Fast-Casual Restaurant Popularity Fueling Real Estate Competition

The increase in the number of fast-casual chains over the last few years has helped fuel competition for prime real estate spots.

According to data from market research firm NPD Group, the number of fast-casual units has increased from 18,176 units in the fall of 2014 to 19,043 locations in the fall of 2015. The growth is attributed to an increase in fast-casual menu concepts. Burgers, pizza, salads, and Greek and Mediterraneans fast-casual chains have gained popularity over the last few years.

Competition for real estate has intensified as many of these fast-casual concepts are looking for similar real estate spots: 2,000 square feet to 3,500 square feet locations in urban areas and suburban strip malls. Nation's Restaurant News reported that restaurant concepts that can fill bigger spaces are looking at these types of real estate locations as well, further intensifying the competition. Bucky Cook, CEO of Your Pie, said lease rates are also increasing, with the rates being highest in popular markets with growing populations.

"Some of it is very tight, and I'm seeing it become more expensive," Cook said. "Competition for spaces is more keen than it was four or five years ago."