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Competition Is No Longer Just the Restaurant Down the Street

Foodservice Brief — June 2015

Restaurant industry competition continues to intensify as the market becomes more fragmented.  Your competition is no longer just the restaurant down the street. Many other concepts are making headway in the foodservice arena by offering enhanced levels of food and service.

Traditional QSRs are in a battle for market share as fast casual continues to grow by at least 7 percent year after year. A growing number of traditional c-stores are morphing into a segment we call “food forward.” Realizing there is opportunity for growth in the foodservice arena, many c- store operators have begun to emphasize their improved food quality and broader beverage offerings, providing more options that compete directly with other traditional QSR concepts. Obviously this is resonating with consumers as food-forward chains have increased their visits by almost 454 million since 2009.

Traditional QSRs are not just dealing with increased competition from fast casual and food-forward c-stores. Food retailers are now in the consideration set for prepared meals for at-home consumption. As if that is not enough, over the course of the extended economic recovery consumers have gotten comfortable with cooking at home. Getting consumers out of their homes and back into restaurants will prove to be a formidable challenge. Due to the broader competitive environment, traditional QSR operators will have to find ways to differentiate themselves and understand how to compete in this increasingly fragmented market.

Most Important Factors When Deciding Where To Visit

Why are these segments growing, especially given consumers’ tendency to look for deals and other cost-cutting strategies? What are the motivations behind their decisions to visit concepts that are increasingly stealing market share from traditional QSRs? Motivations vary by segment. If consumers choose to visit a traditional QSR, it’s most likely due to the price or perceived good value they receive when visiting. If fast casual is the choice, it’s about the quality of the food offerings and the value offered, despite a higher average check. For c-stores, it’s all about convenience.

NPD Report —  Growing in a Fragmented Market

Source: NPD Custom A&U Study 2015

Food-Forward Convenience Stores — A Segment To Watch

Compared to other QSR segments, food-forward c-stores are a key segment to watch because of how well-received they are by their visitors. When evaluating revisit intent, visit frequency, and customer satisfaction, food-forward c-stores receive considerably higher scores than traditional QSRs, fast casual, and traditional c-stores. This is definitely a segment to watch.

% Definitely Will Revisit

Food-Forward C-Store Traditional QSR Fast Casual Traditional C-Store 0 15 30 45 60
Food-Forward C-Store 58
Traditional QSR 45
Fast Casual 43
Traditional C-Store 43

% Visit >1X/Month

Food-Forward C-Store Traditional QSR Fast Casual Traditional C-Store 0 15 30 45 60
Food-Forward C-Store 56
Traditional QSR 37
Fast Casual 19
Traditional C-Store 54

% Very Satisfied

Food-Forward C-Store Traditional QSR Fast Casual Traditional C-Store 0 15 30 45 60
Food-Forward C-Store 59
Traditional QSR 46
Fast Casual 47
Traditional C-Store 39

Source: The NPD Group/NPD Custom A&U Study 2015
Source: The NPD Group/CREST®/years ending December 2014

Our new Growing in a Fragmented Market report assesses the path a consumer follows when choosing QSR for a meal or snack. It uncovers the needs being met by food-forward c-stores, traditional QSRs, fast casual, and traditional c-stores, and reveals why someone might switch from one channel to another. This in-depth study also explores which restaurant visitor segments are the loyalists and which have changed. 

Traditional fast food operators, fast casual operators, and convenience store retailers, as well as their suppliers, can use the report to understand what is important to customers, so they can implement the necessary tactics and strategies to increase traffic.  The report also helps full service operators understand their competition, especially among consumers who have traded down to less expensive outlets.

To learn more about the report, please speak with your NPD account representative, call Bonnie Riggs at 847-692-1767, or email bonnie.riggs@npd.com.

To learn more about Checkout Tracking, please contact your NPD client service representative, call our restaurant analyst, Bonnie Riggs, at 847-692-1767, or email bonnie.riggs@npd.com.

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