There is a new secret sauce at quick service restaurants (QSRs), but according to JLL research, you won’t find it in the food. The fight for market share has led Wendy’s, Chick-fil-A, and other QSRs to adapt new development strategies to compete with fast-casual restaurants that are threatening fast food’s traditional heavyweights.
“Everyone is trying to figure out who their customer is and what they can do to put themselves in a better position than their competitors,” said Steve Jones, Managing Director for JLL Retail Multi-site. “The customer is much more knowledgeable now than in the past. We have access to more intelligence and data, so it’s more important than ever that these restaurants know themselves, their brand and who their customer really is.”
“The traditional QSR dining experience encourages customers to get their food, eat, and leave. At Wendy’s, we’re changing that standard by making the environment in our dining rooms more inviting and comfortable.” —Bruce Allendorfer, Regional Director of Construction, Wendy’s
According to the JLL research, the millennial consumer base is becoming increasingly vital to QSRs. This consumer pool accounts for approximately 23% of annual restaurant spending—about 46 billion visits annually. With those visits come new expectations for atmosphere and fresh ingredients, which requires QSRs to invest in their facilities, brand experience, and technology, across both existing restaurants and new locations.
Fast-casual restaurants are slightly more expensive than QSR options, but offer customizable, health-conscious options offered in a hip environment that appeals to millennials. With this in mind, Wendy’s is evolving its customer experience to match the changing consumer landscape.
“The traditional QSR dining experience encourages customers to get their food, eat, and leave. At Wendy’s, we’re changing that standard by making the environment in our dining rooms more inviting and comfortable,” said Bruce Allendorfer, Regional Director of Construction for Wendy’s. “Customers stay longer and can make an event out of their visit.”
JLL worked with Wendy’s to implement its “image activation.” The new strategy started with store rebrands for the Ohio-based restaurant chain, which includes adding fireplaces, new seating options with lounge chairs and booths, Wi-Fi, flat-screen televisions, and digital menu boards. The goal wasn’t just to drive sales but to compete with the environments offered by Wendy’s fast-casual peers.
“Our customers are reacting positively to the re-imaging of Wendy’s. Sales are up and, more importantly, there are positive customer counts as well,” Allendorfer said. “Wendy’s is providing a quality experience for our customers in both the drive-through and the dining room.”
3 RETAIL DESIGN TACTICS FOR GROWING MARKET SHARE
The opportunity for QSRs is great. With a focus on three key areas, these restaurants can combat threats to their market share:
Rapid renovation: Reworking existing space to better serve high consumer expectations can change the entire experience of a restaurant. Changing the interior build out of the restaurants, remolding the ordering space, and re-creating the menu are all physical ways to make a QSR more competitive. Another more complex method is to create a franchising model to meet local market demand.
Technology: Technology enhancements go a long way to personalizing the consumer experience. For example, drive-through experiences can be upgraded by replacing the metal speaker box with a high-definition video communication platform, as done recently by a global coffee chain. GPS and beacon technologies offer incredible potential for creating new digital experiences for consumers, as well.
Facility Branding: Implementing a brand refresh can alter previous impressions and introduce a whole new demographic to a company. On average, organizations refresh their corporate brands once every seven to 10 years, but QSRs are doing so even more frequently.
Renovation, rebranding, and redevelopment come with their own challenges for QSRs. In 2013, sales for fast-casual chains grew by 11%, while QSRs have maintained revenue growth at about 1.2% annually because of flattening sales and an increase in the cost to produce. Efficiency has proved necessary for chains like Chick-fil-A, who see development projects balloon during expansion and renovation.
“The biggest challenge that Chick-fil-A was facing was a large increase in the number of projects we needed to manage within the reinvestment portfolio,” said John Mark Wood, a Program Manager from Chick-fil-A. “The budget went from approximately $30 million to $100 million in a span of one and a half to two years.”
