Here’s Why Fast Casuals Flourished During the Pandemic

The channel had the tools to know its customers and draw them in before COVID-19.

February 10, 2022

Panera Curbside Pick-Up Sign

ALEXANDRIA, Va.—Fast casuals laid the foundation to survive and thrive during the pandemic, reports QSR Magazine. Though fast-casual visits were down during the peak of the 2020 lockdowns (-23% in the quarter ended June 2020), by year-to-date August 2021, they had risen 8%, and traffic was flat on a two-year basis.

What was their secret to surviving a global pandemic that caused many businesses to take big hits or close permanently? Fast casuals leaned in on the tools that were already part of their business model to effectively reach their customer—think digital ordering, loyalty, pickup and drive-thrus.

Off-premise ordering for fast casuals was up 30% in the year ended August 2021 over the previous year, representing more than 80% of traffic. Pre-pandemic, off-premise ordering was about half of the category’s traffic.

In 2017, Shake Shack launched its mobile app, and QSR says that its digital business could best be described as “nascent” in 2019. The majority of Shake Shack’s customers walked into the restaurant and ordered from a cashier.

“However, these earlier investments in app and web allowed us to leverage digital to quickly navigate and scale this business,” Shake Shack CFO Katie Fogertey told QSR. By the second quarter of 2020, Shake Shack’s digital sales went 15% just a few months prior to 75% of total sales, and grew more than threefold, year-over-year, according to QSR.

“Many of the fast pivots in the early days of the pandemic soon became permanent functions, including implementing multi-channel delivery, enhancing digital pre-ordering and expanding our fulfillment capabilities,” Fogertey said.

According to the CEO, Shake Shack’s digital business was increasing so much that it launched “Shack Track,” which is a digital pre-ordering and fulfillment experience that includes pickup shelves, curbside, pickup windows, multi-carrier delivery and, more recently, drive-thru.

“The need to enhance and alter the physical restaurant to meet the needs of digital is so important to Shake Shack that today, nearly all new restaurants we open have some aspect of Shack Track,” Fogertey said.

Focus Brands, which is the parent company of Moe’s Southwest Grill, McAlister’s Deli, Cinnabon, Auntie Anne’s, Carvel, Jamba, Schlotsky’s, told QSR that one of the many benefits of having the sharp increase in digital ordering was that the company could measure business more effectively and understand which customers engage in which channels.

“We’ve made the pivot, but now we’re in a place where we’re sitting on a treasure trove of data. And we need to make sure that we’re driving our brands forward, that we’re putting that to use, that we’re using that data to make smart decisions to drive our brand’s performance and that customer engagement,” Claiborne Irby, Focus Brands senior vice president of customer engagement and strategy, told QSR.

Accessibility and customization are consumer expectations now, he adds.

One way to leverage customers’ data is through a loyalty program. There aren’t many fast casuals who do not have some form of loyalty incentive. Panera Bread is famous in the fast-casual channel for its loyalty program, which is subscription based and focused on unlimited coffee and hot tea for $8.99 a month plus exclusive rewards for subscribers, but many subscribers don’t leave the restaurant with just a cup of coffee because Panera is focused on the cross-sell and the upsell. It’s also a simple and transparent loyalty model.

Chipotle is another loyalty champion. Before COVID-19, Chipotle had fewer than 10 million rewards members, and by December 2021, there were 24.5 million.

NACS Daily reported that loyalty programs boost visits and spend for retailers. A report by Paytronix Systems Inc. found that most Paytronix loyalty programs consistently boost visits and spend by 18-30% for each program member.

(NACS Magazine dove into loyalty programs and how they can provide convenience retailers with critical consumer insights and a competitive edge in “Just Rewards.”)

Despite the channel’s tremendous success during the pandemic, it’s not immune to the labor shortage plaguing the U.S. economy. QSR says that fast casuals are in a unique spot because their core guest is often younger and more interested in aligning with a brand they believe in than some larger corporations. Fast-casual brand Cousins Subs leaned into this notion and see retention instead of recruitment as its battle strategy in the tight labor market.

Cousins increased wages, invested in retention bonuses and made it easier to apply for jobs. Managers conduct quarterly check-ins with hourly employees and teams hold daily huddles.

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