Fast Casual Restaurants Market

Market Overview

The global fast casual restaurants market size was valued at USD 169.92 billion in 2022. It is estimated to reach USD 407.26 billion by 2031, rising at a CAGR of 10.2% during the forecast period (2023–2031).

The concept of fast-casual restaurants came into existence in the late 90s. However, it gained much traction in 2009. Fast casual restaurants prepare fresh food rather than assemble it, as in fast-food restaurants. High-quality ingredients, locally sourced, fresh, and organic, are some of the many characteristics of fast-food restaurants. Furthermore, the prices of fast-casual restaurants are higher than that of fast-food restaurants but considerably lower than fine dining. Fast-casual restaurants focus on fresh ingredients, healthier menu options, and customization to cater to consumers’ evolving preferences. They often offer a variety of cuisines, including burgers, sandwiches, salads, bowls, and ethnic-inspired dishes. The emphasis is on using high-quality ingredients, including locally sourced produce and sustainable proteins, to create flavourful and nutritious meals.

Highlights

• By food type, the Burger/Sandwich dominates the global market
• By mode of operation, the dine-in dominates the global market
• By nature, the standalone sector dominates the global market
• By region, North America dominates the market share and is expected to retain its dominance during the forecast period.

Market Dynamics

Market Drivers

Changing Consumer Preference Towards Fast-Casual Restaurants

The increase in fast-casual restaurants is attributed to changes in consumer preferences toward a healthy lifestyle. The significant transition toward healthy, natural, freshly prepared food provides impetus to fast-casual restaurants. Fast casual restaurants incorporate freshly prepared, minimally processed food in their menu. These restaurants are gaining much traction owing to their innovative offerings. For instance, Panera Bread, one of the leading fast-casual restaurant chains in the U.S., offers a diverse menu, including but not limited to low-fat and gluten-free items.

Furthermore, weight-conscious consumers can opt for half a portion of a meal or customize it to the thinner type of bread. This healthy customization option offered by fast-casual restaurants drives the market’s growth. One key factor driving this shift in preference is the growing emphasis on healthier eating habits. Consumers are increasingly conscious of the nutritional content and quality of their food. Fast-casual restaurants cater to these preferences by offering fresh ingredients, locally sourced produce, and customizable menu options. This allows customers to tailor their meals to meet their dietary needs and preferences.

Low Entry Barriers and High Profits

The introduction of the concept of cloud kitchens reduces capital expenditure. Low capital costs and higher profit margins result in significant investment in fast-casual restaurants. Similarly, increased automation in kitchens and the emergence of deliver-to-door companies further create new growth opportunities for such kitchens worldwide. The expansion of deliver-to-door services and cloud kitchens boosted the sales and profits of fast-casual restaurants in the last few years.

One significant factor driving this growth is the relatively low entry barriers compared to other segments of the food service industry. Fast-casual restaurants typically require less capital investment and operational complexity than full-service or fine dining establishments. This makes it easier for entrepreneurs and aspiring restaurateurs to enter the market and establish their fast-casual chains.

Market Restraint

Disruptions due to the Covid-19 Outbreak

The food and beverage industry has been impacted profoundly by the coronavirus outbreak. The outbreak started in China, resulting in a lockdown and the ceasing of dine-in activities nationwide. The demand for food from fast-casual restaurants in China is expected to reduce. Similarly, recent developments in the resurgence of the third wave of coronavirus are one of the major challenges the country is expected to face in the upcoming days.

Other Asian countries also faced the same predicament. Stringent rules across the Indian subcontinent disrupt the supply chain and interrupt production activities. In determining the pandemic's overall effects, the length of the viral spread is still important to consider. However, the dearth of workers is a disruption in the supply chain and is anticipated to remain a major challenge for the engaged stakeholders in the region.

Market Opportunities

Early Adoption of Advanced Technologies

The rapidly transforming food service industry is giving much importance to adopting technologies for better and more efficient operations. With the incorporation of scheduling software, digital inventory tracking, automated purchasing tools, and digital reservation table manager, the food service industry has seen huge leaps in revenue generation, inventory management, customer satisfaction, and operation efficiency. Incorporating such software is expected to continue to serve as a lucrative opportunity for the engaged stakeholders in the fast-casual restaurant to manage queues, inventory, purchases, and other key operations.

The ordering and delivery process is one area where modern technology has a huge impact. Fast-casual restaurant owners are implementing online ordering systems, mobile apps, and self-service kiosks to enhance the convenience and efficiency of the ordering experience. These technologies enable customers to place their orders ahead of time, customize their meals, and even track their orders in real time. This streamlined approach improves customer satisfaction and increases restaurant owners' operational efficiency.

Regional Analysis

North America Dominates the Global Market

Based on region, the global fast-casual restaurant market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global fast-casual restaurant market shareholder and is estimated to rise at a CAGR of 8.9% over the forecast period. The North American fast casual restaurants market is studied across the U.S., Canada, and Mexico. Regarding macroeconomic factors, the U.S. is the largest economy in the world, in terms of GDP, with greater flexibility than businesses in Western Europe. On the other hand, Canada is equipped with a high-tech industrial economy. Though the country experienced a slowdown in economic growth in 2008, it recovered faster. North American consumers have seen a rapid transition toward healthy preferences in terms of food choices. The consumers in the region are now much more inclined toward natural, clean-label, and organically grown food. Furthermore, there is an increase in the prevalence of the diseases such as diabetes and obesity. Therefore, consumers make conscious decisions regarding their food, resulting in increased preference toward fast-casual restaurants.

