Fast casual food is so hot right now.
The market for fast casual food, which is almost but not quite fast food (I'll get to that in a second), has grown by 550 percent since 1999, more than ten times the growth seen in the fast food industry over the same period, according to data from market research firm Euromonitor. Chipotle, likely the best known purveyor of the category, has seen its sales more than quadruple during that time; Panera, another oft-used example, has watched its sales more than triple; and Shake Shack, the hamburger joint du jour, has done so well that it just went public despite operating only 36 outlets.
Americans spent more than $21 billion at fast casual restaurants last year, according to data from market research firm Euromonitor, which is not bad, considering that the category is only loosely defined at best.
Everyone agrees that fast casual is the next big thing, but it's surprisingly hard to define what it is exactly. What makes fast casual food fast causal—and not simply fast food? And at what point do we draw the line between fast casual placesand the likes of Applebee's and Chili's, which have table service, but also takeout? The answer might simply depend on whom you ask.
"It's all very confusing,"said Darren Tristano, executive vice president of Technomic, an industry research firm. "The truth is that no one really has the 'right' answer."
Most industry experts can agree that an essential component of the fast casual category is its price point, which ranges from $9 to $13 dollars per receipt, compared to an average ticket closer to $5 for fast food restaurants. Fast casual restaurants also, ideally, earn less than 50 percent of their business from full service sit down meals. Otherwise they too closely resemble casual dining restaurants, like Applebee's. But there's a lot of other criteria.
By Technomic's estimation, there are at least 10 different markers of restaurants that fall within the category: the quality of the food, the use of better ingredients, food that is wholesome, a perception of freshness, first-rate decor, fair pricing, fast service, friendly employees, flexible offerings, and a full view of how the food is prepared.
But there are disagreements. Euronomitor, for instance, considers Buffalo Wild Wings to be a fast casual restaurant. Technomic, meanwhile, does not, because of the chain's growing full-service, sit-down business.
In lieu of a rigid understanding, the category is perhaps best defined by those restaurants that best exemplify its essence. And few, if any, chain is more closely aligned with the concept than is Chipotle.
"Chipotle is really the one that comes to mind," said Tristano. "Not just because of the format, but because of the food and mission. It has everything that fast casual means today."
The Mexican chain has come to embody not only the present but also the future of fast casual sector. Chipotle both has satisfied all of the conventional qualities of the category—food quality, freshness, efficiency, transparency, etc—and has managed to etch out a new standard that is increasingly central to the category: sustainability. Other fast casual chains, including Panera, seem to be following suit. Panera has taken steps to be more environmentally friendly, including a redesign of all of its packaging last year to promote recycling.
"What consumers are looking for is the best value proposition," said Bonnie Riggs, an industry analyst with NPD group. "And value doesn't mean the cheapest price."
The origins of the fast casual category date back to the early 1990s, when chains like Fuddruckers and Au Bon Pain introduced a new, slightly more upscale version of the otherwise supremely cheap and quick options available at competitors like McDonald's and Subway. What separated those pioneers from the rest of the fast food industry was little more than a commitment to an elevated experience in food and atmosphere.
"What we saw early on with fast casual was mainly an emphasis on offering a better product," said Tristano. "It was the price point, but also the food quality, the ingredients, the experience."
The name Fuddruckers and the word pioneer might sound strange when paired together, but that first generation was a food movement in its infancy, pushing consumer demands for better food and better value to only modest ends. Over the years, the fast casual category has evolved to accommodate a heightened interest in health, sourcing, ethics, and value, all of which have coalesced in the likes of Chipotle.
"We noticed this incredible thing at the start of the recession," said Riggs." Traffic in the restaurant industry was negative for two years in a row, which we had never seen before. Quick service was flat; full service was flat. But fast casual was growing in the double digits even during the height of the recession."
As millennials, who make up the biggest demographic of fast casual fans, find themselves more strapped for time and less willing to eat fast food, which they view as unhealthy, the trend will only likely continue. NPD group estimates that fast casual will grow in the double digits through 2022, while the rest of the restaurant industry will eek out growth rates of around half a percentage point.
"Everybody in the world is talking about fast casual," Riggs said. "It just has a such a broad appeal."
Few understand the appeal of the fast casual model better than the fast food industry, which has suffered mightily on the heels of the success of its better dressed sibling.
"When the overall market isn't growing, it means stealing customers from everyone else," said Riggs.
The category now controls 5 percent of all restaurant traffic, up from 1 percent in 2000.
Rather than waiting around while marginally more upscale food joints pluck customers, the fast food industry has responded by mimicking the competition. McDonald's recently introduced a new build-your-own-burger experience; Wendy's has been remodeling its restaurants in an effort to make them more comfortable; and Subway has both pushed a healthy narrative and incorporated ingredients like avocado that tend to be viewed as higher end offerings.
The results have been mixed at best so far, but it's hard to view the fast food industry's moves as anything more than flattery. At the very least, McDonald's willingness to forgo its core business to mimic the likes of Shake Shack points to a future in which the quick service food industry looks a lot more like Chipotle and a lot less like, well, McDonald's.
"I think you're going to see less and less distinction over time as more fast food concepts shift towards the fast casual model," Tristano said. "If you think it's hard to tell what makes a restaurant fast casual today, it's only going to more confusing."