In the fall of 2021, FSR unveiled “NextGen Casual” as a category definer. But it was hardly a novel idea. For years, full-service chains had taken to labeling themselves in hopes of placing some type of proverbial line in the sand. Terms like “upscale casual,” “polished casual,” “elevated casual,” “fine-fast,” “craft casual,” and on it went. The idea was a plain one: “casual dining” had become a blanket descriptor for larger players in the space, from how they operated to what they looked like, but didn’t capture what was taking shape in the middle—a restaurant movement closer to independent restaurants, in terms of food, sourcing, and nuance, yet with the scale, model capabilities, and ambitions of multi-unit chains.
In many respects, it was a long-awaited answer to fast casual. The quick-service disruptor didn’t simply crash fast food and force change from the top down; it also grayed the proposition for full-serves.
Was the food quality in sit-down establishments materially better than fast casual? And if the answer wasn’t so clear all of a sudden, then how could operators justify the added cost of table service? Even before COVID-19, brands had started to solve the riddle through a combination of experience, accessibility, agility, hyper-focused menus, technology, and differentiated designs. The pandemic sped the cycle, and it’s only solidified in the aftermath. Picture higher prices across the foodservice industry and a growing divide between transactional brands and those that are hospitality-driven. As challenging as the dynamic is, it’s uncovered opportunity for brands that lead with the latter to reframe value as “what it’s worth” versus “what it costs.”
MORE: Full-Service Restaurants are Winning the Customer Satisfaction Battle
All said, though, what “NextGen Casual” means going forward remains fluid. Just like fast casual when it landed, or “better burger,” etc., how a brand gets credit for stepping into a fresh space comes down to what guests care most about. And so, FSR and QSR this year commissioned a consumer study with consulting firm King-Casey to develop an understanding of diner wants/needs for the next generation of full-service restaurants. The answers won’t just matter to sit-down chains, however—everybody will be paying attention.
To begin, we set out to assess the relative appeal of five alternative benefit themes for differentiating NextGen Casual restaurants from existing concepts: menu differentiation; technology; health and the environment; non-chain experience; and convenience and comfort.
Nearly 630 people were polled who eat at/from restaurants at least once per month (64 percent visited weekly) and had annual household incomes of $35,000-plus (30 percent reported $100,000 and above). Each survey covered restaurant usage behaviors, reasons for visits and priorities, overall response to one of five NextGen Casual concepts, diagnostic questions to assess attitudes, and relative degree of influenced sponsored by varied attribute/benefit nomenclature.
First, the takeaways:
Restaurant usage behaviors and priorities
Age affects frequency of restaurant use, chain preferences, and types of food consumed in past year. Based on frequency of use, 55- to 69-year-olds are the least desirable segment.
Reasons for restaurant visits, though, are largely independent of age. Consumers have mainly visited establishments for a relaxing meal, to celebrate special occasions, to socialize, avoid cooking and/or to have a particular type of food.
Consumers do not exhibit much, if any, exclusive loyalty to either types of restaurants, specific chains or to specific types of foods. On average, they have, in the past year, visited more than six of the chains studied, consumed more than eight types of foods and have visited fast casuals and quick-service restaurants as well as full-service venues.
Although quick-serves foster the most frequent visits, full-service restaurants earned the highest levels of satisfaction. Interestingly, fast casuals are no more satisfying than quick-service brands.
Providing a relaxed, comfortable atmosphere with physical menus, meals prepared to order, and popular pricing for everyday dining are, by far, the most important considerations for choosing a restaurant to visit. Those benefits are far more broadly desirable than many of the current “hot buttons” for the NextGen themes like technology, health, and the environment and/or limited menus. Nonetheless, there are significant minorities of consumers who find those NextGen themes to be desirable.
A quick editor’s note on the above: Much of the NextGen movement isn’t necessarily tied to recreating what guests expect of full-service dining—it’s to take the hallmarks and do them better/more consistently. That’s where fast casual first threw the quick-service game into chaos. Chipotle reset the bar by taking the pillars of the category (speed and convenience) and bringing them forward with reimagined food quality and more customization than ever. You don’t always have to reinvent the wheel to spin it.
