Ten Fast-Casual Challenges

According to Nick Vojnovic, president of Little Greek Restaurant (a fast-casual, Greek-themed, multiunit concept with an American influence based in Tampa, Florida with 19 locations in Arkansas, Florida, and Texas), the fast-casual category will be seeing constant change and challenges in 2015. Below is a list of what Vojnovic considers to be the ten most challenging aspects the fast-casual industry will be facing in the year ahead.

1. Real estate. Real estate will be becoming tighter and tighter. Landlords are in a position where they have the upper hand; it is not a black-or-white scenario. “Will landlords kill the golden goose by charging more than operators can bear?” Strong negotiating skills will become a very important tool this year.

2. Technology arms race. New social media tools may emerge this year, and the existing ones are constantly changing. Social media has the potential to have a direct return on investment and sales. Fast-casual operators will have to closely monitor trends and be smart with allocating resources accordingly.

3.Private equity dollars. A good example is the growth in the fast-casual burger and pizza categories. “How many more of these concepts can the industry handle before it bottoms out?”

4. Obamacare. While there wasn’t a clear or strong impact in 2014, the impact it will have in 2015 is still unknown.

5. Fuel prices. Fuel prices have being going down significantly but we know they must start going back up at some point. As a positive for the industry, lower prices boost consumer disposable income. The Organization of the Petroleum Exporting Countries (OPEC) will have to jump in to protect pricing at some point which will have an impact on the industry.

6. External threats like terrorist attacks and natural disasters. “These are “black swan” scenarios and are all but impossible to predict.”

7. Labor costs and joint employer mandates. The possibility of returning to a tight labor market is real and it could occur throughout 2015. It could be influenced by the new immigration deal, or joint employer rulings could also take place with unpredictable consequences.

8. Credit card fees. Credit card fees take a pice of an establishment’s profits. Realistically, taking into account today’s technology, this will not change. While usage continues to dramatically increase, expenses are failing to drop. The industry will need to find a way to ‘bypass this draining.’

9. Commodity prices. This year we saw prices go up for shrimp, limes, avocados and beef. Other foods will also see climbing prices this year that operators cannot predict.

10. Shrinking margins. “As an already extremely tight business model gets squeezed, which chains will not survive 2015? Industry players will have to run, not walk, to survive.”

The way to take in these challenges is not to be skeptical or gloomy, but simply to emphasize that industry leaders shouldn’t take things for granted or take a back seat. No matter how successful the concept, there will always be challenges. The operators who adapt and watch for these obstacles will be the success stories in the coming year.

To read the full article about these challenges for the fast casual industry in 2015, click here

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