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The D.C. fast casual sector has reached its angsty teenager phase. No longer the new kid and not quite a mature industry, these restaurants that now seem as ubiquitous as fast-food burger joints, aim to provide customizable, high quality meals for $10 to $15.
Four local fast casual pioneers are growing with fervor. The first sweetgreen opened in 2007, and now has close to 90 locations nationwide. District Taco debuted as a food truck in 2009 and now has 12 restaurants in D.C., Maryland, Virginia, and Pennsylvania. After opening in 2011, CAVA now has more than 70 locations in nine states and the District. And, after launching in 2012, there are now 32 &pizza shops up and down the East Coast.
These independent fast casual titans, along with popular competitors like Chipotle and Shake Shack, prove there’s a hungry market for quick, convenient dining that’s wedged between fast food and sit-down service.
Technomic managing principal Joe Pawlak predicted in April that fast casuals would continue to lead restaurant industry growth in 2018. Where casual and fine-dining restaurants were expected to grow by 2.7 percent this year, fast casuals were predicted to have a higher growth rate of 7.5 percent. These numbers suggest that opening a fast casual restaurant is the safest bet in an industry where so many businesses fail.
But a decade into D.C.’s fast casual boom, the city is starting to see a shake up due to increased competition, labor challenges, and rising rents. In the past 14 months, hoagie slinger Taylor Gourmet closed all of its stores; sushi burrito company Buredo consolidated from five restaurants to two; Philly import honeygrow shuttered its D.C. proper location; TaKorean closed on U Street NW; and futuristic fast casual restaurant eatsa, which had outlets on K Street NW and Pennsylvania Avenue NW, shut down its D.C. and New York restaurants.
As the District’s fast casual spots experience growing pains, City Paper checked in with six operators to understand what adjustments they’ve made since their first sale and how they see the future of their industry.
CAVA, overall, had a positive 2018. (Well, except for the woman at the Tenleytown location who found a leaping frog in her salad in mid-November.) On Nov. 21, the Greek-inspired restaurant where you can load up bowls, salads, or pitas with Mediterranean flavors officially acquired Zoës Kitchen in a $300 million deal, creating a fast casual company with 8,000 employees.
CEO Brett Schulman attributes CAVA’s success to having clear priorities and a point of view. He sees the fast casual sector splitting into companies that focus on convenience and companies that focus on the customer experience.
“They’re not mutually exclusive, but you have to be really strong at one,” he says. “We pride ourselves on being really convenient—making sure you can meet the guest on their terms.” That means having a digital ordering app for on-the-go customers; offering delivery where it makes sense; and a foray into building drive-thru locations in suburban markets.
While the menu is consistent, CAVA designs each restaurant to suit its surrounding community. The CAVA in Manhattan’s Bryant Park, for example, has no seats. It’s not worth paying Big Apple square footage when most diners are looking for a desk lunch. “The monolithic chain of 15 years ago that’s very cookie cutter isn’t going to work in the future,” Schulman predicts. “You have to adapt spaces for different neighborhoods.”
Schulman thinks of CAVA as an “HR company serving food,” and notes they offer employees health insurance, paid vacation, and staff meals. This month, CAVA gave all of its employees two paid hours off to vote, and other businesses followed suit. It’s earned a five-star rating on the job review site Glassdoor.
Attracting, retaining, and affording staff continues to be one of the biggest challenges for fast casuals according to the “2018 Fast Casual State of Industry” report from FastCasual.com. The publication based its findings on surveys of 250 fast casual operators. Fifty-four percent reported concerns about minimum wage increases.
Some companies will inevitably look to technology to help trim labor costs. “I’m a firm believer that technology is going to enhance the human experience, not replace it,” Schulman says. “I don’t believe in a bunch of robots and no people.”
Where CAVA has a chief data scientist that informs the company’s operations and expansion plans, Taco Bamba owner Victor Albisu relies on his gut intuition. “The way we’ve grown, it’s always been a shot in the dark,” he says. Yet Albisu came to the same conclusion as Schulman.
“We treat every single store as its own,” Albisu continues. “We don’t just open a store and put our logo on there and make tacos.” Even the chorizo recipe varies from one location to the next. There are three Taco Bambas operating in northern Virginia, with a fourth on the way, and one in downtown D.C. “We aren’t worried about consistency, just high quality.”
Menus vary from location to location, but the tacos uniformly push boundaries. Springfield offers a “Foo Fighter” taco with crispy fish, tamarind chile sauce, green papaya slaw, and ancho chili peanuts, while D.C. serves a taco in collaboration with Chef Erik Bruner-Yang with beef tendon, chorizo larb, serrano, mint, and basil. “We don’t dumb it down, we don’t make it easy,” Albisu says. “Our customer base is split between total cult following and people who don’t get it and run out as fast as possible.”
Two other local fast casual restaurants took risks with the cuisines they serve, reflecting a new direction for the sector. RASA in Navy Yard serves build-a-bowl, made-from-scratch Indian food, while Chaia in Georgetown is a vegetarian taco shop.
“When we started there was this big open question,” says Sahil Rahman, who co-founded RASA with Rahul Vinod. “Is mainstream America ready to eat Indian food on a regular basis?” About a year in, the youthful business partners are pleasantly surprised. “We’re seeing Indians, millennials, Latinos, African-Americans…even the baseball crowd that’s used to hot dogs and hamburgers has been receptive.”
