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Technomic: Build-your-own concepts fueling fast casual growth

Customization, personalized menu items and staff engagement drive rapid sales expansion for fast casual restaurant brands.

June 25, 2015

The staggering growth pace of sales and unit expansion in the fast casual pizza industry continued in 2014, with the pizza category achieving the largest sales gains at 22 percent. Fast casual annual sales increased more than three times the rate of the total restaurant industry, according to Technomic. Now. The firm is predicting that a subcategory of fast causal is rising to the top: Build-your-own concepts.

Restaurants with a build-your-own format increased sales, last year, twice as fast as made-to-order fast casual brands. The former reported a collective annual-sales gain of about 22 percent, compared with an 11-percent increase for the latter, according to data collected for this Technomic's Top 500 Chain Restaurant Report.

"Consumers certainly like the freshness, food quality and prices at made-to-order fast casual brands, but there is something about the build-your-own format that they prefer significantly," said Darren Tristano, executive vice president of Technomic. "More customers, especially Millennials, see the personalization and engagement that come in a build-your-own menu offering as the greatest differentiator in dining out. These trends are likely to lead fast casual's growth for years to come."

The fast casual  industry grew its annual sales approximately 13 percent last year to $39 billion, according to Technomic. While that is a relatively small share of the total restaurant industry's $466 billion in annual sales in 2014, fast casual's growth rate dwarfed the total industry's annual increase of 3.8 percent. fast casual brands also increased their unit count 9 percent in 2014, far faster than the 1.3 percent gain in new locations for the total restaurant industry.

All menu categories in the report showed sales and unit growth, but several clusters showed interesting developments:

• The pizza category had the largest annual-sales gain of 22 percent in 2014. Store count growth, which increased 27 percent, is driving much of fast casual pizza's sales performance, helping those brands steal market share at lunch and dinner. As new players enter the segment, expect several more years of rapid growth for fast casual pizza.
• The specialty cluster, which comprises categories like salad, Mediterranean and barbecue, posted a 20-percent increase in sales and a 13 percent gain in units.
• Like the bakery-cafe segment, which grew sales 6 percent and locations 5 percent, the Mexican category is one of fast casual's most developed and mature clusters, yet it posted gains of about 18 percent in sales and 6 percent in locations. Chipotle Mexican Grill continued to lead the way with a nearly 28-percent sales increase in 2014. While still expanding and taking market share from quick service brands, fast casual Mexican chains and bakery cafes are likely to grow slower in the coming years than specialty concepts in emerging segments.