QSR, Fast-Casual Aren’t Identical in Net Lease

Quick-serve and fast-casual restaurants can often get put together when it comes to looking at the net lease market. However, a new Placer.ai analysis suggests the two categories are more suited for an old-fashioned compare-and-contrast treatment, like learning to write an essay in grade school.

First, some comparisons. Visits don’t necessarily directly correlate to financials. QSRs have increased their prices, even with specials, that, according to Placer.ai, closed the price gap with fast-casual even as the latter has pushed on innovations like drive-in windows, improved mobile ordering and payment, and greater reliance on data analytics to better compete with the former by improving convenience.

The top-line contrast is that the fast-casual category saw 3.2% year-over-year visitor growth in the first half of 2024 compared to 0.4% for QSR. The focus on visitor growth is an outgrowth of how Pacer.ai uses cell phone data to analyze foot traffic down to a property level.

Part of the difference came down to visitation patterns. Fast-casual saw a 4.0% traffic growth on weekends; QSR received a 2.1% increase. However, they differed during the week. Fast-casual saw a 2.8% increase during the week while QSR saw a decline of -0.2%. Placer.ai posited that “more affluent office workers” being pulled back into the office may be pushing more toward fast-casual then.

The firm also noticed a difference in driving and sources of business. In the first half of 2024, QSRs saw a higher share of visits — 31.8% — from Census Block Groups (CBGs) less than two miles away. Fast-casual establishments garnered 24.6% of their business at that distance. Shift the from 2 to 30 miles and there is a change. QSRs get 56.8% of their business from that range; fast-casual get 63.6%. Get over 30 miles and the two are practically equal: 11.4% for QSR and 11.8% for fast-casual.

Another interesting combination of comparison and contrast is in the incomes of the CBGs. Look at weighted median household incomes and, as you might expect, fast-casual have a somewhat wealthier clientele at $78,000 while QSRs attract $65,700. And yet, they are closer together in a different way. Both categories had nearly equal shares of households that earn between $75,000 and $100,000 per year. That fact shows how the two categories have come to strongly overlap.