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Fast Casual Dining is Hitting the Sweet Spot
June 9, 2022
An estimated 90,000 restaurants shut down, and 5.9 million workers lost their jobs.
But as Michael Scott would say, ‘Well, well, well. How the turn tables…’
The dining consumer has snapped back. Mentions of going to a restaurant are trending +30% YoY, the highest point since Spring 2020.
|U.S. Census data released in May showed restaurants continued to grow their share of spending in April, reaching 54.9% of the food dollar. The April figure is an all-time monthly high for the industry. |
But there’s a particular segment of the restaurant sector that is outperforming: Fast Casual.
The chart below segments mention volume growth for each food-service type (sit-down, fast-casual, fast food) in the LikeFolio ecosystem, so we can analyze sector performance.
|It’s clear that fast-casual names are building momentum with consumers. |
Cheaper and quicker than a sit-down restaurant experience, and higher quality vs. fast food, fast-casual options appear to be the sweet spot for consumers in a high inflation environment.
Companies such as Shake Shack and Fiesta Group are performing well in the LikeFolio universe, but Chipotle, which recently announced it will accept cryptocurrency payments in the US, is shining.
|Here is what is driving Chipotle’s relative out-performance: |
Burritos are Hot…and Customizable.
|The number of consumers talking about Mexican cuisine is rising for the third period in a row. |
After a drop-off over the last few years, Mexican food mentions are trending +10% QoQ and +34% YoY.
Aside from being a trendy cuisine, Chipotle’s customizable menu options allow for easily personalized diet recommendations – for high protein followers and vegan dieters alike.
Consumer Buzz is Gaining Steam
|Overall Consumer Mentions of Chipotle are on the rise, pacing +16% YoY. |
In its first-quarter earnings report, the company said it saw very little resistance to price rises which were up around 10% compared to the year-ago period, demonstrating the strength of the sweet spot between fast food and sit-down restaurants.
Demand is Picking Up Momentum
Trending at +3% QoQ and +8% YoY, Purchase Intent Mentions for Chipotle are steadily gaining momentum.
Helped by the inflationary environment, and with frugality on the rise (+14% YoY), Chipotle could be the stock to own in a negative economic environment.