Thanks to an improving economy, Americans are growing more comfortable with dining out. In fact, recent foodservice trends have driven the demand of fast casual restaurants as consumers are willing to trade lower prices for higher quality offerings. Mintel’s Fast Casual Restaurants US 2016 report shows that three in 10 consumers find fast casuals to be a better value than quick service restaurants (QSRs) and agree that the quality of food at fast casuals justifies higher price points.
However, both QSRs and full service restaurants (FSRs) have adopted new practices to compete with fast casuals, forcing fast casual brands to take a closer look at what defines their consumers and motivates them to dine out. We’re seeing many fast casuals make the necessary adjustments to not only compete with other foodservice categories, but continue to blur category lines and meet the demands of an even wider base of consumers.
The newest threat: Fast casual premium
Consumers are thinking of health when making their foodservice decisions, with interest in higher quality ingredients and healthier available options among the top motivators for visiting fast casuals more often. This is contributing to the growth of fast casual premium restaurants, such as Nando’s and LYFE Kitchen, which feature higher prices than traditional fast casuals but offer larger menus.
19% of consumers view fast casuals as more innovative than other restaurants
With one in five consumers already viewing fast casuals as more innovative than other restaurants, the timing is perfect for the emerging fast casual premium segment. Although it remains niche, consumer trends favor the blurring of lines between FSRs and limited service restaurants (LSRs), which should lead to more category-defining restaurants in the near future. Mintel research indicates that consumers preferred to visit fast casuals over QSRs in 2015. As fast casual premiums grow in popularity, they will pressure midscale and casual dining restaurants to innovate in order to keep up with the competition.
Outpacing the competition with email marketing
- Noodles & Company email encouraging subscribers to take part in National Spaghetti Day.
Email marketing is a powerful tool for any industry, and foodservice brands often use emails to alert consumers to new products or promotions, give away coupons or encourage consumers to engage with the brand. Getting email addresses from consumers is easier now than ever before, as more diners subscribe to proprietary apps (which require an email address); restaurants also incentivize consumers to trade their emails for deals, such as providing an email to receive a free entree.
With foodservice brands embracing the surge in email subscribers, research from Mintel Comperemedia and ePerformance* reveals that fast casual restaurants are achieving the highest read rates in the foodservice industry.
From Dec. 20, 2015 to Jan. 20, 2016, the overall restaurant industry read rate was 17%. Fast casuals exceeded the industry average with a read rate of 21% during the same time period. Most notably, QSRs fell below the industry benchmark with a 15% read rate.
Prominent fast casual player Noodles & Company found success with their email marketing, sending subscribers emails related to family dining and celebrating fun events or holidays. An example of one of Noodle & Company’s most successful emails, receiving a 21% read rate, features the subject line “Come in today for National Spaghetti Day!”
As evidenced by the spike in read rates among fast casuals, these restaurants are ahead of the competition when it comes to email marketing. Coupled with their innovative measures to meet consumer interest in healthier and more expansive menu offerings, fast casual restaurants should continue to stand out from other categories in the foodservice industry for the foreseeable future.
* Mintel Comperemedia, Mintel ePerformance/eDataSource.
Caleb Bryant is a Foodservice Analyst at Mintel. Caleb authors reports focusing on changing consumer attitudes, industry news and flavor/ingredient trends within foodservice.
