Vertical Integration Within Fast Casual
When looking at growing trends in food-consumption in developed nations, the main drivers for the current wave of increased dining spend, specifically within Fast Casual, often are said to be around education of the consumer (who and where the food comes from), a better understanding of quality (how its made), and refined concepts that push forward unique takes on classic + ethnic foods. Many of these trends are listed in the National Restaurant Association’s decade overview of “what’s hot”.
While a lot of this comes down to brand positioning, understanding the supply-chain of those serving food will become increasingly important in the short-term both internally and externally.
Looking at startup companies such as Munchery, Sprig, Plated, or Blue Apron, it is important for them to continue to tout a stable and local supply chain once the venture-funded growth slows. In the end, these companies are competing for similar raw materials as companies like Chipotle (which can subsidize their organic products) or markets like Whole Foods, as well as in some way consumer product companies like Nature’s Path, which recently bought farmland in Montana for $2M in order to better control key components of its Tier 1 supply chain.
Among these reasons it will be increasingly beneficial for the medium scale restaurant groups (where purchasing power isn’t as great) to become vertically integrated. This in turn could trickle down to other food service providers/startups like those mentioned above, who are directly competing for consumer’s dollars, whether they want to admit it or not.