August 27, 2013 in Business

Fast-casual restaurants sustaining rise

Chipotle, Panera, others avoiding industry’s slump
Tiffany Hsu Los Angeles Times
 
Nearly 16,000

The country now has more than 15,700 fast-casual chain locations, according to NPD.

The sense of malaise settling over much of the restaurant industry seems to have missed a spot: the still-growing fast-casual segment that includes chains such as Chipotle Mexican Grill and Panera Bread.

A new report from researchers at the NPD Group found that the number of upscale quick-service eateries – known for higher service levels, better-quality food and larger check sizes than their fast food cousins – grew 7 percent in the year ended in May.

Foot traffic into such establishments rose 9 percent as customer visits to the restaurant industry as a whole stagnated.

“Traditional quick-service restaurants have taken notice and are working to compete with the fast-casual chains’ offerings, especially in terms of the freshness and quality of food,” said Greg Starzynski, director of product management for NPD’s food service unit.

Wall Street has taken note of fast-casual’s trajectory. Chipotle’s stock is up about 35 percent so far this year.

When Noodles & Co. debuted in late June, it quickly became the year’s top-performing initial public offering, rocketing up 104 percent. It was upstaged earlier this month by Sprouts Farmers Market’s launch.

Panera, when it released its second quarter earnings late last month, reported a 16 percent surge in profit. Though the bakery-cafe chain revised down the low end of its predicted range for fiscal year same-store sales growth to 3 percent from 4 percent, it said it may exceed expectations to open up to 125 new locations in 2013.

McDonald’s, by comparison, said its net income rose nearly 4 percent in its second quarter. Chief executive Don Thompson said the remaining months of the year “are expected to remain challenged.” The stock is up less than 10 percent for the year to date.

Get stories like this in a free daily email


Please keep it civil. Don't post comments that are obscene, defamatory, threatening, off-topic, an infringement of copyright or an invasion of privacy. Read our forum standards and community guidelines.

You must be logged in to post comments. Please log in here or click the comment box below for options.

comments powered by Disqus