The fast casual segment of the restaurant industry is having a tough year so far with the latest edition of the BDO restaurant industry benchmarking update showing that sales through the first quarter of this year declined 2 percent in that category.
According to an article covering the finding of the report dubbed The Counter, cost of sales for the fast casual QSR segment hit an industry high during the first quarter to 30.2 percent. While that spells doom and gloom for a ton of fast casual restaurants, there were some shining stars, including Chipotle, a restaurant that in the past struggled over a food poisoning outbreak. The QSR report found Chipotle had a 17.8 increase in the first quarter after suffering a double-digit sales decline. According to BDO, Panera Bread was also up, posting a 5.3 percent increase during the first quarter. The chain, which is being acquired by Krispy Kreme owner JAB Holding for $7.5 billion in cash, announced this year more commitments to delivery as well as improved kiosk ordering.
Among the decliners, The Counter found that Pie Five, Pollo Tropical, and Qdoba reported negative same-store sales of 15.8 percent, 6.7 percent and 5.9 percent, respectively. Shake Shack’s sales fell 2.5 percent in the first quarter, a number for which the brand blamed unfavorable weather. In the pizza segment of fast casual growth was 3.9 percent with Domino’s topping the list of gainers for the tenth quarter in a row. Higher-end casual, otherwise referred to as upscale casual, saw an increase in the first quarter of 0.2 percent. Restaurants Eddie V’s Prime Seafood and J. Alexander’s reported 4.7 percent and 3.5 percent growth, respectively, noted the report.
“Rising guest counts attributed to both eateries’ positive momentum. J. Alexander’s also cited early success in two new restaurants during Q1, favorable beef prices and higher average customer checks,” BDO said in The Counter. Meanwhile, BDO reported fast casual dining saw sales decline 1.4 percent. Prime costs were also highest in the segment at 61.3 percent. Labor costs also topped the list at 33.3 percent, noted the report.