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Morgan Stanley Forecasts an Uptick in Casual, Quick-Service Dining

Thu, 12/19/2013 - 12:48pm

Morgan Stanley analyst John Glass says that growth has solidly resumed among casual restaurants, ending an extended period of contraction.

The analyst's report on Wednesday, suggests that not only is the consumer's appetite for eating out improving but consumer preference is also shifting toward more casual and quick-service chains as they adjust to more modest spending habits and tastes.

The number of chain restaurants grew overall at 1.7 percent in 2013, according to the report. That is up from 1.3 percent increase in 2012 and 0.9 percent in 2011. That compares total restaurant industry unit growth, which includes non-chain restaurants, of 0.7 percent in 2013.

But casual dining increased an estimated 2 percent in 2013 and the analyst thinks it will now grow at a steady 2 to 3 percent annually in the years ahead. That is far from its prerecession rate of 5.2 percent but still indicates above-industry average gains. Every segment in casual dining grew in 2013, this includes casual pizza chains such as Mellow Mushroom or bar and grill chains such as Chili's.

Glass also said that quick casual brands, such as Carl's Jr. or Chipotle, continue to show above-average industry gains. This niche increased 7 percent in 2013, on top of a 9 percent increase in 2012. He says this tends to be "higher quality growth" as these brands tend to offer more innovative and unique concepts.

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