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Q-and-A: Paul Barron talks about “The Chipotle Effect”

Paul Barron is founder and CEO of DigitalCoCo as well as founder of FastCasual.com and QSRWeb.com. SmartBrief interviewed him on the future of fast casual and his new book, “The Chipotle Effect,” excerpts of which were published on SmartBlog on Food & Beverage.

“The Chipotle Effect” is touted as the first book on the fast-casual restaurant business. What inspired you to write the book?

The vision was one that started back in the mid ’90s, when nobody was really looking at the space the way I was. I saw this as a revolution in how the restaurant industry would innovate to meet the new demands of the consumer. At that time, I knew the Web would transform everything we do in the business, including connecting with our guests, but even then I still did not fully grasp the massive impact that social media would play in the future of the business. I felt this was the ultimate game changer for our business, and in 2002, I recognized I was onto something really big!

With that insight, I focused on getting FastCasual.com to the forefront of the media sphere, and the idea of the book was born. As I expected, the evolution of the Web, social media and the fast-casual segment came together in a “perfect storm,” and today, the fast-casual segment is realizing the most amazing growth the restaurant business has experienced in more than three decades.

In one of your excerpts, you discuss the “food-as-lifestyle” revolution. What advice do you have for restaurants that want to keep up with the revolution but might not have the resources to do so?

I think every great restaurant operator finds the resources to keep up with the latest trends and technology. The barrier to entry is so much lower than ever before. After all, they are all innovators, some better than others, and the reality of this or any business is that it’s about people and ideas. If you are short on either, you are toast. Traditionally, the restaurant business has been built on food, when in my opinion the shift to “food as a lifestyle” is the new mantra. This means you must create an overall experience, one that not only impacts the guest while in the restaurant but also when they are outside the four walls, in ways that will create new lifestyle expectations: better health, better taste, better quality, better lifestyle.

Innovation is the only way to stay competitive. The consumer is already two steps ahead of us now due to the mass adoption of social media and technology, which have created a whole new level of consumers who are highly adaptable, flexible, curious and armed with seemingly endless choices. This is the biggest opportunity that has hit the American business scene since the evolution of the auto industry. Tech bubble, ha! The golden age of the restaurant business is about to change in ways that will impact hundreds of millions of people in the U.S. alone and will create tens of thousands of entrepreneur millionaires over the next 20 years.

What do you see as the future for fast casual? Is Chipotle’s fresh, sustainable approach the answer for every restaurant?

I think we are faced with some pretty big issues within the industry as aging boomers and new consumers in the Generation Y segment remap how we think about developing our menus, our designs and even our operations. The health halo that Chipotle has created is one that was fueled by the consumer, not necessarily Chipotle. What they did brilliantly was capitalize on an emerging need for local, sustainable and fresh as a theme. This is the key to how we face tomorrow’s consumer — identify and capitalize on future trends before they happen.

What’s the worst mistake that you see fast-casual restaurants making, and how can they rectify it?

Falling prey to the standardization of their product or brand position. This is the kiss of death. Growing to 10,000 units, I fear, is left for only a very few in our industry. Fast casual is about power segments and power players that control certain menu categories or geographic regions. Bakery café = Panera; fresh Mex = Chipotle; sandwich = Firehouse Subs, etc. The real failure of fast casual will be when a consumer puts a fast-casual brand in the consideration set of “fast food.” If that happens, we have lost the purpose and the vision of what the consumers are pushing us toward. If anything, I see fast casual going up the line with more customization and quality to create an experience that the consumer has yet to truly taste. There are a few examples, such as Rick Bayless and XOCO, and the work of the Lettuce Entertain You group, as well as rising players such as Piada and BurgerFi.

How can fast-casual restaurants stay plugged into what consumers want, even as their preferences evolve? Is it only a matter of technological adoption, or is there more to the picture?

The picture for the whole restaurant industry is one that is pretty amazing as Big Data plays into the boardroom, and monetization of social and digital platforms becomes more of a reality. But best of all, we are serving an evolving consumer in an evolving technology and device world. We are close to the shift to a post-PC world, thanks to Apple, which means consumers will get information and act on reviews, word of mouth and social centers almost instantaneously versus traditional media, which have longer lead and lag times. Speed and mobility will have an immense impact on the future restaurant, especially fast casual. What is interesting is that consumers are evolving much faster than ever before, and we need to be supercareful or we could lose them to a whole new culture of food consumption.

Like food trucks — not one major brand saw that coming. Local and sustainable — only a handful of chefs and even fewer brands saw that one. Next is “gourmet-level value,” which is already finding its way to the street. This is a very interesting time in the business and one that restaurant execs need to look at very closely. The reality is we have a new playing field, and we need to draft a whole new team to win.

Disclosure: Paul Barron consults on consumer science and restaurant trends in fast casual, quickservice restaurants and casual dining, including many leading and upstart fast-casual brands, some of which are included in this commentary.

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