1.3.1. Commercial Food Service
Most of the food service establishments are situated within the commercial sector. These establishments exhibit significant variation, rendering the categorization into distinct segments a complex task. Each segment can be differentiated by service level, quality of menu offerings, and price point. These attributes, along with other unique characteristics, will be examined within each segment. Historically, there were clearly defined segments; however, contemporary trends have blurred the lines between these categories. Despite these limitations, we will discuss eight primary segments.
Quick Service Restaurants (QSRs)
Quick Service Restaurants (QSRs), commonly known as fast food restaurants, are those where the customer orders at a counter, pays prior to receiving the product, and picks food up at the counter. Drive-thru service is also commonplace in the QSR segment. The service level is minimal, fast, and efficient, and the food quality is low-cost value. QSR establishments are unquestionably chain-dominated, and traditionally, McDonald’s, Burger King, and Wendy’s dominated the QSR segment, but dominance has begun to shift.
Food Trucks/Street Food
Food Trucks/Street Food are like QSR establishments, with limited counter-based service, due to their small street-side presence. Patrons order and pay at the counter and may take their food away, eat it right on the sidewalk, or sit at a table nearby. These operations typically have a limited menu; and they find a few things to do very well. Unlike QSRs, food trucks/street food vendors are typically independents, but chains are beginning to emerge. Food trucks and street vendors have been innovative using social media sites, like TikTok, as a marketing strategy.
Quick Casual
Quick Casual (also known as fast casual) segment is fast-growing, exciting, and is taking market share from QSR and the family and casual dining segments. Much of the growth in this segment can be attributed to dominant players such as Chipotle and Panera. Other key players in this segment include Noodles and Company and Pei Wei Asian Market. Service is limited similar to QSR. One of the main distinctions between quick casual and QSR is the quality of their menu. In quick casual establishments, an emphasis is placed on freshness, and many items are prepared in front of the customer. These establishments often have metal cutlery, ceramic plates and bowls, and more upscale and trendier décor to further differentiate themselves from QSR. The quick casual segment is largely dominated by chains.
Family Restaurants
Family restaurants are generally full-service establishments. Customers no longer order at a counter and take their food to a table. Rather, they are seated, typically receive menus, and are waited on by servers, who are central in orchestrating the dining experience. Food may now be delivered in courses (appetizer, main course, and dessert). Payment occurs at the end of the meal, and gratuities (tips) are expected. Alcohol is served in most full-service establishments. These restaurants include a mix of chains and independents. Homestyle cooking dominates this segment, and family-style restaurants are typically open for breakfast, lunch, and dinner. Buffet restaurants can also fall into this category.
Casual Restaurants
Casual restaurants, similar to family style restaurants, are full-service establishments that position themselves with a relaxed atmosphere (relative to upscale establishments), moderately priced food, and higher quality service as compared to QSR. Typically, only lunch and dinner are served in casual restaurants, however, some establishments may also serve breakfast as well. A broad range of alcoholic beverages are available in these restaurants. Casual restaurants focus heavily on tabletop marketing pieces to entice patrons to order appetizers and specialty alcoholic beverages. Similarly, servers are trained and encouraged to “up-sell” appetizers, desserts, and alcoholic beverages. While popular, casual restaurants are losing market share to quick casual establishments.
Casual Upscale Restaurants
Casual Upscale restaurants (also known as polished casual restaurants) are a minor step below upscale restaurants. This segment of food service is arguably one of the most difficult segments for individuals to grasp conceptually. Restaurants in this segment are similar to upscale restaurants in service and food quality. However, their major distinctive feature is that they turn tables quickly in comparison to upscale restaurants where the dining pace is more leisurely. Casual upscale restaurants generally serve both lunch and dinner, whereas upscale fine dining restaurants typically only serve dinner. Casual upscale establishments have expensive décor, some may use linen, they have a full bar and a high-quality wine list, and most items are prepared from scratch with the highest quality ingredients. There are numerous independently owned and operated casual upscale restaurants. However, the major players in this segment are chains. But for the most part, chain restaurants in this segment do not want the connotation of being a part of a chain, rather would like to be perceived as unique independent restaurants.
Upscale Fine Dining
Upscale fine dining establishments are at the top of the restaurant “food chain.” Upscale fine dining restaurants have a strong focus on providing the highest level of product and service, and their décor has an upscale look and feel. Upscale restaurants will often have a wine cellar to meet guests’ expectations. Upscale establishments employ highly trained professional servers who are typically only responsible for one or two tables at the same time. Average checks can easily exceed $500.00. Unlike casual upscale, independents dominate the upscale fine-dining segment. The restaurants in this segment generally have an à la carte or a fixed price (prix fixe) menu. An à la carte menu prices each item separately, whereas everything is included for one price with a fixed price menu. Many upscale dining establishments and their chefs strive to earn a coveted Michelin Star, a top spot in one of the several international lists, positive reviews from restaurant critics, or positive reviews online. Such accolades help these establishments maintain their exclusive status in a highly competitive business environment.
Cloud Kitchens
Cloud kitchens—also known as ghost kitchens—are a rapidly emerging segment within the food service industry. These are commercial kitchens designed exclusively for preparing food for delivery or takeout, with no dine-in facilities. They offer a cost-effective way for restaurateurs to expand existing operations or launch virtual brands without the overhead of a traditional restaurant. The rise of cloud kitchens accelerated during the COVID-19 pandemic, driven by a surge in demand for online meal delivery, growing interest in international cuisines, and the widespread adoption of digital ordering platforms. According to (Mordor International Reports 2023), approximately 49.4% of Canadians reported ordering food online at least once a week following the pandemic. This shift in consumer behavior has solidified the role of cloud kitchens as a key player in the evolving food service landscape.
