Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
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location, and other factors — are also suitable for strip centers and city centers. At the same time, their focused menus don't require the large kitchens that full-service operators need. Because most of their business occurs at lunch and their customers tend to have higher household incomes, fast-casual chains target areas with both midday trafc and residents with incomes greater than $50,000. But their appeal enables them to thrive in cities, suburbs, and small towns. Te segment has much going for it in today's economic and social climate. Fast-casual restaurants give casual-dining consumers an opportunity to trade down to lower-priced yet high-quality fresh food. At the same time, they allow quick-service customers to trade up to a "third place" environment that ofers afordable food quickly at a cost that is usually only a few dollars more than typical fast food. Fast-casual consumers tend to be from higher-income groups, and those making higher incomes have been afected less by the recession and slow economic recovery. Te segment also attracts younger customers. However, as the segment continues to grow, its customer base becomes more mainstream. Fast-Casual Evolution Te fast-casual segment has origins in what used to be called "home Some emerging concepts are taking the menu to the next level, aiming to ofer fne-dining cuisine in a limited-service format. Tom & Eddie's, a higher-end better-burger concept developed by two former McDonald's executives, features menu items developed in collaboration with local college culinary programs. Its $13 average check is slightly higher than the average fast-casual restaurant's. And several growing fast-casual concepts are looking for new ways to engage their media-savvy customers with LCD menu boards, HD fat-panel entertainment, complimentary Wi-Fi, social networking, and entertaining but useful mobile apps. Growth Concepts A look at growing chains within fast casual fnds both national leaders and emerging upstarts. Among the larger chains, Jimmy John's Gourmet Sandwich Shop opened 231 units in 2012, for a total of 1,560, which was the largest increase in U.S. units for a fast-casual chain in 2012. Chipotle Mexican Grill and Panera Bread netted the next largest increases for the year, adding 174 and 163 units, respectively. In terms of ownership structure, among the top 150 fast casual chain restaurants, 47 percent of the units are company owned and 53 percent are franchised. Ninety-seven, or 65 percent, of the top 150 fast-casual brands have at least one franchised unit. Te growing fast-casual chains reveal some menu-segment potential. Niches like bakery cafés, fresh Mexican, and so-called "better burgers" are already well represented by leading brands such as Panera, Chipotle, and Smashburger. However, the ongoing success of these brands, as well as the reasons that consumers like them, indicate that there still may be plenty of opportunity in those menu segments. In the ranks of the fastest-growing fast-casual chains with less than meal replacement" and "adult fast food." Chains such as Fuddruckers, Au Bon Pain, and Taco Cabana featured food, atmosphere, and prices that were a step above quick service, in an efort to ofer casual-dining quality in a limited-service setting. In the 1990s, fast-casual concepts such as Boston Market, la Madeleine Country French Café, and Einstein Bros. Bagels raised the bar on convenience and efciency, which made them even more competitive with quick service. Troughout the segment's evolution, some concepts have adapted to remain relevant, and others have not. FASTEST-GROWING FAST-CASUAL CHAINS Today, leading fast-casual chains have built on the Ranked by unit increase 2011–12 strengths of their predecessors but have continued to stay ahead of consumer demands for comfortable and Rank Chain Name 2011 Unit 2012 U.S. Increase Units contemporary décor, fresh and better-for-you food, and social consciousness. 1. Jimmy John's Gourmet 231 1,560 Sandwich Shop Looking ahead, there are several areas where tomorrow's leaders will differentiate themselves. 2. Chipotle Mexican Grill 174 1,399 Leading chains are capitalizing on their successful 3. Panera Bread 163 1,643 formulas to create new concepts. For example, Chi4. Five Guys Burgers 142 1,060 potle's ShopHouse Southeast Asian Kitchen features and Fries the company's proven format ofering customization 5. Panda Express 133 1,533 of high-quality ingredients, applied to Vietnamese, Malaysian, and Tai favors served on rice, noodles 6. Firehouse Subs 92 569 and bahn mi. 7. Dickey's Barbecue Pit 82 285 Fast-casual leaders are looking at ways to enhance 8. Which Wich 80 235 varying points of service. On one hand, Panera and McAlister's Deli are testing drive-thrus to up the 9. Jersey Mike's Subs 77 584 convenience factor. At the other end of the spectrum, 10. Einstein Bros. Bagels 59 685 Wingstop has debuted a casual-dining concept, WingTotal 1,233 9,553 stop Sports, with a sports-bar-and-grill atmosphere, Source: Technomic, Inc. company reports plenty of HD TVs, and a full food and drinks menu. CCIM.com % Change 17.4% 14.2 11.0 15.5 9.5 19.3 40.4 51.6 15.2 9.4 14.8% November | December | 2013 23