Valley entrepreneurs take a bite out of the fast-casual restaurant market.
Modern American culture is all about instant gratification, from on-demand TV to flash-fried fish. But expanding palates and waistline-minded consumers exposed a hole in the fast-food market – one that demanded speed and higher-quality ingredients.
The market’s answer: so-called “fast-casual” restaurants. Featuring counter ordering and limited table service, with meals averaging $8 to $11 per person, these assembly line-like eateries generally get customers fed and out the door in less time than it takes to make a pizza delivery. According to Technomic’s 2015 Top 500 chain restaurant report, fast-casual dining sales are up 12 percent – well above the puny growth rates for sit-downs or fast food. Along the way, fast-casual has become an important part of the Valley’s culinary economy.
For pioneers like Fired Pie co-owner Fred Morgan, buying into the fast-casual model was a no-brainer. “The concept is simple and can be easily executed,” Morgan says. “The average bill is lower than full-service, but high table turnover makes up for that.”
The saucy entrepreneur was first introduced to the pizza business in junior high. Following 17 years with California Pizza Kitchen and a stint as COO of Oregano’s Pizza Bistro, Morgan and two fellow investors decided to open their own restaurant. Inspired by the success of national chains Chipotle and Panera Bread, they opted for a customize-your-own pie concept.
“Fast-casual changed the market,” Morgan says. Training and labor is reduced. Utility and real estate costs also tend to be lower because fast-casual owners seek out unused retail spots that come at a bargain. “We had to shop for good building deals. If you overpay on rent, you won’t survive,” Morgan explains. The trio founded the inaugural Fired Pie in July 2013 with no debt, forking over their personal savings to fund the venture.
Aaron Pool, founder of Gadzooks Enchiladas and Soup, was equally set on his fast-casual restaurant concept. “That was all I ate in college,” he quips. Unfortunately, the ASU business grad had never actually rolled an enchilada or boiled a soup bone. Unable to secure a small business loan, Pool bought a defunct clothing store at Seventh Street and Osborn and leveraged it as collateral to remodel the building.
Wary of hiring an outside chef, Pool learned how to cook while Gadzooks was under construction. “I created the menu before I knew how to make any of the dishes,” he admits. “You know, fake it until you make it!” Through trial and error (including a few spectacularly horrible culinary creations inflicted on his family), Pool assembled a menu of decadent tortillas and fixings that he continues to personally dish out to locals two years later.
Though Gadzooks seems ideal for scalability, Pool isn’t interested in franchising his establishment. Morgan briefly considered it, until he walked into a franchise meeting to discover the new hires were former bankers and used car salesmen. “I knew I didn’t want that group to run my restaurant,” he says.
It’s a different game for Kim Kuhljuergen of Coconut’s Fish Café in Scottsdale. After 23 years in sales, the former Energizer rep courted the Hawaiian owner of Coconut’s in Maui for a licensing agreement. Kuhljuergen embraced opening a fast-casual place where people wouldn’t have to worry about dress codes or wait times. “It’s more inviting and good for people with busy lives,” he says. “Unlike with fast food, everything is made to order.”
The future of fast-casual looks delicious. While the restaurant industry is expected to expand at a snail’s pace in the next decade, foodservice market research firm NPD Group’s 2022 forecast predicts double-digit growth rates for fast-casual eateries. “Overall, restaurant customers are trading down, foregoing some of their visits to full-service places while increasing the number of visits made to fast-casual restaurants,” says NPD analyst Bonnie Riggs.
Transplants including Austin’s Hopdoddy Burger Bar and Denver-based Tokyo Joe’s have expanded the Valley’s fast-casual dining scene. But local restaurateurs aren’t being edged out – yet. Coconut’s Fish Café opened a second location at Scottsdale Road and Shea Boulevard in June, while Fired Pie boasts 10 locations statewide with additional expansion plans. Despite increasing competition, Morgan is secure in his product. “There’s competition, of course, but the better concepts will make it,” he says. “We always knew we could build a better mousetrap – or rather, a better pizza.”
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