He believes Americans are craving international cuisines, especially in large metropolitan areas. “Fast casual is the fastest growing segment of the market, so it only makes sense that people are going to have to adapt to this model.” The former owners of sit-down Burmese restaurant Mandalay are bringing the District a fast-casual restaurant called Bandoola Bowl in 2019, for example.
While RASA only has one location, it relies on delivery services to get its food in front of more customers. “A lot of people in the Shaw and Chinatown areas order RASA where I don’t know if they’d come into the store,” Rahman says. “There’s so much data being collected. If you think about growing, you know people are craving RASA in this area.”
Delivery is so popular that RASA just launched catering on Caviar. Rahman says if he got a mulligan, he would go back and create a separate delivery line of cooks that prepare meals for delivery customers without impacting in-store operations.
Rahman says they’re working on standardizing recipes and putting systems in place that will allow them to replicate their business. “We want to get our feet set and make sure we’re confident that we’re giving the best possible experience,” he says. “I want to run a great company, not just a big company.”
Chaia has a similar status as RASA. Co-founder Bettina Stern took a chance on opening a vegetarian taco shop in 2015 after testing the concept and serving signature dishes, like the creamy kale and potato taco, at area farmers markets. Three years later, Stern says they too are standardizing recipes and operating procedures in order to open their next location at 615 I St. NW.
“Vegetables are the most luxurious items on the plate,” she says. “They require a lot of work.”
Stern says Chaia relies on its ordering app to provide “integrated data that gives us the competitive edge.” These apps toe the line between collecting an uncomfortable amount of personal information and retrieving just enough data for restaurants to provide a more customized experience. “It helps us ask things like, ‘Would you like your regular order or do you want to try something new?’”
Chaia has expanded slowly compared to others that peppered the area with restaurants fast and furiously. “Some of these places just grew too fast,” Stern says. “We’re looking at locations three and four in the area, then it might be time to go to another region instead of putting seven Chaias in a seven-mile radius.”
TaKorean has chosen this approach, launching its first outpost in Philadelphia inside a renovated food hall around the same time its U Street NW storefront closed. The homegrown Korean taco and rice bowl chainlet started as a food truck and Union Market stall.
“After we opened at The Yards, I thought, OK, we’re doing this thing,” says founder Mike Lenard. “We have to open stores, get money, and be aggressive like everyone else. But after U Street, I don’t want to do another store for a long time. They’re so much riskier with a high probability of failure. In a food hall, if it doesn’t work out, it’s not that bad.”
Not even delivery could save the U Street NW TaKorean. When Caviar takes 30 percent of each sale, it’s “completely unprofitable,” according to Lenard. “If you used to go to the store and now use Caviar and Uber[Eats], you’re destroying restaurants,” he says. “In D.C., there are a lot of people with excess income, but it’s contributing to the general laziness of our culture. Some CEO wrote that, ‘Defying delivery is like defying gravity.’ You can’t not do it.”
Lenard says his stores were “aggressively up” two years ago and TaKorean is continuing to grow overall, but he notes that the local fast casual sector has changed since he first entered the market in 2012.
“There were only four fast casuals in the market and now there’s maybe 12 or 13,” he says. “People have so much money in their pockets from institutional investors—they’re signing leases everywhere, blanketing the market and making it difficult to capture people’s attention.”
Philadelphia-based fast casual restaurant honeygrow went through an aggressive expansion phase. Justin Rosenberg, the CEO of the salad and stir-fry company that’s been operating since 2012, told Eater in August 2017 that he envisioned adding eight more honeygrow locations in the region by 2019. Only Pentagon City and Chinatown were open at the time.
Honeygrow was able expand into Rockville, Tysons Corner, and Reston, but the D.C. location at 7th and H streets NW closed this month. Rosenberg cited the high rent. “We have work to do,” Rosenberg says. “We learned the hard way through closing a few locations, especially what rents we should be taking.”
Rosenberg says he’ll consider opening new honeygrows in 2020 and 2021, once they hone their cooking processes, staff training, and staff retention practices, suggesting rent wasn’t the only problem.
“Today is harder than ever,” Rosenberg says. “There are so many options for people to work, we’re constantly thinking of ways to make people stay with us.” He suggests employees should be loyal to honeygrow because they’re learning techniques that could help advance their careers.
“You learn how to cook, this is not a poop-and-scoop concept,” he says. “Cooks can say they’ve made thousands of stir-fries on smoking woks. We use the same noodles as David Chang. They’re dropping noodles, shocking the noodles in an ice bath. That matters.”
Asked about the future of the fast casual sector locally, Taco Bamba’s Albisu worries about oversaturation while also acknowledging that healthy competition means better quality for consumers.
“Our industry and many industries, we have a tendency of breaking things,” he says. “All of the sudden everyone wants to do something. It’s cool because it pushes the level up and you have to try to be the best in your genre. I hope that there’s a lot of good competition and the sheer amount of offerings doesn’t bring down the whole ship.”
The danger of an oversaturated market, he believes, is that quality will start to suffer and public perception of fast casuals will take a dive. “This is a food style that I don’t ever think is going to change,” Albisu continues. “It’s here to stay. I just think we all need to be doing our best work to continue being successful.”
But being the best salad tosser, sandwich builder, or pizza thrower might not be enough. The fast casuals that stretch expectations and incorporate new and bold flavors from around the world appear to be best positioned for success and longevity, especially in a market where dining has never been so exciting.
“I think those that are doing it right will still be in the game,” says Chaia’s Stern. “Those that have the right ethos going forward will hopefully make it. We’re totally unconventional. People like unconventional.”