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News release

LAS VEGAS, NV

Quick Service Restaurants Evolving Brand Strategy to Compete with Fast Casual

QSR staples Wendy’s, Chick-fil-A implement new development strategies with JLL in race for market share


LAS VEGAS, May 18, 2015 – Quick service restaurants (QSRs) have a new secret sauce, but you won’t find it in the food, according to JLL research. The fight for market share has led Wendy’s, Chick-fil-A and other QSRs to adapt new development strategies to compete with fast-casual restaurants that are threatening fast food’s traditional heavyweights.

“Everyone is trying to figure out who their customer is and what they can do to put themselves in a better position than their competitors,” said Steve Jones, Managing Director for JLL Retail Multi-site Program Management. “The customer is much more knowledgeable now than in the past. We have access to more intelligence and data, so it’s more important than ever that these restaurants know themselves, their brands and who their customers really are.”

According to the JLL research, the millennial consumer base is becoming increasingly vital to QSRs. This consumer pool accounts for approximately 23 percent of annual restaurant spending—about 46 billion visits annually. With those visits come new expectations for atmosphere and fresh ingredients, which requires QSRs to invest in their facilities, brand experience and technology, across both existing restaurants and new locations.
Fast-casual restaurants are slightly more expensive than QSR options, offering customizable, health-conscious options in a hip environment that appeals to millennials. With this in mind, Wendy’s is evolving its customer experience to match the changing consumer landscape.

“The traditional QSR dining experience encourages customers to get their food, eat and leave. At Wendy’s, we’re changing that standard by making the environment in our dining rooms more inviting and comfortable,” said Bruce Allendorfer, Regional Director of Construction for Wendy’s. “Customers stay longer and can make an event out of their visit.”

JLL worked with Wendy’s to implement its “image activation.” The new strategy started with store rebrands for the Ohio-based restaurant chain, which include adding fireplaces, new seating options with lounge chairs and booths, Wi-fi, flat-screen televisions and digital menu boards. The goal wasn’t just to drive sales, but also to compete with the environments offered by Wendy’s fast-casual peers.

“Our customers are reacting positively to the re-imaging of Wendy’s. Sales are up and, more important, there are positive customer counts as well,” Allendorfer said. “Wendy’s is providing a quality experience for our customers in both the drive-through and the dining room.”

The opportunity for QSRs is great. With a focus on three key areas, these restaurants can combat threats to their market share:

  1. Rapid renovation: Reworking existing space to better serve high consumer expectations can change the entire experience of a restaurant. Changing the interior build-out of the restaurants, remolding the ordering space, and re-creating the menu are all physical ways to make a QSR more competitive. Another, more complex, method is to create a franchising model to meet local market demand.
  2. Technology: Technology enhancements go a long way to personalizing the consumer experience. For example, drive-through experiences can be upgraded by replacing the metal speaker box with a high-definition video communication platform, as a global coffee chain recently did. GPS and beacon technologies offer incredible potential for creating new digital experiences for consumers as well.
  3. Facility branding: Implementing a brand refresh can alter previous impressions and introduce a whole new demographic to a company. On average, organizations refresh their corporate brands once every seven to 10 years—but QSRs are doing so even more frequently.

Renovation, rebranding and redevelopment come with their own challenges for QSRs. In 2013, sales for fast casual chains grew by 11 percent, while QSRs have maintained revenue growth at about 1.2 percent annually because of flattening sales and an increase in the cost to produce. Efficiency has proved necessary for chains like Chick-fil-A, that see development projects balloon during expansion and renovation.

“The biggest challenge that Chick-fil-A was facing was a large increase in the number of projects we needed to manage within the reinvestment portfolio,” said John Mark Wood, a Program Manager from Chick-fil-A. “The budget went from approximately $30 million to $100 million in a span of one-and-a-half to two years.”

Chick-fil-A worked with JLL to manage its reinvestment program. By adapting new development strategies like these, QSRs can stay diversified and contend with their fast-casual counterparts. 

To download JLL’s special report on the state of the restaurant industry, please visit here. For more news, videos and research resources on JLL, please visit the firm’s U.S. media center webpage. Bookmark it here: http://bit.ly/18P2tkv.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.