Tastier, Plusher--and Fast

By Desa Philadelphia

It sounds laughably upper crust, but once you unwrap a Coronation Chicken sandwich, the name seems almost appropriate. It's made with white meat, mango chutney, fresh-roasted almonds and a curry dressing. And it's the signature product of Pret A Manger (that's French for "ready to eat"), a chain of spacious, well-lighted restaurants decorated with more chrome than a Ferrari showroom. The Coronation sandwich also fetches a fancy price--almost $7 in the chain's New York City stores--that translates into tidy profits.

Industry experts have grouped chains like Pret into a new category they call "fast casual" or "quick casual." These combine the convenience of a fast-food joint with the more sophisticated fare, atmosphere and price of a sit-down restaurant. The market leaders boast about the freshness of their ingredients and the diversity of their menus. Panera Bread, with headquarters in St. Louis, Mo., offers 14 kinds of bread--including Asiago Cheese and Olive Sourdough--freshly baked on its premises and sells loaves as well as sandwiches. Fazoli's, with restaurants in 32 states, serves pasta and Italian subs. Rubio's, based in Carlsbad, Calif., is the "home of the fish taco." At Cosi, a sandwich-and-salad chain concentrated in the Eastern states, patrons can make s'mores over little hibachis at their tables and buy cocktails in the evening.

According to research firm Technomic, fast-casual chains have enjoyed aggregate growth of 15% for each of the past three years and booked more than $5 billion in sales last year. Panera, with 414 stores the nation's largest fast-casual company, had revenues of $529 million last year, compared with $114 million in 1998. Technomic analyst Joe Pawlak says these restaurants appeal to office workers and others who are willing to pay more for better food--those who "want to move beyond fast food but still need food fast."

So far, fast casuals account for only 4% of sales in the $130 billion fast-food sector, but their rapid growth has caught the attention of the burger barons. McDonald's has bought a 33% stake in Pret A Manger, with an option to buy the chain outright in 2005. The burger giant also owns a majority interest in Chipotle, which sells fast and fresh Mexican cuisine. And McDonald's bought Boston Market out of bankruptcy in 2000. Not to be outdone, Wendy's in June bought the Baja Fresh Mexican Grill, with 185 stores mostly in the West.

Russ Smyth, who is responsible for McDonald's fast-casual investments, says buying into such restaurants is the only way for traditional fast-food firms to get into the pockets of free-spending fresh-food fans. "No matter what we do," he says, "we won't be able to attract those people to the Golden Arches." --By Desa Philadelphia