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Preparing to launch a new restaurant can be a thrilling undertaking. As you craft fresh concepts and plan to bring your delicious ideas to the dining scene, it might seem like the sky’s the limit—and to some extent, you’re right. A recent survey found that 51% of adults said they’d like to dine out more, and with both revenue and demand on the rise, now is an attractive time to open a new restaurant establishment.
That said, it’s also important to find your niche. Honing your grand ideas into something specific, unique, and goal-oriented can help you find your footing as the owner of a new food service business. Having a restaurant business plan is also a key component to long term success.
To that end, it’s important to understand the different types of restaurants and which category yours may fit into. Here are seven of the top restaurant concepts to consider.
1. Fast food / QSR
Fast food restaurants, otherwise known as quick serve restaurants (QSR), serve on-the-go food via countertops or drive-throughs. Quick turnaround is the name of the game, which is made possible by a standardized menu with every food item cooked as quickly as it's eaten. Staples among fast food restaurants include car-ready foods like burgers, burritos, and chicken sandwiches.
In the United States, fast food is a booming industry, generating $200 billion in average annual revenue. This represents more than one-third of the world’s total fast food revenue of $570 billion.
Some other key findings about fast food include:
•Between 2013 and 2016, nearly 37% of adults consumed fast food on any given day.
•Fast food is even more popular among younger adults, with nearly 45% of adults between 20–39 consuming fast food on any given day.
•Fast food consumption among adults increases with increasing income.
Why is fast food so popular? Fast food provides advantages for both consumers and restaurant owners. For consumers, fast food is convenient and affordable. There’s also a sense of familiarity involved, as consumers know exactly what foods they’ll be able to enjoy (and know they’ll taste the same).
A distinct advantage for fast food restaurant owners is the high-profit margins, ranging between 6 and 9%. These numbers are thanks in part to lower costs for ingredients, facilities, and labor within the fast food industry. Margins are also boosted by soft drink sales, which alone can represent a 90% profit margin.
2. Casual dining
Casual dining is a go-to option for diners who want a slightly more elevated experience without breaking the bank. Casual dining franchises, as well as independent establishments, are prevalent in the U.S., again providing the familiar, consistent experience that many diners find desirable.
Characteristics of casual dining restaurants often include:
•Table service and a sit-down meal
•Oversized, comfortable seating
•Thematic decor or ambiance
•Larger menus
Olive Garden and Applebee’s were the leading casual dining franchises in 2021, each generating over $4 billion in revenue.
Some prospective restaurateurs might wonder why they should choose casual dining over fast food. After all, one of the primary advantages of fast food is the speedy turnaround, which may allow fast food restaurants to serve more customers per day than their casual dining counterparts.
Nonetheless, casual dining still represents a quicker turnaround than more upscale restaurant types, and can often serve more customers at a time by operating in larger spaces.
On top of that, casual dining restaurants have restaurant expansion opportunities to increase profit margins because:
•Consumers are paying for the experience and ambiance as well as the food service.
•The menu can include a wider variety of dishes on the menu, including more expensive selections.
•Consumers on a night out may also pay for an alcoholic beverage, appetizers, and desserts.
3. Fast casual
One of the more modern types of restaurant concepts, a fast casual restaurant is a fusion of fast food and casual dining. Fast casual restaurants typically boast a more upscale menu than these establishments, often with healthier or fresher ingredients, while providing the same quick turnaround. Especially popular among working adults, fast casual restaurants are a convenient lunch option that can adhere to a healthy diet.
Chipotle is the leader among fast casual restaurants, generating $7.5 billion in revenue in 2021. One of the most interesting trends in Chipotle’s 2021 report is a 24.7% increase in digital sales, which accounted for 45.6% of total sales. The digital age is revolutionizing the restaurant industry, and fast casual is a concept that can keep up.
Other promising statistics about fast casual restaurants include:
•Total value is expected to reach $209 billion by 2026.
•Market growth will accelerate at a compound annual growth rate (CAGR) of 8%.
4. Fine dining
Fine-dining establishments stand out by providing an especially luxurious experience. This typically includes features like a sophisticated dining room, exceptional service, and a multi-course menu. On a day-to-day basis, consumers of fine dining establishments are usually not regulars. Rather, diners may indulge in fine dining to celebrate a special occasion, such as an anniversary or birthday.
As a result, fine dining restaurants are the most competitive from a business point of view. Because they cannot rely on the amount of customers they regularly host, they must rely on the amount their customers spend. Consequently, customers are far more wary of which fine dining restaurant they may choose. Both diners and owners alike rely on positive reviews.
To cultivate such positive reviews, fine dining restaurants need a superb menu with high-end food preparation, highly professional staff, and an upscale atmosphere. Fine dining restaurants often tend to have very limited menus to ensure quality. Fine dining menus may also routinely evolve to represent seasonality and culinary innovation. Steakhouses are an exception, as they tend to offer more classic menus held stable by their key ingredient—the steak.
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5. Contemporary casual
Contemporary casual restaurants are an offshoot of the fine dining model, catering to a younger demographic that prefers a more laid-back menu and setting. In this model, you have a significant emphasis on both atmosphere and experience.
