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No Dollar Menus Here

The economy may be sluggish, but fast-casual chains such as Chipotle and Panera are edging out their QSR competition.
February 11, 2013

NEW YORK - If given the option to buy a value meal versus a Baracoa burrito with extra guacamole, some consumers may choose the latter.

"While traditional fast-food chains complain waning consumer confidence is hurting sales, Chipotle Mexican Grill Inc. and Panera Bread Co. are ringing up solid results �" and they don't even have dollar menus," writes the Wall Street Journal.

Both Chipotle and Panera believe that their "devoted diners" are willing to pay twice as much to dine at their locations than QSRs such as McDonald��s or Taco Bell.

During a conference call last week, Chipotle Co-CEO Monty Moran said the chain was "able to attract more people into our restaurants��despite a sluggish economy," and that it��s speed of service has become more efficient.

Meanwhile, Forbes reports that Chipotle opened 60 restaurants in Q4 of last year to raise its total count to 1,410. The company also reaffirmed its goal to add 165 to 180 restaurants in 2013, including four in international markets.

Panera is seeing success with menu items that allow customers to trade up to those that are more expensive �" not cheaper. Nation��s Restaurant News writes that during 2012, the higher-priced "Signature" and hot sandwich categories performed well, and according to Chairman and Co-CEO Ronald Shaich, sales of those items increased 34% in Q4 and 18% for the year.

"We saw an interesting trend with the Big Kid Grilled Cheese, which illustrates the power of the choice we provide our guests," Shaich said, adding, "Our initial belief was that the Big Kid Grilled Cheese would take share away from the other sandwiches, however we saw a lot of customers trading up out of café sandwiches to the Big Kid Grilled Cheese, which provided check growth."

Panera executives also said last week that the chain would introduce pasta system-wide by the end of the first quarter, reports Nation��s Restaurant News, adding that Panera will initially roll out three pasta dishes that will likely become permanent menu items: tortellini alfredo, pesto saccottini and rustic penne Bolognese.

Another service Panera is focusing more attention to is catering. The chain plans to hire more sales managers and launch a new online ordering website. In 2012, the company��s catering business grew to about 20%, making up 7.7% of sales for the year.

Chipotle recently introduced catering in its Colorado market and says the services will help contribute to the top line, although it is not clear yet as to how much.

And speaking of McDonald��s, the company reported last week that its made "quick fixes to boost its U.S. business" by advertising its Dollar Menu and bringing back the McRib in December. However, a drop in customer traffic in Europe "and continued weakness in Japan offset its U.S. recovery and led to nearly flat global same-store sales in the fourth quarter" of 2012, reports the Wall Street Journal.