Response to NextGen concepts
Consistent with the earlier findings that consumers like to visit different chains and different restaurant formats, all five of the NextGen concepts studied enjoyed high levels of positive response. On average, more than four of five consumers liked the ideas and would visit them if conveniently located. Largely, broad interest in the concepts can be traced to their common promise of highly desirable benefits—new, full-service restaurant that offers a varied menu with great tasting food, comfortable seating, table service, and a relaxing atmosphere.
Consumers were most attracted to the idea that emphasizes convenience and comfort—satisfied—well-fed and comfortable, better food, and convenient service at affordable prices; in a hurry, want to relax, order ahead, have your order delivered. Almost two-thirds of consumers liked that concept a lot (61 versus 39–51 percent) and more than half claimed they would definitely visit (53 versus 36–47 percent). This concept was particularly associated with dinner meals and was disproportionately appealing to 55- to 69-year-olds.
A slightly narrower appeal was expressed for the concepts that promised menu differentiation (the most innovative, chef-inspired creations) or a non-chain experience (we don’t look, feel, or operate like a chain restaurant). Menu differentiation was also associated with dinners and, particularly, special occasions. Interest in a non-chain experience was particularly expressed by women and consumers with higher incomes.
Least appealing were the concepts that focused on technology or health and environment. It is important to note, however, those concepts still had strong levels of appeal, but to a smaller audience. Notably, both of these concepts were disproportionately associated with dining alone and particularly attractive to men. Interest in the technology theme was skewed to 18–34 year-old single Black men. The health and environment theme was particularly appreciated by 35- to 54-year-old married men with kids living at home.
Another note: One of the secret weapons of NextGen concepts is their ability to flex technology by fit. Customers generally aren’t going to say they want tech in their sit-down experience unless it’s supplementing what they expect of the brand. That’s generally on the restaurant to figure out. So a brand like bartaco and its QR code ordering complements the approach with a team of customer-experience providers in the dining room, running food and answering questions. Other chains might have pay-at-the-table tech and tablets to enable servers to cover more ground and have information at the ready, or KDS systems in the back to boost consistency and open them to a wider labor pool that can train faster. Tech can be invisible, or not, but NextGen concepts find ways to deploy innovation to improve the experience rather than take something away.
For several of the concepts, specific words/phrases evoked positive consumer attention and disproportionately led to interest:
“Convenience” and “comfort”—reasonable prices; freshly prepared foods; foods I crave; good wait staff and/or the promise of saving time.
Menu differentiation—customized food order; foods made-to-order; freshly prepared foods; choices you can’t get elsewhere; limited, but great choices.
Health and environment—healthy items; environmentally conscious/sustainability; organic ingredients.
Although most people (84 percent) were suspicious of the concepts in one or more ways, only a fear of prices being too high (45 percent) was articulated by more than a third of consumers. At lower levels, to varying degrees by concept, consumers, on average, were concerned with portions being too small, the restaurant being too noisy/busy, bland food that doesn’t look appetizing, etc.
Independent of the concepts studied and totally consistent with the foregoing findings, consumers would be far more influenced by words and phrases related to fresh preparation of their meals and/or unique recipes than to the use of healthy, good-for-you ingredients. Here again, however, these data points do not mean that there is not a market for restaurants that cater to the health conscious. But rather, that there would be far broader appeal in flavorful descriptions than to those related to healthful ingredients.
Recommendations and considerations
There is definitely an opportunity for a NextGen class of full-service restaurants built around a common theme of great tasting food with comfort in a relaxed atmosphere. Consumers are ready and willing to try almost any type of new restaurant concept because they like varied experiences as well as varied menus.
Under that overall umbrella there are numerous opportunities that appeal to varying numbers of consumers based on their differential priorities. The broadest opportunity is for full-service restaurants that combine the promise of a relaxed on-premises experience with the convenient efficiency for those in a hurry or with takeout needs—and all at affordable prices. Whether or not this triple-benefit restaurant can be successful from an operations and financial perspective must be carefully evaluated.
Lower, but not insignificant opportunities, exist for new full-service restaurants that focus on menu differentiation or a non-chain experience or technology and/or a healthy, environmentally conscious theme.
There is some evidence that the alternative themes can be disproportionately used to attract specific demographic groups.
Taken together, it is likely that the Next Gen era of full-service restaurants will not be a single-minded, homogeneous group, but rather niche oriented clusters of restaurants targeted to specific/unique consumer need/benefit segments rather than trying to broadly appeal to the masses.
And now, the full results:
