Fast-food is one of the most popular restaurant concepts for consumers. At the same time, there has been an emerging trend of restaurants known as fast-casual and casual dining restaurants that have been gaining in popularity. Consumers today have a wide range of options where they want to go for fast food, or when they don’t want to cook. However, most people may not clearly understand the main differences among the three food service concepts, so let me clarify them.
Quick Service Restaurants
Quick Service Restaurants (QSRs), colloquially known as fast-food restaurants, integrate efficiency into their business, standardizing the way that food is prepared, and streamlining the operations to fulfill food orders within minutes, yet maintaining the quality of the food.
McDonald’s. Subway. Jamba. Dunkin’. Domino’s. Starbucks. Burger King. KFC. We see quick service restaurants on a daily basis on every street corner. They are some of the biggest names in franchising too, with many of these companies growing to thousands of locations and more in America and globally.
As a former QSR owner myself, I am a huge fan of the efficiency that they provide. QSRs are known to serve a limited menu, and the food is usually available for takeout, although seating may be provided. For anywhere between $2 to $7, you are able to enter a restaurant or order take out and enjoy a hot meal and a cool drink. Interestingly, quick service restaurants have been able to scale incredibly well, and you can find a McDonald’s, Starbucks or Subway in almost every country. Whether you are having your coffee or burger in Singapore or in Santiago, chances are the coffee or burger comes with a similar packaging, ingredients and has the same name. The efficiency of the quick service restaurant franchise model has allowed franchisees and operators to take a food concept and scale it efficiently globally.
The first QSRs were created in the 1920s, and White Castle in Kansas was one of the first ever established. Many other food businesses followed the model pioneered by White Castle, but it was McDonald’s and A&W that started the assembly line system. Other popular brands like In-N-Out were created in the 1940s, and they popularized the drive-thru that allowed people to order food through an intercom system from their car.
A modern success story is Chipotle that grew to over 500 locations by 2006. They succeeded by rebelling against the typical lower price structures of other QSRs, had expanded menus, and raised their overall operational efficiency by prioritizing top-quality, local produce, higher-priced all-natural and humanely-raised meats, and well-designed restaurants. They also challenged the fast-food status quo by paying employees more than its competitors.
Fast-casual is the latest concept in restaurant dining, and is a blend between quick service restaurants and casual dining restaurants. Fast casual restaurants are typically defined as limited-service concepts that offer more service, have a slightly higher price point than QSR and offer what’s perceived as higher quality food. In terms of service speed and efficiency, it is considered to be slower than a true QSR but faster than a traditional restaurant.
Panera Bread. Five Guys Burger and Fries. Jimmy John’s Gourmet Sandwich Shop. These are some of the leaders in fast-casual restaurants. The newer players included Halal Guys, Curry Up Now, Tin Pot Creamery, and more.
By definition, it is a restaurant found primarily in the US that does not offer full table service but promises higher quality food than other fast-food restaurants with less frozen or processed ingredients. As an intermediate concept between fast-food and casual dining, they are usually priced accordingly. On the average, fast casual restaurants use better food ingredients, have a high price point of between $5 to $12, and generally serve customers looking for healthier food choices. They also offer a more upscale or trendy feel with options such as food trucks, organic food options and updated menus.
The fast-casual niche is booming. According to Technavio, the market for fast-casual fare is expected to hit $66.87 billion by 2020. There are many new players entering the market on a weekly basis, and there are also many investment and private equity funds who are financing the growth of these food concepts.
Casual Dining Restaurants
Casual dining restaurants, as compared to quick service restaurants and fast-casual restaurants, have a more upscale setting, feel more like a restaurant and often have more elaborate menus. It is also more common for consumers to dine in at a casual dining restaurant as compared to other restaurant concepts.
Some popular casual dining restaurants include TGI Friday’s, Chili’s Grill & Bar, Applebee’s, Buffalo Wild Wings, Outback Steakhouse, and more. The price point also tends to be higher, starting from around $12 and up. If you look at the menu of a TGI Friday’s, for example, you will find that the items go well beyond the limited QSR handheld foods. They will include more options that require utensils other than your hands, and also include more beef, fish, poultry and salad options. In addition, many casual dining restaurants also serve alcohol, which is not as commonly found in other food service concepts.
The ambience and set up of casual dining restaurants also tend to be more elaborate as compared to quick service restaurants. Operators will usually invest more money and resources in setting up the correct ambience and providing the correct experience for diners who could be dining in for up to an hour as compared to a quick service restaurant. At food concepts like Applebee’s, there is also commonly a lot of wood and millwork, custom lighting and oversized booths combined with tables and chairs made of similar upscale materials.
All three food concepts have its similarities and differences, but as each type of restaurant is booming and growing, it is increasingly great news for the savvy consumer who will be able to choose from a wide range of food options based on her budget, food preference and time. In particular, the fast casual dining concept is growing rapidly, whereas the quick service restaurant is a more established one with many global franchise players like McDonald’s and Subway that have been around for a long time.
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Desmond Lim is co-founder and CEO of Workstream, an automated hiring platform for companies hiring hourly workers. He is a graduate of Harvard and MIT Media Lab, former product manager at WeChat, and investor at Dorm Room Fund. He is based in San Francisco and lived in Palo Alto with his wife and two young daughters.