The pandemic, great resignation and eminent recession has brought a wave of change in all segments of the restaurant industry.
The biggest market shift seems to be the rise in off-premise business (e.g. catering, take-out, delivery). At one point there was a question as to whether this would be a passing trend that would subside once things got back to “normal.” As we’re seeing there really isn’t a new normal, at least not yet, and the proclivity for off-premise dining is here to stay.
By their nature, Fast Casual restaurants were, thankfully, already well positioned to do a healthy amount of off-premises business. But, over the past two years as the demand for off-premises food orders increased many fast casuals are still having to adapt.
Initially, one of the driving forces behind Fast Casual was the concept of “food theater”. This successfully emphasized the presentation of quality ingredients and / or focused on food preparation to clearly differentiate from their quick serve rivals. The idea was to combine casual dining quality with quick serve convenience. Emphasizing that quality proposition became critical.
But now, with a higher percentage of business going out the door rather than dining-in and a larger percentage ordering ahead online or via apps, many concepts are having to rethink how that quality statement is communicated. Several notable brands are considering eliminating the food theater or guest/employee interaction or creating a separate operational flow to address the order ahead business.
For example, Chipotle is highly regarded as a classic scoop-and-serve, quality-ingredient, Fast-Casual concept. The guest goes through the line, places their order at the various stations, and watches their meal be prepared in real-time. Next, they pay for their order at the end of the line before seating, (sometimes referred to as ‘Pay-Last’). While this process has a lower throughput, Pay-Last typically yields a higher ticket average because of the up-close interaction with staff, the ordering process, and visual lure for fresh ingredients.
However, if that flow is interrupted by several online or 3rd-party delivery orders, the customer interaction is significantly hampered. So, Chipotle recently introduced a new store format with a second, order ahead focused (non-customer facing), make line so that the two experiences are kept separate. Of course, Chipotle has the scale to make a shift like this, whereas many emerging fast casual chains are struggling to find another answer.
Another factor in the current restaurant climate is many Quick Serve restaurants have gone to Drive-Thru only service. Should Fast-Casual adopt the drive-thru model? How else can they provide the convenience the quests want while also emphasizing quality?
Another prominent Fast-Casual brand is also exploring these ideas. The restaurant “Chop’t” is now looking at an entirely new format leaving the Pay-Last format in favor of a; ‘contactless ordering’ Pay-First model.
The guest experience is different.
Are these restaurants hurting themselves by becoming less oriented to the guest experience and nearly becoming a takeout joint?
Does this create a self-fulfilling prophecy? What do these shifts mean for the Fast-Casual segment? Will it simply be absorbed into the Quick Serve category? Or will they find other ways to make clearly differentiate themselves and make the quality statement?
Fast-Casual has been the fastest growing restaurant segment for many years. How does this shift impact the guest experience and differentiate if order ahead is the driving force? How do you take care of the guests?
Will this work?
From a cost standpoint, many restaurants can only afford a single make-line. Food theater is vital to the concept and eliminating it to gain convenience is not desirable. Most emerging fast casual chains don’t have the footprint, capital or infrastructure to try what Chipotle and Chop’t have done.
So here are some other options to try. The coming year will determine the most effective direction(s).
1. We see a Pay-First format with the queue line running past the staff preparing fresh orders from refrigerated cases displaying fresh ingredients being one way for a single make line to accommodate both the walk-in guest and the order ahead guest efficiently while still emphasizing quality experiences.
2. One thing that several Fast-Casuals are trying is an emphasis on curb-side delivery. Many are using new technology such as apps like FlyBuy, SwipeBy, and Curbspot. You simply drive into the parking lot; the restaurant staff know where you are and promptly bring your order out to you. This eliminates the perception of long waits because there’s no line, and seemingly elevates the level of service above a drive-thru.
3. Another thing we’re seeing that helps to elevate the dine-in experience for Fast-Casual and differentiate it from quick-serve is to brand the pick-up or delivery process. Many chains use runners to bring food to your table, while one emerging chain is asking the guest a whimsical question of the day and calling out their answer when their food is ready at the pick-up counter.
4. Scratch made and / or cook-to-order concepts. We’ve seen so many innovations in cooking equipment that its now possible to provide a true cook-to-order meal in a fast-casual time frame of under 5 minutes. On the other hand, equipment advancements allow for improved product quality with speed and scale that make fresh ‘scratch made’ or ‘in-house made’ specialty items possible with the limited space, labor and skill for the average restaurant.
5. One other option is what we’re seeing in the retail industry. One guest focused A+, flagship location in each major market with several smaller convenience focused supporting locations in-filling around it. The flagship remains guest focused because the majority of the off-premise orders are diverted to the B & C level units.
Perspective
Our perception is that the big players in Fast-Casual are largely moving to address order-ahead business quickly, while not disrupting dine-in business. We expect to see more second make-stations/lines, or movement to Pay-First. In Fast-Casual, maintaining excellent service is of primary importance and this segment may morph into a bifurcated experience. The kitchen and servery are set up for efficiency while the dining area is primed for experience and hospitality.
Food Theater may become secondary, or perhaps a new approach to emphasize quality may be necessary. Food display will become more important with faster, made-to-order concepts vs. cook-and-hold.
The restaurant world is still in a period of transition. Anyone who claims certainty about sure-fire solution may warrant some healthy skepticism. The bottom line is that it’s vital to design with the ability to adjust and flex from the beginning. With intelligent, mindful design, and options that enable flexibility and agility, restaurants will be adaptable to whatever model becomes the prevailing direction in the industry’s future. As the economy shifts, money spend on food and dining changes with it. If there’s only one thing that the pandemic taught us, it’s that the restaurant industry is resilient and seems to always find a way to adapt to adversity.