What are this year’s Top 3 hottest US stocks? Potential cures for cancer? Earth-shattering new technology? Nope, they’re way down the list. Try a farmers market, sandwich outlet and noodles chain. And only the first one isn’t a franchise or fast casual restaurant concept.
“Will [insert any restaurant chain name here] become the next Chipotle?” has become the most overused headline in the American business press. Punters who missed out on the Chipotle bonanza have bet big on fast casual Johnny-come-lately’s such as Noodles and Potbelly, two franchises whose shares doubled in value the day they launched on the stock exchange, propelling them to the second and third most successful IPOs for 2013 so far.
So what is “fast casual” and are we likely to see the revolution here?
A fast casual restaurant is “a type of restaurant that does not offer full table service, but promises a higher quality of food and atmosphere than a fast food restaurant,” according to the redoubtable Wikipedia. “In the United States, it is a relatively new and growing concept positioned between fast food and casual dining (hence the hybrid name "fast casual"). The typical cost per meal is in the US$8–$15 range.”
Are there any fast casual restaurants in New Zealand and Australia?
The new Carl’s Jnr outlets popping up all over Auckland are like fast casual restaurants in that, unlike McDonald’s, Burger King and Wendy’s, you get your food served to you at your table after you’ve ordered it. However, it is doubtful whether they offer “a higher quality of food and atmosphere than a fast food restaurant”.
Nando’s, Mediterranean Food Warehouse, Habitual Fix and Mexicali Fresh spring to mind as being more typical of fast casual. Nando’s has 30 restaurants in New Zealand, MFW five, Habitual Fix twelve and Mexicali Fresh has announced it will double from three to six restaurants this year as growth in fast casual “is soon expected to hit double-digit increases here in New Zealand”, according to their Franchise Opportunities booklet.
The concept’s popularity has been a recent phenomenon.
Early fast casual franchises had no guarantee of success. Even ZuZu Handmade Mexican Food, a precursor to the hugely successful Chipotle and the franchise founded by the man who coined the fast casual name in the first place, Horatio Lonsdale-Hands, fell by the wayside in the late nineties. A concept too far ahead of its time, perhaps?
Founded just four years after ZuZu, Chipotle Mexican Grill had grown to fifteen stores by 1998 when McDonald’s became a major investor, helping the franchise grow to 500 stores by 2006, when they got out of the business. But maybe they moved too soon. Chipotle now has more than 1500 stores around the world and its share price history looks like this…
Not bad for a chain which made its name from beans and rice wrapped in flat bread.
Noodles and Potbelly also serve simple food staples with mass appeal, but their success, like Chipotle’s, comes off the back of the trend to healthy natural choices and local produce. All rate highly on health.com’s list of healthiest fast food chains.
The trend is catching on in New Zealand and we look forward to the healthier and more varied options that fast casual brings.
Got a food business or an idea for one?
At No Ordinary Business and Franchise Consultants, we have a background in the food service and retail industries, and can help you with strategic and business planning, franchise development, funding applications, location selection and marketing.
Contact us for a free initial consultation.