Fast-Casual CompetitionOctober 28, 2013 By: Donna Hood Crecca
Fast-casual restaurants are on an upward growth trajectory, and are increasingly competitive with full-service restaurants for consumer dining-out occasions. Industry projections involve the fast-casual segment growing 8% in sales in 2013. As fast-casual operators look to grow their sales, they’re seeking to expand their dinner day part business, which has many of them seriously considering offering adult beverages.
Of course, several leading fast-casual operators have had adult beverages in their DNA from their inception. Chipotle, for example, always offered margaritas; this summer the 1,400-location Mexican fast-casual concept upped the ante by introducing hand-shaken Patron margaritas. Smashburger took its 143-unit concept up a level this fall when it began partnering with area craft brewers in select markets to offer their brews alongside its signature handcrafted burgers; featured breweries include New Belgium and Goose Island. Other fast-casual operators are investigating the adult-beverage opportunity, and while challenges certainly exists, the goal of increasing dinner day part traffic may well prompt others to introduce spirits, wine and/or beer to their menus.
Such a move would likely appeal to two important demographic groups: Millennials and Hispanics. Research for the soon-to-be released BarTAB report and the recently released Hispanic Consumer Insights report reveal that younger consumers (21-34) purchase adult beverages more often than older consumers (35+) at fast-casual restaurants where such drinks are available (30% vs. 14%, once a month or more often), and indicated the highest likelihood of purchase should they become available in the future. The same trend emerges for Hispanic consumers when compared with the general population.
For full-service restaurant operators, this presents a competitive threat to the all-important dinner day part. But it also presents an opportunity to sharpen the focus on the drink program as a point of differentiation and muster the resources necessary to promote and execute against adult beverages.