Last week I saw a line out of Chipolte’s on East Main Street that wrapped all the way out to the curb, along the front and then back along the side of the building. I found out later that they were offering a free burrito if you wore some aluminum foil like they use to serve the food, but even still there is always a line at Chipolte whether you’re wearing aluminum foil or not. I read an article in Retail Traffic magazine that affirmed just how hot the Chipolte chain and “quick casual” establishments are these days — which should be good news for Kent because university cities seem to do well attracting the quick casual type of restaurants. Given everyone’s interest to get more dining in Kent I thought it was worth sharing this article so that we could keep our expectations in line with what’s happening in the restaurant business these days.
A Swiftly Tilting Palate
Oct 1, 2007 12:00 PM, By Lauren Shepherd
Retailers need restaurants
With the restaurant industry expected to take in record sales this year of $537 billion, food concepts — from upscale to casual to fast food — have become more integral than ever to shopping centers. Lifestyle centers and mixed-use projects showcase restaurants as major traffic generators. And developers have even taken older regional malls that used to only have food courts buried deep within and appended them with pad site restaurants and others adjacent to mall entrances.
Still, the food business is fickle. Concepts hot one year can quickly see traffic peter out the next. Even established restaurant players, like Dallas-based Brinker International, which operates perennial favorites Maggiano’s, Chili’s, On the Border and Macaroni Grill, have made missteps along the way, launching seemingly sure-fire concepts that died quick deaths.
And today, in fact, the restaurant industry as a whole has seen a quick change. Two years ago, casual sit-down concepts were all the rage. And while some of those players continue to perform well, another sector — quick casual — has moved to the forefront. Restaurant research firm Technomic Inc. says in 2006, sales at quick casual restaurants rose 13 percent whereas sales at casual dining establishments grew 8 percent for the year.
In terms of unit growth, the data again shows quick casual chains growing faster than their casual dining counterparts. The number of units in the quick casual segment grew 9 percent in 2006 while the number of casual dining units climbed about 6 percent.
Quick casual operators — epitomized by the rapidly growing Denver-based chain Chipotle — have revitalized a sector once seen as just a small step up from traditional fast food. Aaron Allen, founder and CEO of Quantified Marketing Group says the emergence of quick casual has been one of the dominant trends in 2007. The firm’s 2007 Restaurant Trends Forecast report highlighted that trend.
Casual dining chains have struggled all year to post same-store sales gains particularly as consumers have demanded more for their money. In August, same-store sales at quick-service restaurants — which include both fast food and fast-casual chains — rose 2.3 percent. But at casual dining chains, same-store sales rose only 0.3 percent. Overland Park, Kan.-based Applebee’s International Inc., for example, in August, saw same-store sales at company-owned restaurants fall 1.6 percent, reflecting a decrease in guest traffic of between 6.0 percent and 6.5 percent. “They really haven’t gotten their culinary act together to get with the trends,” Allen says. As the company struggled, it explored strategic alternatives, which resulted in IHOP Corp. agreeing to buy the troubled chain for $2.1 billion earlier this year.
As consumers have begun to feel more disenchanted with their neighborhood casual dining joint, quick casual concepts have come to the rescue. The quick casual industry is now much more than counter concepts. Instead, restaurateurs have realized that they can give diners more options, including table service, more upscale dÉcor and healthier ingredients while still keeping prices down and preparation time short.
One of the biggest reasons for the surge is simple, analysts say — time. “Today’s consumer is time-starved,” says Paul Fetchser, president of New York-based Great American Brokerage Inc. “Who works 40 hours a week?” Fetchser says the family dinner has changed as working parents have less time to cook. “People no longer hop in their cars and drive 40 minutes to have dinner,” he adds. “Dining is out, eating is in.” That mindset can be a boon to developers as well since quick casual restaurants are designed to turn tables quickly and can offer shoppers something to eat in the “shoulder period”; the period between major mealtimes. “They’re able to get their customers in and through quickly,” says Bryant Siragusa, national director of mall restaurants and entertainment for CBL & Associates Properties Inc.