Successful contemporary casual establishments generally cultivate a brand that aligns with the sensibilities of Millennial and Gen-Z consumers, such as:
•Eco-friendly
•Farm-to-table
•Locally sourced ingredients
•Fusion cuisine
Contemporary casual restaurants typically thrive by catering to modern trends. Part of this includes creating a menu that adheres to the desires of a younger consumer base. Another part of this is becoming their own trend.
In other words, the most successful contemporary casual restaurants are trends in and of themselves. This can be accomplished by:
•Generating a large social media following
•Offering a particular unique menu with visually pleasing food preparation
•Outfitting the dining room with unique decor
•Cultivating a celebrity clientele
•Offering a new experience, such as dark dining
6. Pop-ups
A trending restaurant concept over the last few years, pop-up restaurants are temporary, often mobile, establishments. While food trucks were a catalyst behind the popularity of pop-up establishments, they have since become more stationary. Pop-up restaurants often take the form of tents, stands, or warehouses. A true pop-up may last for only one day, although they can often stick around for an entire season.
From a consumer point of view, pop-ups provide a sense of exclusivity and urgency. Due to their temporary nature, consumers don’t want to miss out on experiencing a new pop-up before it's gone. This makes pop-ups an exciting concept, providing an experience they may never be replicated. Hype is the backbone of these restaurants, so social media marketing is vital to their success.
Similar advantages exist for the chefs and owners of pop-ups, who have the freedom to explore different menus and cuisines. Pop-ups also give chefs the ability to own their own business, as overhead is generally very low. This is the primary advantage from a business point of view––a restaurant concept that can thrive with limited staff, facilities, and investment.
7. Ghost kitchens
As one of the newest concepts in the restaurant industry, ghost kitchens are virtual, delivery-only restaurants with no storefront. Orders are most often placed online, taking advantage of the $150 billion food delivery industry––which has tripled since 2017.
Third party food delivery apps are the catalyst of this growth, as U.S. delivery app users are expected to hit nearly 54 million by 2023. Ghost kitchens, though, should prove to be an even more significant phenomenon. Some estimates project ghost kitchens to become a trillion-dollar industry by 2023.
The primary advantage of a ghost kitchen business model is the limited overhead. With a ghost kitchen, there’s no need for dining rooms, table service, waiting areas, or parking lots that come with other independent and chain restaurants. On top of that, there is a lower cost of labor due to a lower number of employees. All of this can mean a minimal total investment, quicker launch, and higher profit margins. Best of all, delivery and visibility are often provided by the apps.
Ghost kitchens can thrive with only:
•200 square feet of real estate
•Four staff members
•$30,000 investment
With the right team in place, a successful ghost kitchen can be launched in as little as six weeks.
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Start a ghost kitchen today with CloudKitchens
Finding your niche in the restaurant industry and choosing one of the many different types of food restaurants you’ll operate can take some trial and error. Choosing the wrong niche is among some of the reasons why restaurants fail later down the road. But if you’re looking to launch a ghost kitchen, there are tools to help you make the process as smooth and easy as possible—so you can focus on the delicious foods you serve.
CloudKitchens is a full-service culinary partner for budding restaurants and veterans looking to expand their business. When you go into business with CloudKitchens, we provide everything you need to build a successful ghost kitchen, including:
•A private kitchen in a food delivery hub
•Cleaning and maintenance of facilities
•On-site support staff
•Delivery software
•Complete management of delivery logistics and fulfillment
•All utilities, including WiFi, grease/trap cleaning, and pest control
We have locations in most major metropolitan areas in the US and even a ghost kitchen in Toronto! Turn your culinary dreams into reality with CloudKitchens today. Turn your culinary dreams into reality with CloudKitchens today.
Sources:
Nation’s Restaurant News. U.S. restaurant sales forecast to hit $898B in 2022, reports National Restaurant Association.
World Population Review. Most Popular Fast Food by State 2022. https://worldpopulationreview.com/state-rankings/most-popular-fast-food-by-state.
CDC. Fast Food Consumption Among Adults in the United States, 2013–2016. https://www.cdc.gov/nchs/products/databriefs/db322.htm
Mashed. Where Fast Food Restaurants Really Make Their Money. https://www.mashed.com/69317/fast-food-restaurants-really-make-money/?utm_campaign=clip
Restaurant Business Online. Top 500: 2021 Was A Mixed Bag For Casual Dining. https://www.restaurantbusinessonline.com/financing/top-500-2021-was-mixed-bag-casual-dining
Chipotle. Chipotle Announces Fourth Quarter And Full Year 2021 Results. https://ir.chipotle.com/2022-02-08-CHIPOTLE-ANNOUNCES-FOURTH-QUARTER-AND-FULL-YEAR-2021-RESULTS
QSR Magazine. Fast Casual Restaurants Exit the Pandemic Positioned for Growth. https://www.qsrmagazine.com/outside-insights/fast-casual-restaurants-exit-pandemic-positioned-growth.
McKinsey & Company. Ordering In: The Rapid Evolution Of Food Delivery. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ordering-in-the-rapid-evolution-of-food-delivery
Restaurant Dive. How the pandemic accelerated the US ghost kitchen market ‘5 years in 3 months’. https://www.restaurantdive.com/news/how-the-pandemic-accelerated-the-us-ghost-kitchen-market-5-years-in-3-mont/585604/
CloudKitchens. Commercial kitchens built for delivery. https://cloudkitchens.com/commercial-kitchens/
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