Is This the End For Fast Casual Dining?

2016 hasn’t exactly been the best year for the restaurant industry. According to data put out by NPD Group, restaurant traffic fell flat in Q1 and stayed pretty much the same throughout Q2. These declining numbers were especially bad news for the fast-casual segment, which, at this time last year was experiencing explosive growth. 

Many are pointing the finger at Chipotle and its highly-publicized food safety troubles for the 3 percent fall in fast-casual traffic during Q2. However, even taking the Mexican food chain out of the equation, numbers show this segment still only saw a 2 percent growth in Q2, compared to 11 percent at the same time in 2015. 

So why the decline then? Bonnie Riggs, NPD Group's restaurant industry analyst, believes the economy is playing a big role in changing consumer behavior when it comes to their dining decisions. 

“Contributing to the stalled visit growth are consumers' uncertainties about current and future economic conditions,” she said in a press release. These uncertainties, which are putting a damper on consumer spending, coupled with many restaurants increasing menu prices, is making for an unfavorable situation in the fast-casual segment. 

With higher prices at restaurants like Chipotle and Panera Bread, customers are eating out less. In fact, according to NPD, lunch traffic fell by 4 percent in Q2. 

"It's political, concern about the economy. It's uncertainty, food safety, social unrest," Riggs told Nation's Restaurant News (NRN). "But probably the biggest thing is sticker shock."

Luckily, it’s not all bad news for fast casual brands with Riggs noting the research showing some positives, as well. “Consumers made 61.3 billion restaurant visits this past year," she said. "It's true that in this flat market it's a battle for visit share but there are restaurants that are winning. The winning operators focus on their customers' needs and deliver on them.” Read more