QSRs Look to Beat Fast-Casual Brands by Joining Them

NATIONAL REPORT – With competition on the rise, an increasing number of top quick-service restaurant chains are trying to fend off fast-casual brands by evolving their offerings to retain market share, according to a Nation's Restaurant News report. McDonald's Corp., Pizza Hut Inc., Domino's Pizza and KFC Corp. are among those that are experimenting with service attributes more commonly associated with the fast-casual segment.

"Those four brands, or any quick-service brand really, would all love to have the demographics of the fast-casual customer," said John Gordon, principal of San Diego-based Pacific Management Consulting Group. "They tend to be higher income, dine out more, and be more social and food-oriented."

However, while combining fast-casual service methods with the existing features of quick-service restaurants could make them more relevant to consumers, franchise-based companies must consider whether to roll them out chainwide or by units or regions.

Some of the evolved offerings include:

• McDonald's -- The chain began testing customizable, build-your-own hamburgers in California and Illinois last year. President and CEO Don Thompson discussed what it could mean for customer awareness during McDonald's fourth-quarter earnings call.

  "Customers don't realize to the greatest extent that at McDonald's, we are making that sandwich, preparing that in the back-of-the-house after you place that order," Thompson said. "What does this mean? It means that…awareness the customers have about who we really are as McDonald's and what we are able to deliver in that kitchen, which is a customized sandwich, [is lacking]."

• Chief Operating Officer Tim Fenton added that the company is monitoring the pace and rate of new products in order to train employees on preparation to avoid the potential slowdown that could come with increased customization.





 
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• Pizza Hut -- Earlier this month, Pizza Hut announced the opening of two fast-casual-style locations that offer pizza by the slice. A company-owned site in York, Neb., seats 80 customers and also offers made-to-order salads and sautéed pastas, while a Pawtucket, R.I., franchised location seats around 30, is known as "Del-Co Plus" and includes by-the-slice as an addition to its prototype based around delivery and carryout.

  "We pay attention to our consumer trends, one of which is them seeking a quick on-the-go option, and one of our solutions for that is pizza by the slice," said company spokesman Doug Terfehr.

• Domino's Pizza -- This chain is going all-in, having recently announced plans to remodel all of its domestic locations to its "pizza theater" prototype style by the end of 2017. These units offer better sight lines into modern-looking dining rooms, which will have more views of the pizza production line. The change is intended to reinforce the improved quality of the company's pizza.

  "The most important definition of fast-casual…to my mind, is giving consumers what they want today vs. what you built your business around 25 years ago," said Chief Executive Patrick Doyle. "There was one thing that wasn't completed yet for Domino's, which is that you've got to have a better-looking restaurant."

• KFC -- At some point this year, KFC plans to open a second unit of its fast-casual "KFC eleven" prototype, which features flatbreads, salads, sandwiches and wraps, along with its Original Recipe Boneless chicken, to be prepared on a customization line. The company also opened another similar prototype, KFC Select, in December.

  Company officials described KFC eleven as an "innovation restaurant" where the company can test new service styles and menu items.