Canada: «Fast Casual» category and its competitors

Toronto / CA. (npd) There is a new category in the Canadian foodservice industry predicted to give quick-service and full-service restaurants (QSRs and FSRs) a run for their money. While still relatively underdeveloped in comparison to the American market, «fast casuals» – those restaurants considered to be upscale QSRs with offers of more attentive service and higher food quality – are beginning to stir the pot north of the border. Making significant inroads since 2011, fast casuals average a larger cheque size than traditional fast-food restaurants and in a relatively short time, are stealing market share by capturing six percent of all QSR visits in Canada.

According to a recent study on the subject by leading global information company The NPD Group, the new category is compelling consumers to choose between food freshness / menu variety and speedy service / value pricing. Though fast casuals and QSRs share convenience as a number-one traffic driver (38 and 39 percent respectively) and general appeal as their number-two influencer (34 and 30 percent respectively), the need to satisfy a specific craving (23 percent) and the desire for quality menu items (22 percent) round out the top reasons why consumers frequent fast-casual outlets, while a restaurant being an old favourite (28 percent) and being known for its good pricing (19 percent) are the additional drivers for QSRs.

«Fast casuals are in an excellent position for growth in Canada, some of which will come from QSR customers «trading up» their dining experiences and FSR customers «trading down» their average cheque totals», said Robert Carter, executive director of Foodservice at The NPD Group. «Though traditionally cheaper than sit-down restaurants, fast casuals can demand a higher price point than their fast-food counterparts because their made-to-order quality offerings are served in an upscale atmosphere which is often newer and promotes greater menu innovation than that of their competitors».

As it stands, however, traditional QSR foods are currently dominating the fast-casual marketplace, with French fries (26 percent), hamburgers (25 percent), carbonated soft drinks (24 percent) and hot coffee (13 percent) representing the most popular menu items. The rising success of fast casuals is, therefore, largely linked to the perception Canadians have of these establishments, as well as the ambiance they provide for patrons who choose to enjoy their meals on premise (58 percent). Likewise, The NPD Group´s research also reveals that fast casuals have consistently outperformed QSRs in the past two years when comparing customer satisfaction, periodically having surpassed FSRs as well.

The emergence into Canada´s foodservice market is not without its challenges, however. Even with its high-quality positioning, fast casuals are vulnerable to being too expensive for regular visits. In this respect, QSRs have the competitive advantage, as the average cost per meal tends to be lower. Further, to compete more aggressively with this trend, FSRs have begun promoting decreased pricing in the hopes that they will be able to maintain their existing customer base.

«If the U.S. is any indication, Canadians can expect that fast-casual restaurants will continue to be a bright spot for the foodservice industry, which is still recovering from the challenges faced during the recession», continued Carter. «Even in tough economic times, the segment has shown that growth can be achieved and we know from experience that, as the new kids on the block, they are bound to attract customers».

In the United States, visits to fast-casual restaurants increased by eight percent from 2012 to 2013, while spending increased by ten percent. In Canada, both traffic and Dollars spent are comparable to American consumer habits, as visits increased by seven percent and spending by nine percent in the same timeframe.

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