Food Franchises and Restaurant Franchises are designated as either Quick Service, Casual Dining, Upscale Casual, Fine Dining or Fast Casual formats. Which restaurant format is trending in 2017?
If you’ve been researching food franchises, you may not have heard of the fast casual format. Essentially, fast casual is a blend of fast food and casual dining with a menu that features healthier, fresher, high-quality ingredients.
First quarter 2017 Restaurant Performance
Restaurant sales continued to struggle in March. Same-store sales dropped 1.1 percent while traffic dropped 3.4 percent. That’s a slight improvement over February 2017, but same-store traffic in the first quarter dropped 3.6%.
The average restaurant check in the first quarter was up 1.9 percent which is trending lower than the average 2.3 percent growth for all of 2016.
Upscale Casual Restaurant Trending Up in the First Quarter
Upscale casual restaurants typically have tablecloths, trained waitstaff and a full bar. They differ from fine dining restaurants which offer a good bar, signature cocktails, and fine wine. If you’re looking to be pampered, you’ll want to reserve a table at a fine dining establishment.
Upscale restaurants showed the strongest performance in the first quarter 2017. Fine dining and quick service restaurants were second and third respectively.
Family dining and fast casual restaurants were the weakest segments in quarter one.
The Restaurant Formats
Fast Food or Quick Service Restaurants (QSR)
Fast Food or Quick Service (QSR) are most often described as food concepts like McDonald’s, Taco Bell, Burger King, Jimmy John’s franchise, Subway franchise, and sandwich shop franchises that serve somewhat healthier food and get you on your way in less than 5-minutes.
The fast food restaurant franchise serves food for less than $5 per meal, have somewhat mediocre food quality, and has limited menus with no table service.
Casual Dining Food Franchises
Casual Dining restaurants typically serve food under $15 per meal with a fairly diverse menu and healthier choices than fast food restaurants.
Casual dining restaurants include TGI Fridays, Applebees, Red Robin Gourmet Burgers, P.F. Chang’s and Russo’s New York Pizzeria. Russo’s New York Pizzeria was voted the Best Fast-Casual Brand 2017!
Fast Casual Restaurants
Fast-casual restaurants are a combination of fast food and casual dining. The food is more upscale and offers a diverse menu than say Chipotle Mexican Grill. A good example of a fast casual restaurant is Panera Bread. Panera has no table service to speak of. You place your order at the front counter and then food is placed in an assembly area for you to pick-up.
Staffing Food Franchises in 2017
Finding qualified employees to staff your restaurant franchise is a concern. Managers and cooks and waiters can be hard to find and keep. Turnover in the restaurant industry is high. In fact, turnover for hourly restaurant employees as well as managers is higher than they have been in over ten years and is trending higher.
You may have to offer additional financial incentives to your staff to get them hired and keep them from leaving. Turnover is costly and can affect customer service.
Which Restaurant Format Should You Choose
As with any investment consider the trend but don’t make your decision solely on what is trending now. Times change, especially if you’re talking about food franchise opportunities or the restaurant industry.
Find food franchises that are emerging year to year. Sometimes the fastest growing food franchises are the first ones to fail. Look for consistency and a low failure rate.
Place a high value on the food experience of the management team. Do they have a successful background with food franchise opportunities or in the restaurant industry as a whole? What is their business plan to achieve consistent growth? Are they choosing winning locations?
As always, do your diligence and then ask questions of current franchisees. Find the best food franchise opportunity for you.