Fresh ingredients, no tipping and sleek design made fast-casual restaurants a darling of the millennial customers every business strives to attract, but Bloomberg reports the hot streak is now over. The category’s once-enviable growth looks like it’s hit a plateau.
This year, U.S. fast-casual sales growth will slow to between 6% and 7%, down from about 8% in 2016, according to industry consultant Pentallect Inc. In each of the prior five years, sales had grown between 10% and 11%.
“The segment has become saturated and has some issues,” says Bob Goldin, a Chicago-based Pentallect partner. “There are signs of maturity.”
There’s turmoil throughout the industry. Noodles & Co. and Pie Five, which sells personalized pizzas, are closing locations. Red Robin Gourmet Burgers abandoned its fast-casual Burger Works venture, shuttering outlets and re-branding others. Mexican-food seller Qdoba is delaying new openings amid falling sales while Zoe’s Kitchen has posted slower growth lately.
The fast-casual genre got rolling in the 1990s, with Boston Market, Fazoli’s and Einstein Bros. luring diners with convenient and affordable meals that were a step above fast food. More chains popped up, many of them went public, and stock prices skyrocketed. But better-quality fast food for less money, companies that push cook-it-yourself meal kits and the homelike comfort of mom-and-pop restaurants are taking a bite out of sales.
