What Makes these Fast Casual Innovators the Best in the Business

Fast casual is a term I coined in the mid-’90s at the time to create a way to identify the segment compared to the bulky titans of fast food and casual dining. It wasn't rocket science for me to come up with the term or to even launch fastcasual.com, it was at a time when I saw the culmination of a few strong-minded individuals willing to push the status quo with the right ideas that were starting to connect with an emerging new consumer.

I had the opportunity to meet and work with these fast casual innovators early in my career when I started to see the hidden gems of restaurant brands that they were forging. But the most important aspect that I understood back in the ’90s was not my connection to food, it was my connection to technology consumer adoption and my understanding that technology would someday be the guiding force of the restaurant business.

Fast forward 25 years later and you now have a segment nearing 100 billion in sales and almost every aspect of communication is referring to the term I coined back in the ’90s. My observation and study of the segment, the consumers, the trends and the leaders still drive my curiosity today. If you have not had a chance to check out the documentary Fast Casual Nation, be sure to check it out on Amazon Prime here!

Join me in The Barron Report episode above as I break down some of the pioneers and emerging brand titans of the fast casual sector as I analyze both the pros and cons of some of the best brands in the business.

The On-Demand Delivery Trends and the Technology Driving Them

The future of on-demand ordering could be summed up to one simple statement– It’s just beginning.

According to Foodable Labs, over 30% of the U.S. Restaurant industry is offering some kind of on-demand third-party ordering solution. Over 80% of consumers under the age of 35 are using on-demand food ordering apps about two times a week, proving the delivery segment has exploded thanks to the new age consumer and their dining habits.

The Big 6 are the lion's share of the market, but our research now shows over 100 on-demand food delivery companies serving the 1.2MM restaurant and food companies in the US.

The breakdown of Engagement and Sentiment tells an underlying story of these companies and how consumers view them and eventually, how restaurant operators may view them as well.

Engagement is scored by an analysis of how often consumers mention the use of the app or service on social along with an analysis of the Sentiment of the service based on food delivery speed, quality, accuracy.

The Engagement and Sentiment Scores of the Leading Third-Party Delivery Companies

According to this data, the Best Quality goes to the company Caviar. As the leader in the Sentiment area of Quality, this may be based on great service, but the company also recently acquired by Square. Remember Square is also a POS company and is tied to transaction-based business models. Recently Caviar added a spotlight that says "who's making your food" and has labels like women-owned restaurants. The overwhelming support by their users has given their consumer Sentiment score a boost.

Best Accuracy: Caviar came through as the leader in this area as well with a unique Sentiment score that showed this as one of the most appreciated aspects of its user base. Caviar's, along with other delivery apps', performance is being measured by the Chicago-based delivery search engine Food Boss, which is being led by the former McDonald's CEO Don Thompson.

Best Speed: Uber Eats takes this slot with what was one of the best Sentiment scores based on the overall app Sentiment. This has little to do with the ordering process and making a restaurant selection, which for most users ties into the overall speed of the order. As they continue to use their technology to analyze user behavior, Uber continues to have the upper hand when it comes to speed that other companies may not be able to pace.

I had a chance to explore one of the technology companies that has created a solution to centralize the on-demand challenge of being listed on multiple platforms mainly for discovery.

Ordermark has created a solution to centralize the in-store technology to create a more seamless integration into food operations which over time has become one of the most challenging aspects of the on-demand food ordering explosion.

Every restaurant operator understands discovery is the key to success and the solution in today’s world is not Facebook or Twitter, instead, it's being on as many on-demand platforms that you can handle. Alex Canter, CEO and founder of Ordermark and I discuss the growth aspects of the company and the delivery sector, as well as technology and operational challenges of the future of on-demand food ordering and where it might be heading.

Maryland is On Track to Ban Foam Plastic Packaging

Maryland could be the first U.S. state to ban plastic foam, food containers made from polystyrene. Lawmakers in both chambers of the state legislature have passed already bills banning this type of packaging.

Foam plastic, which is used to make a popular type of food container used by operators all over the world, is one of the least eco-friendly materials. Since it lacks durability, it often breaks into many pieces and ends up in waterways and streets.

