Food & Drink » Epicurious

Fast-casual chains taking a bigger bite of the food service market

As McDonald's downsizes, fast-casuals gain traction with health savvy consumers



Last week we found out that global burger monolith McDonald's was doing something it hadn't done for at least 40 years: downsizing.

The fast-food titan says it will close more restaurants in the U.S. than it opens this year, fighting back against dwindling sales numbers.

To anyone who's kept up with consumer trends over the last decade or so, this should come as no surprise. More and more, health savvy diners are looking for fresher nutritional food options that a burgeoning segment of the market is more than happy to provide.

Known as "fast-casuals," chains like Five Guys Burgers and Fries and Chipotle Mexican Grill have been popping up across North America, snatching up consumers by positioning themselves as a high-quality alternative to traditional fast-food joints.

At a slightly lower price point, fast-food giants like McDonald's and Tim Hortons still rule the $23-billion industry — about 45-per-cent of Canadians purchase at least one item from a fast-food menu every day, according to research from NPD Group, but that number has been on a steady decline in recent years.

This new breed of quick-service establishment continues to make considerable headway as the fastest growing segment in the Canadian restaurant market, and you can be damn sure the suits at McDonald's and Restaurant Brands International (the multinational company that owns both Tim Hortons and Burger King) have taken notice.

McDonald's Canada, which oversees 1,400 locations across the country, re-launched its salad offerings last year to cater to evolving Canadian consumer demands, and has vowed to continue testing out new menu items with healthier ingredients. (In a sign of just how desperately Mickey D's wants to attract health nuts, the chain now offers baby kale in three of its salads. Yes, the same people responsible for the culinary catastrophe that is the McRib really want you to eat your greens.)

Perhaps the biggest challenge facing the Golden Arches is simply changing diners' decades-old perception of the ubiquitous burger chain.

Last year, McDonald's launched a national campaign called "Our Food. Your Questions" that explains how it makes and sources its food, a commitment to transparency the company says will continue in 2015.

Tim Hortons has undertaken a similar initiative this year with its "More Good to Love" campaign, which highlights some of the coffee shop's healthier menu items, like the harvest vegetable soup and whole grain muffins.

At its owner convention in Toronto last summer, designed to showcase sales-boosting ideas for the future to franchisees, a tour of a Timmie's mock store also offered a possible glimpse of things to come with a menu that included such items as a quinoa salad, loose-leaf teas and strawberry-flavoured beer.

It was no doubt a reflection of the pressure chains like Tim Hortons have been feeling amidst the rise of the fast-casual sector, especially in a tepid fast-food market that is predicted to grow by only one per cent in the next five years. It means that, if corporate big wigs want to see a bigger piece of the industry pie, they'll have to resort to stealing it off the plates of their competitors.

But the cholesterol-laden elephant in the room remains: Why should consumers shell out for baby kale from traditional fast-food chains that have built their empires around making the world a fatter, unhealthier place?