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Must-know: Why restaurants are so important to investors

Part 5
Must-know: Why restaurants are so important to investors (Part 5 of 11)

Key restaurant industry formats: The fast-casual business

Fast-casual

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.

2014-07-07 Year Ended 2013 Sales ($ in Billion) Fast CasualEnlarge Graph

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.

The players

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.

Family dining

In the next part of this series, we’ll look at the family dining restaurant format.

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