“I’m thrilled to be a part of the effort to stand up for our waterways, stand up for our neighborhoods, stand up for the world our kids will inherit,” said Del. Brooke Lierman, the sponsor of the House of Delegates version to "The Sun." 

Shutterstock

Shutterstock

However, the two chambers have to come to an agreement on a bill and then it has to be approved of Republican Gov. Larry Hoga. If he does sign off on the bill, the ban would be put in effect July 1, 2020.

Establishments that violate the law could be fined up to $250.

Not everyone is in support of the bill though. Many argue that it imposes an additional financial burden on restaurant business owners who already have low-profit margins.

"Not only will costs go up for restaurants and be passed onto consumers, but because comparable products weigh more and many cannot be recycled, costs will increase due to higher tipping fees (based on weight) at landfills," said Cailey Locklair Tolle, president of the Maryland Retailers Association to "CNN."

Learn more about Maryland's pending ban on plastic foam containers in this recent episode of The Barron Report above.

Uber Eats Rolls Out New Fees Prior to Suspected IPO

Third-party delivery services emerged as a much-needed solution for restaurant operators. These services have made it easier for brands to offer delivery to consumers that are starting to expect this convenience.

But as more operators use these services, the more the fees increase and these fees cut into profits. Uber Eats, for example, takes a 30 percent cut, plus the platform also collects a $4.99+ delivery fee from the customer.

But operators aren't the only ones investing in these delivery apps. Now that Uber Eats has established a loyal customer base, the company is rolling out a new fee structure.

Instead of just a booking fee, this fee will be divided into two fees a service fee and delivery fee. The delivery fee will vary based on the restaurant and the service fee will be 15 percent of the order. On orders of $10 or less, there will now be a small order fee.

Shutterstock

Shutterstock

"Since Uber Eats doesn’t keep a comparison of its old booking fees up on the app, customers are understandably confused about whether prices have gone up or not," writes "The Verge."

However, it's definitely a move by Uber to increase profits.

“We’ve seen a number of changes to the fee structure on Uber Eats over the past year which tells me they’re experimenting and trying to figure out the best way to get profitable on this service," said Harry Campbell, a former Uber driver and author of "The Rideshare Guy" blog.

Uber Eats is expected to IPO in April, so it's not surprising that the company is looking to maximize profits. The food delivery service is the largest growing sector in Uber's portfolio.

Want to learn more about these new fees and the impact they will have on the restaurant industry? Host Paul Barron is breaking them down in the latest episode of The Barron Report above.

Shake Shack Leads the Way with Local Sourcing by Partnering with Craft Beef Curator Crowd Cow

The future of the fast casual segment is quickly becoming a race to the farm!

More and more brands are seeking solutions that are starting to shift the supply chain integration on how they go to market with new menu items and new approaches when it comes to handling the demand of the new age consumer.  

Shake Shack, for example, has been one of those pioneers in bringing local products and connections to their burgeoning brand that experienced a 28% growth in total sales in 2018

According to a recent study by Foodable Labs, both local and better-for-you food items are key trends that are rising in a specific group of consumers in the 25-34 demographic. These consumers are seeking more local menu items vs other demos. They are also ordering more better-for-your menu items. There are three very clear demographics fueling the better-for-your menu demand. The18-34 demographic is leading the way and the 55+ is trailing slightly showing this trend is on a clear track to impact brands over the next decade in key spending demographics of Baby Boomers and the Gen Z and Y consumers.

Percent of Conversations

Total Conversations around local menu eclipsed 318K in the past six months with Better for you hitting over 422K in the same time period. (source foodablelabs.com)

Shake Shack is taking this queue from consumers seriously with their partnership with the Craft Beef curator Crowd Cow, a company focused on bringing local farmers and their artisan proteins to the foodservice markets.  

In my conversation with Jeffrey Amoscato, vice president of supply chain and menu innovation at Shake Shack and Joe Heitzeberg, co-founder at Crowd Cow in the video above they clearly were on the same page in reaching the new consumer with a whole new strategy for locally sourced beef. As we see emerging brands looking to improve this sector of their menu and supply chain you can get a clearer picture of what you’re up against in this episode.  

Make sure to reach out to us if you have a show idea or you have a recommendation for guest on one of our Foodable Network shows! Or tweet me @paulbarron!