Despite consumers saying they value eating out over home cooking, a paradox has emerged; upscale casual dining is losing ground to fast casual. A whopping 83% of people say they prioritize shared meals, yet their spending reflects a shift towards convenience and affordability. Can upscale casual restaurants regain their footing?
Even though the country is generally experiencing economic growth, that is not translating as quickly into household budgets. Because rents and heating costs have remained high in proportion to income, there is just less to spend on dining out.
According to Deloitte, more than one-third (37%) of dine-in guests and 40% of takeout guests want less expensive options alongside promotions and discounts. Even higher-quality products aren’t driving guests to fine dining, resonating with only 19% of dine-in guests and 15% of takeout guests.
As MYR emphasizes: “The current economic climate is also playing a role in the rise of fast-casual restaurants. Simply put, it has become vastly more difficult to run a high-end restaurant, and the profit margins aren’t always worth it.”
What the Modern Diner Craves
The past few years have forced most consumers to reevaluate their priorities, and in doing so, as a group, they’ve determined that life is short, time is finite, and their time and money needs to deliver more. At the same time, pretention has been stripped away, which is why we expect to see more casual dining offerings in the future.
Driven in part by Millennials and Gen Z, guest XM explains, “younger diners want to go to more casual but still high-quality establishments. These would be establishments that have a more relaxed dress code and are more focused on crafting a top-notch guest experience.”
Consumers also want their food more quickly. There’s a reason the drive-thru is king. People want fast food even faster. That’s a tough prospect for upscale restaurants known for their multi-course, meticulously planned cuisine delivered by chefs with egos that match their menu prices.
Reimagining to Stay Relevant
RestaurantNews explained why the fast-casual model has exploded, while upscale casual is working to regain footing:
- Better flexibility in execution
- A flexible labor model
- Operators can run multiple daypart segments
- Fast casual plays well with consumer packaged goods
- Less expensive to open with better payback periods
- Solid topline sales with good flowthrough to the bottom line
- Less sensitive to economic contraction
Among these reasons, we might just find opportunities for upscale casual dining. What can upscale casual restaurants steal from fast-casual? Whether creating more memorable dining experiences or offering a flexible menu, new ways to drive business are there, even for legacy restaurant brands.
Sure, this space is ripe for innovation, but we have to give it up to these stalwarts of upscale casual for moving the needle.
- Maggiano’s Little Italy – Offers interactive events and cooking classes at its many locations for a one-of-a-kind experience.
- P.F. Chang’s – Takes customization seriously by allowing diners to choose their exact spice level and choice of protein in every dish.
- Ruth’s Chris Steak House – With its own bar menu, Ruth’s @ The Bar offers the chain’s beloved burger served with fries and a glass of red for $35, serving up a more affordable, casual steak house experience.
- Brio Tuscan Grill – Is testing a much-streamlined menu to offer super-speedy service and more operational efficiency behind the scenes.
- Carrabba’s Italian Grill – Now features fresh, seasonal features appealing to health- and quality-conscious consumers.
Value is in the Eye of the Beholder
“Consumers continue to seek value, which is not about low prices. Consumers are making spending trade-offs. And food away from home is one of the most difficult expenses to give up because going out to a restaurant is still an affordable luxury for them.” Darden CEO Rick Cardenas, as quoted in FESMag.
CFO Joe Taylor agreed, explaining that for consumers, “value isn’t just price point – it’s also about quality, consistency, and service levels.”
The news is not all bad for upscale dining. In fact, GrubStreet shares that, “Yelp data reveals that fine dining is not dead. When compared to pre-pandemic levels (April 2019 through March 2020), consumer interest decreased nearly 16% for traditionally affordable restaurants ($). Notably, interest in higher-priced restaurants ($$$ and $$$$) rose nearly 10% and 17%, respectively, compared to pre-pandemic levels. We continue to see this trend year over year, with consumer interest up nearly 2% for both pricing designations ($$$ and $$$$).
Competing for your dining dollars means upscale casual restaurants are bringing the creativity these days. Successful fast-casual chains are meeting consumer demand for high-quality ingredients and unique experiences—without the formality and inconvenience of fine dining.
Here are a few to watch out for:
- True Food Kitchen – Beautiful biophilic design welcomes diners to feast on an “anti-inflammatory” menu created by Oprah’s resident medical expert, Dr. Andrew Weil.
- Rare Society – The West Coast-based upscale chain gives Millennials and Gen Z the steakhouse experience of their dreams—with shared meat boards and a more communal, sociable, and interactive experience.
- Firebird’s Woodfired Grill – Investing in digital and not allowing off-premises to impact dine-in operations gives customers a to-go experience that rivals the industry’s best.
- Tatte Bakery & Café – This beloved East Coast chain serves up espressos and pastries alongside hearty, reasonably priced meals like roasted salmon with winter vegetables, braised short rib, and three kinds of shakshuka.
Will upscale casual dining be able to bridge the gap between fast-casual convenience and the fine-dining experience? As consumer preferences continue to shift, the answer remains to be seen. However, one thing is certain: innovation and adaptation will be key for these restaurants to capture the hearts and wallets of diners in the future.