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| Chart of The Week | Fast Casual Dining Restaurants: Change in Brand Preference

The MSW TBSM tracking service measures Brand Preference as one component of the survey.  Brand Preference was collected for approximately twenty major Fast Casual Restaurant brands in both Q1 2022 (among 1000 demographically and geographically balanced respondents) and Q1 2023 (among 500 similarly balanced respondents).  This week’s chart examines the five fast casual options that saw statistically significant trends in brand preference, both positive and negative, between the two time periods.

  1. Brand Preference is the gold-standard metric for assessing a brand’s strength in the hearts and minds of consumers.  In fact, independent studies conducted by the Marketing Accountability Standards Board (MASB) found that preference fit sales and market share results better than any other metric studied.  This strong relationship between preference and sales has also been demonstrated in the Fast Casual Restaurant category (r = +0.94).

  2. An analysis presented by Placer in mid 2022 indicated that after a strong 2021, the fast casual segment was seeing visitation trends drop off as inflation caused consumers to trade down to QSR.  A November 2022 poll by Decision Analyst reported 59% of Americans were eating out less and confirmed the trend of trade down to fast food outlets.

  3. Against this backdrop, TBSM brand preference trends over the past year show that the option that gained the most in the past year was the “your favorite other brand” option.  While this result could represent an increase in variety seeking among restaurant goers in general, it could also reflect the aforementioned slide in the fast casual segment overall.

  1. The one brand with the most impressive growth in brand preference over the past year is Jersey Mike’s Subs.  The 2.0 percentage-point growth in preference is particularly striking due to the brand starting at a relatively low level of 4.2% in Q1 of 2022.  This growth corresponds with in-market data from Earnest Insights which shows that Jersey Mike’s sales more than doubled between January of 2020 and August of 2022, a result that made them the growth leader in the fast casual industry.

  2. While Jersey Mike’s preference was already strong among the Age 55+ segment, the chain’s growth in preference over the last year was fueled by increases among the younger age groups, particularly age 35 to 54.

  3. Very strong preference growth for Jersey Mike’s was also seen among those respondents from the southern U.S.

  4. While not quite statistically significant, preference increases of around 2 percentage-points were realized by the two largest players in the fast casual space, Chipotle and Panera Bread.

  5. Chipotle recently reported strong growth in 2022, with overall revenue increasing by 14.4% – including 8.0% growth in comparable restaurant sales.

  6. Sales data for the past year is not readily available for privately held Panera Bread.  But much has been made of the development of its digital channel which now accounts for 50% of sales, and its growth into urban markets with redesigned, smaller locations.

  7. Brands that saw a statistically significant weakening in brand preference include Zaxby’s, Noodles & Company and Qdoba.

  8. Noodles & Company experienced a difficult 2022 with a reported net loss of $3.3 million.

  9. Qdoba and Zaxby’s are privately held and so recent financial information is limited.

  10. However, Qdoba has been sold several times over the years, most recently in October 2022, and the chain has seen minimal growth in the number of locations over the past 5+ years.

  11. While Zaxby’s has been growing outside its original stronghold in the southeastern U.S., perhaps the fierce competition in the chicken restaurant space and inflationary pressures have caused a bit of a bump in the road for the brand.

  12. While not statistically significant, Jimmy John’s saw a 2 percentage-point drop in brand preference, suggesting that Jersey Mike’s success might be eating into its more established rival’s store of brand preference to some extent.

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