Although "fine casual" isn't a term that has really caught on yet, growing chains such as Fresh to Order may be doing for fine dining what fast casual did for fast food. But is this a trend that will change the way we look at how fine food is seen and served, or is it simply a fad, a bit of fancy nomenclature hitching its wagon to fast casual's rising star?
Fresh to Order, or F2O, as it calls itself, is a chain of eateries in the Southeast U.S. that says it wants to bring fine food to the masses. How gauche! With restaurant traffic still in a months-long swoon, however, everyone feels the need to change things up, but fast-casual concepts have been the one bright spot in a otherwise fairly dismal space. Although Yum! Brands may have started the more upscale KFC eleven chicken joint to satisfy its envy of industry successes like Chipotle Mexican Grill (NYSE:CMG) and Panera Bread, we are starting to see fine-dining restaurants dabble in going downmarket. For example, Ruth's Hospitality Group's signature steakhouse chain is offering a "Sizzle, Swizzle, Swirl Happy Hour" bar menu featuring items that cost much less than its usual entrees in an effort to entice first-time and younger customers.
But is there more to fast fine than just cutting prices? F2O, which says it threw open the doors to this new dining category, maintains that what keeps it from being more than just a glorified Chipotle or Panera is not only the quality and freshness of its offerings, but also where the food is sourced and how it is prepared, along with the service you receive.
Customers at any typical fast-casual restaurant approach the counter, choose from a selection of fresh but already prepared ingredients, grab the food, and go. Not so at F2O, where you're greeted at the door, just like at better restaurants; order at the counter; and then watch as the food is immediately dropped on open-flame grills behind the registers. Servers then deliver the food to your table and clear your plates after the meal is eaten. And it gives you this experience for about $10.
Fast fine, then, might be seen as a pay grade higher than Chili's and Applebee's but a step below a Morton's The Steakhouse or Darden Restaurant's Capital Grille.
It was similar for fast food when Chipotle and Panera kick-started the movement toward fresher ingredients, pleasant surroundings, and affordable prices. Because the typical fried or flame-broiled frozen fare was seen as unhealthy, the trend immediately caught on with a dining public that was increasingly worried about what it was eating. Whereas McDonald's (NYSE:MCD) has seen its monthly same-store sales steadily decline, Chipotle is watching them steadily grow.
Yet with success comes imitators, like the KFC project mentioned above. There are also pizzerias that think they can do for the slice what Chipotle did for the burrito, as well as new IPOs such as Zoe's Kitchen, which is adding a Mediterranean flair. The fast-casual segment is getting crowded, and perhaps that's partially to blame for Panera stumbling in the last quarter. Earnings fell 3% year over year and missed analyst expectations by a penny per share. Revenue of $589 million was down more than 7% from 2013's second quarter and missed by a wide mark Wall Street's forecast of $640 million.
This possible dilution in the fast-casual space from a growing number of players may just mean that fast-fine restaurants like Fresh to Order could be the next growth spot. Unlike fast food, though, fine dining isn't a lingering wound.
According to the industry watchers at NPD Group, fine-dining establishments have recorded some of the strongest traffic gains in the restaurant industry, rising 4% for the 12-month period ending in May compared to the year-ago period. That's better than the midscale eateries and casual-dining chains, which saw traffic fall 2% and 3%, respectively. Quick-serve was essentially flat, but that's only because of the strength of fast casual, as fast food remains on the decline.
What may really set Fresh to Order apart is the lack of customers having to pay a gratuity at the restaurants. Maybe you're not getting white-glove service, but you're getting quality healthy food, relatively cheap and relatively fast, with better service than you'd find at a fast-casual chain.
Maybe that does make it just a glorified Chipotle or Panera Bread, but if upstarts like F2O are growing and grabbing share, this could be the next growth opportunity in the restaurant industry that will force other fine-dining chains to move into fast-fine dining as well.