The success of fast-casual leaders Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) have attracted their share of imitators.
Fast-food giant Yum Brands’ (YUM) KFC is among the latest and biggest names in the restaurant industry to throw its hat into the fast-growing fast-casual ring.
KFC is testing a fast-casual format that makes no bones about borrowing Chipotle’s business model, in which customers choose ingredients for staffers to assemble as they walk the food line.
The test restaurant near the chain’s headquarters in Louisville is called KFC eleven. It’s been “well received,” said spokesman Rick Maynard in an e-mail. He says KFC will open a second location in the area.
“The focus is on learning everything we can at this innovation restaurant and using it to benefit the KFC brand,” he said.
The interior features dark woods and stainless steel. The logo has a rooster instead of KFC’s rendering of the white-bearded Colonel Sanders. But the “eleven” in the name pays tribute to the founder for the 11 herbs and spices used in his original recipe for fried chicken.
The menu of salads and rice bowls is built around KFC’s relatively new boneless chicken product, which have received lots of TV air time this year from “I ate the bones” commercials.
KFC eleven is the company’s attempt to “remain relevant, evolve and raise the quality for a more affluent customer,” said Darren Tristano, executive vice president of Technomic, a foodservice research firm. “The plan is to roll it out. But they need to be sure it’s working (operationally).”
Meanwhile, Starbucks (SBUX) has moved deeper into Panera territory. It’s been offering new bakery products from its acquisition last year of La Boulange Café & Bakery, a Bay area fast-casual chain. New salad bowls and sandwiches also have been rolled out recently.
“They definitely intend to be more competitive with Panera,” as well as with McDonald’s (MCD) during breakfast, Tristano said.
KFC’s sister brand Taco Bell also has been experimenting with fast-casual foods with a “Cantina Bell” menu within its existing fast-food units. Meant to compete with Chipotle but with lower prices, the menu features cilantro rice-stuffed burritos and bowls with fresh-Mex ingredients such as corn salsa, black beans and romaine lettuce.
“It’s for Millenials who desire the ‘farm to table’ feel,” said analyst Conrad Lyon of B. Riley. “It takes the freshness factor up a notch.”
The ultimate imitator of fast-casual concepts and Chipotle in particular may be Chipotle itself. It’s applying its assembly-line approach of fresh-Mex items to a spin-off called ShopHouse Asian Kitchen, inspired by the popular one-dish shop houses of Thailand.
Three restaurants are currently open, two in Washington, D.C., and one in Hollywood, with a fourth soon to open in Santa Monica, Calif.’s Third Street Promenade.
Four others in the D.C. and L.A. markets are expected to open by mid-2014, for a total of eight.
Chipotle, Starbucks and Yum Brands shares all fell less than 1% in afternoon trading in the stock market today. Panera is down nearly 2%.