Fast-casual restaurants are a hybrid of fast food and casual dining restaurants. Fast-casual restaurants offer minimal table service. The menu is limited and moderately priced. Panera Bread (PNRA) has an average menu price of $8 to $15. Unlike fast food restaurants, fast-casual restaurants still have room for growth.
People like fast-casual restaurants for the high-quality food and the affordable price points. Chipotle Mexican Grill (CMG) emphasizes that it’s the high-quality food and hand-held characteristics that make fast-casual a fast-growing trend.
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Food at these restaurants is usually prepared fresh, with high-quality ingredients. Chipotle Mexican Grill (CMG), for example, sources its ingredients from local producers. Menu items can be customized at the counter.
Chipotle Mexican Grill (CMG) had sales worth $3.21 billion as of fiscal 2013. Panera Bread (PNRA) had a sales worth $2.38 billion. Einstein Noah Restaurant Group (BAGL), which operates the Einstein Bros. Bagels, Noah’s New York Bagels, and Manhattan Bagel Company brands, had sales worth $0.43 billion over the same period. Other fast-casual restaurants include names like Qdoba Mexican Grill, Noodles & Co (NDLS), Potbelly (PBPB), and Quiznos Subs. You can gain exposure to the restaurant industry through the exchange-traded funds PEJ and PBJ.
In the next part of this series, we’ll look at the family dining restaurant format.