Meeting consumer needs requires a tricky balancing act from limited-service restaurants. Darren Tristano explains what customers require today
The burgeoning growth of the fast-casual segment in the US has had implications for the entire restaurant industry. The trends that surfaced at fast casuals have spread, particularly in fast food. Although fast-food restaurants have struggled recently in the US to increase sales, data in Technomic’s 2016 Future of LSR: Fast-Food & Fast-Casual Consumer Trend Report reveals that efforts to adjust to consumers’ changing needs and expectations have provided positive returns. A continued focus on consumer needs will likely pay off for limited-service segments, as both fast-food and fast-casual restaurants continue to be mainstays of the American diet; 51% and 40% of consumers, respectively, visit these restaurants weekly.
Increasing ‘clean’ ingredients
As a result of concerns about additives in foods, consumers continue to call for more healthy items at limited-service restaurants (LSRs). Technomic research shows that 36% of consumers say “natural” claims would make them more likely to purchase fast food, and 40% say the same for fast casual. Younger consumers, who are key foodservice users, are driving this demand.
Technomic’s 2016 Top 500 Chain Restaurant Report calls out clean eating and labelling as a major theme; this trend is especially visible in the limited-service segment. LSRs are taking steps to remove additives, artificial flavours and colours from food and beverages and offer antibiotic and hormone-free proteins. LSRs are adding ‘clean’ ingredients and labels to menus in response to these consumer concerns, as data indicates additive-free labels would drive purchases among consumers at LSRs.
Many of the burger giants have committed to moving to antibiotic-free chicken over time, but few have committed to antibiotic-free beef, as it’s more difficult to source in large quantities. Expect to see more antibiotic and hormone-free beef commitments, but it will take time.
Other health and dietary claims are trending on LSR menus. Gluten-free claims have exploded at fast-casual chains over the past two years, though they have yet to impact the fast-food segment. Similarly, organic claims are growing on fast-casual menus, but have not yet emerged on leading fast-food menus. Vegetarian claims are trending up at fast-food chains and have already proliferated at fast-casual chains, appearing at almost half of all chains.
But just as healthy items are important for menus, it will be crucial for operators to balance these options with indulgent offerings. LSR operators may consider adding craveable items to menus that alleviate guilt with healthy claims such as “hormone-free” or “preservative-free.” These clean labels will aid operators to meet better-for-you demands.
While many LSRs add clean items to menus, entirely clean concepts are also emerging; those showing the most promise strike a healthy and indulgent balance. For example, better-for-you fried chicken is already on the rise within the fast-casual segment. Offering portable, healthful sides, such as fresh fruit, to pair with more indulgent items may also encourage consumers to visit LSRs.
Clean menu-focused concepts, such as better-for-you fried chicken chains, will advance into the segment of top restaurants by turnover as diners demand more sustainable, ethical and “clean” fare. They are already growing in the independent sector – independents like Flyrite, Fuku and The Organic Coup tout antibiotic-free or organic fried and grilled free-range chicken. Leading LSR chicken chains are already committing to supply chain changes; expect even more concepts to follow suit. Other aspects of better-for-you fried chicken items that independents are highlighting – and that chains will likely incorporate into their own menus – include non-GMO and environmentally friendly frying oils, preservative-free buns and locally sourced slaws.
Balancing consumer concerns over food additives and costs will be vital, as most consumers source food and beverages from fast-food and fast-casual concepts because they say the prices are reasonable. LSR operators must work with suppliers to obtain the “clean” ingredients consumers demand, at a reasonable cost to maintain their inexpensive positioning.
Offering more focused menus
‘Specialty’ was one of the fastest-growing LSR menu categories of 2015, with 7.8% growth in turnover, but it remains one of the smallest categories. Going forward, specialised menus will inspire concept development and growth that will lure investors. Fast-casual menus are growing slightly, while fast-food chains are downsizing their menus somewhat, focusing instead on offering fewer options with greater customisability. The idea is to produce fewer but high-quality items. In particular, look for specialised ethnic and seafood LSR menus to flourish – think poke, lobster, falafel, empanada, dumpling, bao concepts and more. The format of these items will range from build-your-own bowls to a short list of chef-created handhelds. These menus will be much smaller than varied menus and alternate between chef-curated menus and customisable options.
Expectations will continue to grow for build-your-own and customisable options. While build-your-own options have already proliferated at leading fast casuals, quick-service restaurants (QSRs) are still lagging behind. However, almost as many consumers call for customisable options at QSRs as at fast casuals. Customisation is becoming the norm, though
consumers will rely on restaurant recommendations in creating these offerings. These tailored options will allow LSR operators to more easily cater to diners’ growing dietary restrictions.
Barbell strategy
Just as LSRs should be aiming to balance healthy and indulgent items, leading QSRs are hitting a sweet spot by developing more premium items on the one hand, and bundled value meals on the other.
Bundled meals feature about three to five select items for one low price. At these same chains, premium items are now topping $6, breaking the invisible $5 ceiling. More upscale ingredients, larger portions and home-made or handcrafted options are cropping up on menus. Wendy’s launched a four-for-$4 meal deal last autumn and recently added its Crispy Chicken BLT as another option. In contrast, Wendy’s has also featured sandwiches with Gouda and Gruyère cheeses and currently offers a Power Mediterranean Salad with grilled chicken, feta, hummus and sun-dried tomato quinoa blend. By offering something for everyone, this barbell strategy helps drive traffic.
Technomic’s most-recent Value & Pricing Consumer Trend Report shows that 43% of consumers say create-your-own bundled meals encourage them to visit a particular restaurant. QSRs are also playing catch-up with QSRplus and fast-casual chains by launching more premium options. Eventually, the line between QSRplus and QSR chains will fade, as more leading QSR chains develop and launch premium and made-to-order options.
Key takeaway
Speedy service and low-cost options at fast-food and fast-casual concepts continue to attract consumers of all ages. However, operators must cater to consumer demands for clean ingredients, both healthy and indulgent items, meal deals and premium options if they want to be noticed.
Darren Tristano is President at Technomic Inc., a Chicago-based foodservice consultancy and research firm owned by Winsight. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations.