Chick-fil-A worked with JLL to manage its reinvestment program. By adapting new development strategies like these, QSRs can stay diversified and contend with their fast-casual counterparts.
To download JLL’s special report on the state of the restaurant industry, visit here.
Related Stories
3D Printing | Oct 9, 2024
3D-printed construction milestones take shape in Tennessee and Texas
Two notable 3D-printed projects mark milestones in the new construction technique of “printing” structures with specialized concrete. In Athens, Tennessee, Walmart hired Alquist 3D to build a 20-foot-high store expansion, one of the largest freestanding 3D-printed commercial concrete structures in the U.S. In Marfa, Texas, the world’s first 3D-printed hotel is under construction at an existing hotel and campground site.
Mixed-Use | Oct 7, 2024
New mixed-use tower by Studio Gang completes first phase of San Francisco waterfront redevelopment
Construction was recently completed on Verde, a new mixed-use tower along the San Francisco waterfront, marking the end of the first phase of the Mission Rock development. Verde is the fourth and final building of phase one of the 28-acre project that will be constructed in several phases guided by design principles developed by a design cohort led by Studio Gang.
The Changing Built Environment | Sep 23, 2024
Half-century real estate data shows top cities for multifamily housing, self-storage, and more
Research platform StorageCafe has conducted an analysis of U.S. real estate activity from 1980 to 2023, focusing on six major sectors: single-family, multifamily, industrial, office, retail, and self-storage.
Mixed-Use | Sep 19, 2024
A Toronto development will transform a 32-acre shopping center site into a mixed-use urban neighborhood
Toronto developers Mattamy Homes and QuadReal Property Group have launched The Clove, the first phase in the Cloverdale, a $6 billion multi-tower development. The project will transform Cloverdale Mall, a 32-acre shopping center in Toronto, into a mixed-use urban neighborhood.
3D Printing | Sep 17, 2024
Alquist 3D and Walmart complete one of the nation’s largest free-standing, 3D-printed commercial structures
Walmart has completed one of the largest free-standing, 3D-printed commercial structures in the US. Alquist 3D printed the almost 8,000-sf, 20-foot-high addition to a Walmart store in Athens, Tenn. The expansion, which will be used for online pickup and delivery, is the first time Walmart has applied 3D printing technology at this scale.
Retail Centers | Sep 17, 2024
Thinking outside the big box (store)
For over a decade now, the talk of the mall industry has been largely focused on what developers can do to fill the voids left by a steady number of big box store closures. But what do you do when big box tenants stay put?
Mass Timber | Sep 17, 2024
Marina del Rey mixed-use development is L.A.’s largest mass timber project
An office-retail project in Marina del Rey is Los Angeles’ largest mass timber project to date. Encompassing about 3 acres, the 42XX campus consists of three low-rise buildings that seamlessly connect with exterior walkways and stairways. The development provides 151,000 sf of office space and 1,500 sf of retail space.
Mixed-Use | Aug 21, 2024
Adaptive reuse of a Sears store becomes luxury mixed-use housing
6 Corners Lofts at 4714 W Irving Park Road, Chicago, Ill., opened in March of 2024 as a 394,000-sf adaptive reuse project born out of a former Sears store.
Adaptive Reuse | Jul 30, 2024
Empty mall to be converted to UCLA Research Park
UCLA recently acquired a former mall that it will convert into the UCLA Research Park that will house the California Institute for Immunology and Immunotherapy at UCLA and the UCLA Center for Quantum Science and Engineering, as well as programs across other disciplines. The 700,000-sf property, formerly the Westside Pavilion shopping mall, is two miles from the university’s main Westwood campus. Google, which previously leased part of the property, helped enable and support UCLA’s acquisition.
Smart Buildings | Jul 25, 2024
A Swiss startup devises an intelligent photovoltaic façade that tracks and moves with the sun
Zurich Soft Robotics says Solskin can reduce building energy consumption by up to 80% while producing up to 40% more electricity than comparable façade systems.
