Fast casual restaurants saw their high-growth track record come to a screeching halt in 2020. The pandemic and large influx of Americans working from home severely hurt their core lunch business and dine-in business overall. However, fast casuals are nimbly launching innovative off-premise services to adapt and will see a much quicker recovery than their full-service restaurant counterparts as a result. This recovery will be further boosted by consumers increasingly trading to fast casuals from higher-priced or lower-quality concepts during the recession.

• The impact of COVID-19 on consumer behavior and the fast casual restaurant industry.

• The recessionary impact on fast casual restaurants.

• How fast casual restaurants can combat a loss of customers due to increased work from home.

• How fast casuals are competing in areas that span beyond the current pandemic, including sustainability initiatives and special diet-friendly menu innovation.

This Report will examine consumer attitudes and behaviors toward the fast casual dining segment. This Report also is unique in that it contains consumer survey data from two separate surveys fielded in February 2020 and August 2020 to be able to compare consumer behaviors and attitudes toward fast casual restaurants both before and during the pandemic. This Report builds upon previous Reports with this title from 2019, 2018, 2017, 2016, 2013, 2012, 2011 and 2010.

For the purposes of this Report, Mintel has used the following restaurant definitions:

• QSRs (quick service restaurants) – Used interchangeably with “fast food,” QSRs specialize in inexpensive, convenient meals. There is no waiter service, no alcoholic beverages, and a low price point. Examples include: McDonald’s, KFC, Taco Bell, Wendy’s and Pizza Hut.

• Fast casual restaurants – These establishments are characterized by a higher price point than QSRs though not as high as full-service restaurants. Fast casuals do not offer waiter service and may or may not serve alcohol. Examples include: Chipotle Mexican Grill, Panera Bread, Shake Shack and Blaze Pizza.

• LSRs (limited-service restaurants) – These establishments provide food services where customers usually select and order items and pay before dining. Food/drink may be consumed on the premises, offered as carryout or delivered to the customer’s location. These may also sell alcoholic beverages. LSRs include both QSRs and fast casual restaurants. The “other” category within LSRs, as seen in the Market Size and Forecast, includes snacks and non-alcoholic beverage bars, cafeterias, grills and grill buffets.

• FSRs (full-service restaurants) – These establishments have waiter/waitress service and customers order and are served while seated. These may also sell alcoholic beverages and offer carryout services and include the following restaurant segments: casual dining, family midscale and fine dining. See definitions below:

• Casual dining restaurants – These establishments represent the largest segment of the FSR market. Casual dining restaurants have higher pricing than family midscales but lower than fine dining, and they offer a full bar. Examples include Chili’s Grill & Bar, Olive Garden and Outback Steakhouse.

• Family midscale restaurants – These establishments offer the lowest check size of any FSR. A majority of family midscales do not serve alcohol, though some may have a limited alcohol selection (ie beer, wine). Family midscale examples include Denny’s, Cracker Barrel and IHOP. Buffet restaurants are classified as midscale restaurants (eg Golden Corral).

• Fine dining restaurants – These establishments have the highest price point of all FSRs.

The first COVID-19 case was confirmed in the US in January 2020. On March 11, the World Health Organization declared COVID-19 a global health pandemic; on March 13, President Trump declared a national emergency in the US. 

Across the US, state-level stay-at-home orders rolled out throughout the months of March and April, remaining in place through May and in some cases June. During this time, referred to as lockdown, non-essential businesses and school districts across the nation closed or shifted to remote operations, which meant restaurants suspended dine-in service and only sold foods and beverages for takeout or delivery.

During reemergence, all 50 states have relaxed stay-at-home orders and allowed businesses to operate with varying levels of social distancing measures in place. The continued spread of COVID-19 infections has driven some states to slow down or reverse course on reopening plans, including the resuspension of dine-in service in select cities in Fall 2020. Mintel anticipates the US will remain in a state of flux through 2021, until a vaccine is available.

This forecast and subsequent Report assumes that:

• Consumer expenditure on hotels and restaurants is estimated to decline 12.7% in 2020 but rebound 7.4% in 2021 and continue to grow through 2025.

• Personal disposable income will increase an estimated 3.1% in 2020 but is forecast to remain in the 2-3% growth range over the next five years, which is much lower than the prior five years.

• The US unemployment rate is estimated at 8.5% in 2020 – comparable to rates during the Great Recession – and it’s not set to recover to 2019 levels in the next five years.