Europe is anticipated to exhibit a CAGR of 10.5% over the forecast period. Europe operates as a single market and is the major trading power. The European countries accounted for the second-largest global imports and exports in 2016. In terms of growth rate, there has been a decline in the overall economy of Europe post the 2008 recession. Despite Brexit, the European market presents attractive opportunities for the food and beverage sector. The high standard of living of the Europeans has increased the popularity of fast-casual restaurants equipped with healthy product offerings. In addition, fast casual restaurants help working professionals in greater convenience, thus giving them enough time for other activities. The increase in food outlets further fosters the growth of fast-casual restaurants in this region. European consumers are very much inclined toward locally sourced ingredients and product offerings. Three out of five Europeans prefer products that are locally sourced. Therefore, fast casual restaurants have started catering to this demand and offering freshly prepared, natural, and locally sourced products. Similarly, the hectic lifestyle in the region fuels the demand for fast casual restaurants in the region.

The Asia-Pacific market is studied across China, India, Japan, ASEAN, and the Rest of Asia-Pacific. The economic outlook for Asia-Pacific remains strong. The growth in China is projected to ease to 6.6%, partly reflecting the authorities' financial, housing, and fiscal tightening measures. In addition, growth in Japan has been above potential for eight consecutive quarters and remained strong at 1.2% for 2020 in the outbreak. Demographics, reduction of productivity, and the rise of the digital economy impact the long-term growth of the Asia-Pacific fast-casual restaurants market. In addition, the surge in the middle class and working population contributed to the growth of the fast-casual restaurant market in Asia-Pacific. The working class prefers eating at fast-casual restaurants as it provides faster and more convenient cooking features. The Asia-Pacific market has a huge growth potential as the chains offer new and innovative products. The low penetration rate of fast-casual restaurants in this region also provides ample growth opportunities for the key players to gain first mover advantage.

In LAMEA, amid escalating trade tensions, tighter financial conditions, and volatile commodity markets, economic recovery in Latin America has moderated and become more uneven. Some major countries in the LAMEA region include Brazil, Argentina, Saudi Arabia, UAE, and South Africa. Brazil is expected to witness moderate growth; however, there has been a decrease in the economy in Argentina due to financial market disruptions and high real interest rates. The factors that drive regional market growth include better economic management, improved global economic conditions, recovery in commodity prices, and improved agriculture production. The LAMEA fast-casual restaurant market includes Latin America, the Middle East, and Africa.

Segmental Analysis

The global fast-casual restaurant market is bifurcated into food type, mode of operations, and nature.

Based on food type, the global fast-casual restaurant market is bifurcated into pizza/pasta, burgers/sandwiches, Asian/Latin American food, chicken, and others.

The pizza/pasta segment dominates the global market and is projected to reveal a CAGR of 13.1% over the forecast period. Pizza is a flatbread topped with cheese, vegetables, tomato sauce, and meat baked in the oven/microwave. Pasta is a noodle made from durum wheat flour, water, and eggs that are then molded into different forms. Most fast-casual restaurants serve both dishes by adding different flavors to them. Furthermore, the availability of pizza/pasta on various platforms ranging from modern trade to online distribution channels boosts the expansion of the pizza/pasta segment in the fast-food market. Pizza/pasta are considered a cost-effective alternative to fast food, and their preparation requires less time, as they are pre-cooked. These fast-food products are available throughout the year and are safe to consume.

The increase in demand for fast food from millennials is the key driving factor for the growth of the pizza/pasta segment in the market. Moreover, changes in lifestyle patterns of people and hectic lifestyles have increased the demand for these types of food worldwide. Growth of the pizza/pasta market is attributed to the preference of consumers and extensive outlets of pasta/pizza to level up with the rise in the requirement. Different varieties of pizza/pasta are available in the market, which fulfill different tastes and preferences of the consumers. The market for fast-casual restaurants is anticipated to rise due to consumer interest in nutritious food immediately over the forecast period.

Based on the mode of operation, the global fast-casual restaurant market is bifurcated into takeaway and dine In.

The takeaway segment owns the global market and is predicted to exhibit a CAGR of 11.2% over the forecast period. Various restaurants have provided takeaway facilities to cater to the demand of consumers who are in a hurry and have less time for dining. The takeaway segment includes online food delivery from aggregators and in-house delivery services. Online food delivery provides much convenience in today’s hectic lifestyle of consumers. Over the past few years, the rate of internet penetration has increased throughout the world. As per the sources, nearly 54% of the global population has access to the Internet. Therefore, online services have increased in various industries, including fast casual food. Growth in on-demand food delivery from individual brands and third-party aggregated apps is driven by millennials, who seek convenience and good quality food.

Based on its nature, the global fast-casual restaurant market is bifurcated into standalone and franchised.

The standalone segment owns the highest market share and is predicted to exhibit a CAGR of 12.2% over the forecast period. The standalone fast-casual restaurants operate, promote, and sell their products independently. Likewise, they have a limited consumer base and product offerings, specialized to a particular region and demographics. The standalone restaurants are expanding at a higher pace, with restaurants shifting toward healthy food offerings and locally sourced ingredients. Regional brands account for a higher share in the independent segment, as most operate not more than two or three outlets nationwide. Such restaurants are highly popular among the localities. In addition, most of these independent fast casual service restaurants specialize in preparing one or two main types of fast-food products that gain more consumer traction.

Recent Developments

• January 2022- Chipotle Mexican Grill (CMG) announced that it would be opening a new restaurant in New York City. The restaurant, which is in Times Square, is the company's first location in the city.
• May 2023- Stratford announced a new destination for fast-casual Middle Eastern fare with the launch of Tahini’s first location in the Festival City, which celebrated its grand opening on Mother's Day.