Feasibility of a Fast Casual Healthy Restaurant Startup

Business Idea Overview

The business idea under review is a family-owned restaurant that is not a franchised operation. The research focuses on the likelihood that a small, locally owned and operated startup restaurant can succeed on its own in a competitive market. Many local businesses that perform well are often affiliated with a national franchise that offers advantages such as training, advertising, and administrative support services, among others. However, there are still many people who wish to start a business simply because they love to cook and want to make a career out of it. People in this situation often underestimate the difficulty of starting their own business, and the failure rate for small businesses remains extremely high as a result.

This analysis examines all the challenges that face a small local startup and the reasons so many fail. The specific business idea focuses on a fast casual startup that serves healthy, locally grown, and organic meals. This niche was identified as a popular dining option that has increasingly become highly demanded by consumers. The research therefore looks at the chances a small local business can take advantage of a business idea that suits it especially well, and considers what likelihood it would have of competing against more established local businesses as well as the national franchises found throughout the local market.

The restaurant industry has consisted of two primary styles throughout the last several generations: full-service restaurants and fast-food restaurants. Since the introduction of the first McDonald's, the fast-food type of restaurant has grown extremely quickly. These establishments generally serve food that is fairly easy to prepare, such as hamburgers, chicken, sandwiches, pizza, Mexican dishes, and breakfast and snack items. These types of foods became popular quickly because they taste good, are served quickly, and are convenient for customers. Most fast food restaurants also offer a drive-through window where people do not even have to leave their cars to get their meals, making them especially popular with busy families.

The Fast Casual Restaurant Format

However, after fast-food became well integrated into the American diet, people began to notice several problems that emerged as a result. The most visible was that people became heavier as their levels of body fat increased. The spread of fast-food restaurants was accompanied by other societal trends, such as the growth of office jobs in which people sat for most of the day. Furthermore, when people returned home from work they would often spend the remainder of the evening in front of the television. As a result, people were living more sedentary lifestyles while also consuming foods higher in sugars and fats, and the rate of obesity became a common problem for a large number of citizens.

The other traditional style of restaurant is the full-service establishment, in which a customer is seated, places an order with a server, waits for the food to be prepared, and then eats at the restaurant. This model is the oldest in the industry. However, its drawback is that it is often time-consuming compared to faster options, and in many cases significantly more expensive than fast food. The key distinction between the two formats is that at a fast-food restaurant customers order and are served at a counter or drive-through window, while at a full-service restaurant an employee takes the order at the table and brings food and drinks directly to the guest. The faster option is typically more convenient, while the traditional option offers higher food quality and a greater level of service.

Eventually, a third option emerged that combines the best elements of both models. Known as fast casual, this format was largely pioneered by companies such as Panera Bread and others using a similar approach. These companies focused on serving high-quality food in a manner that was also fast, convenient, and free from the full level of table service found at traditional restaurants. One of the primary distinctions between fast casual and fast food is that fast-food establishments offer limited menus and do not provide table service, while fast casual restaurants typically feature a somewhat broader selection of higher-quality items. By offering consumers a third dining choice, the fast casual format quickly gained popularity, allowing people to enjoy higher-quality food without the time investment required at a full-service restaurant.

Another important consideration for this business plan is how consumer preferences have changed over the years. Companies such as McDonald's represent one of the greatest American success stories in business. McDonald's is a multinational corporation that has broken through international barriers on a global scale and has been a leader in Western market expansion, covering nearly every market on the globe (Lafontaine & Leibsohn, 2004). The company has fine-tuned its operations to generate maximum efficiency by leveraging its enormous size and economies of scale. However, much of this efficiency has come at a cost to human and environmental health.

Obesity rates have mirrored the growth of the fast-food industry, representing a broader decline in public health. The development of high obesity rates in industrialized countries stems from a variety of factors, but the availability of cheap and unhealthy food has been a key contributor. Americans have the lowest-cost food supply in the world and spend the smallest proportion of disposable income on food — but this has come at a cost to public health. One study examined the relationship between diet and colon cancer using dietary histories drawn from a statewide, population-based sample of colon cancer patients, and found that the results support the recommendation that a "prudent diet" — low in fat and high in vegetables — may reduce colon cancer risk (Young & Wolf, 2006). Beyond obesity, therefore, prevailing dietary trends may also be contributing to more serious conditions such as cancer.

Shifting Consumer Preferences and Health Trends

There are also significant environmental concerns associated with industrial food production. Many of the ingredients used by fast-food organizations travel across the country — or even internationally — when locally sourced alternatives may be available. Manufacturers are now able to process foods in ways that extend their shelf life by adding chemicals and other ingredients that alter food's natural qualities. For example, high-fructose corn syrup is a chief ingredient in many lower-cost foods — it is inexpensive, calorie-rich, and processable in large quantities at relatively low cost.

While the term globalization originates from the global exchange of business and trade, its effects can now be seen in nearly every aspect of daily life (Stiglitz, 2006). Not all of these effects have been beneficial for society, and a significant backlash has emerged from large segments of the population. The restaurant industry is a mature industry with intense competition, and many companies have pursued international expansion to fuel growth as domestic markets have saturated. However, as the negative consequences of these trends have become more visible over time, many consumers are now willing to pay a premium for healthier options — and this has opened the market to new entrants in a variety of ways.

This analysis has established that both the demand for healthier foods and the fast casual restaurant format have been growing trends in the market. It is therefore reasonable to conclude that a well-run local fast casual restaurant could be popular with local consumers. There are many factors the owners would need to consider and address. For example, they would need to design a supply chain that takes advantage of locally available products and build a menu around those items that appeals to the local population. This might require some trial and error, but with sufficient time and effort to develop a strong menu, the restaurant could realistically meet local demand for healthy food options.

If the owners can refine their menu and align it with the fast casual format, they would be positioning their business to capitalize on both growth trends simultaneously. Many people today lead busy lives and simply cannot find the time to sit down for a full-service meal on a regular basis. The fast casual model has demonstrated that it gives consumers a viable third option — one that allows them to purchase higher-quality food without committing to the full-service dining experience. A restaurant in this space would therefore be well-positioned relative to both of the emerging trends identified in this analysis.

Conclusion

Young, T., & Wolf, D. (2006). Case-control study of proximal and distal colon cancer and diet in Wisconsin. International Journal of Cancer, 167–175.