Drive down any major U.S. thoroughfare, and you are bound to pass chains that sell hamburgers, fried chicken, tacos and sub sandwiches. But if you're hankering for cashew chicken or Thai noodles, you'll likely need to find a local establishment -- at least for now.
Despite the maturity of the fast-food industry in the U.S., the Asian category is still relatively untapped on a national level. Among the top 500 chains in the U.S. only about 1.7% of sales are from Asian chains, according to Technomic.
Traditionally, fast-food chains have not seen as much opportunity in the sector due to several factors, including the large number of reasonably priced mom-and-pop restaurants and the fact that in some corners of the country Asian dishes weren't considered mainstream enough for the average palate. But as the chain restaurant giants scour for increasingly scarce growth opportunities in the U.S., the sector is looking a lot more attractive.
"Historically the other fast feeders have had a huge head-start. But if you look at which segments have grown, this has been consistently growing at a small rate," said Mary Chapman, director-product innovation at Technomic, which finds that last year fast-food and fast-casual Asian chain sales among the top 500 grew 9.3%.
But because U.S. consumers have been exposed to Chinese food for so long through local mom-and-pop establishments, they are increasingly interested not only in Chinese, but in expanding the Asian-culinary horizons to Thai, Japanese, Vietnamese and even Indian. According to a recent Technomic report on the Asian category, the number of consumers between 2008 and 2010 who said they would be very likely to order a Chinese-style beef dish jumped from 30% to 46%. "Asian's got a high flavor profile -- consumers want more interesting flavors," said Ms. Chapman.
Ms. Chapman said that even in non-Asian restaurants, incidences of Asian appetizers and meals are up. Among the top 250 chains in the U.S., there were 19% more Asian items on menus in the second half of 2010 than in the same period in 2009. Even McDonald's is in. The fast feeder last week reintroduced its Asian salad, which will be available through early September.
Population growth may also be a factor. Asians grew at the same rate as Hispanics from 2000 to 2010: 43%, according to the U.S. Census. There are 14.5 million Asians in the U.S. The largest population is Chinese, followed by Indian, which just surpassed Filipinos. The Chinese population grew 38.5% from 2000 to 2009 to just over 3.2 million.
Fast-casual is one of the better performing restaurant categories because consumers view the food as fresher, in part because they can see their order being made, said Ms. Chapman. And consumers also view Asian food generally as fresher.
In that case, Chipotle is opening up is Asian concept at just the right time. ShopHouse Southeast Asian Kitchen will have one location (for now, anyway) in Washington and feature cuisine inspired by Thai, Malaysian and Vietnamese cuisines.
Chris Arnold , communications director at Chipotle, said that the Asian concept "absolutely lends to the Chipotle model." He added: "We have long believed that Chipotle's success isn't necessarily about tacos and burritos, but rather it's about a simple model that keeps us focused on doing just a few things, but doing them very well. With the same disciplined approach to ShopHouse, we think it will do well, too." Mr. Arnold said there will be no advertising initially, so there is no ShopHouse agency.
Yum Brands is also tentatively getting into the space: Last week it made a bid to up its minority stake in Little Sheep, a well-known hot-pot chain in China, to 92.3%. Little Sheep also operates a handful of units in California and Texas.
Panda Express, though not available everywhere, is the dominant player in this country's limited-service Asian category, with market share of 45.7% and U.S. sales of $1.4 billion in 2010, according to Technomic.
Whatever critics might think of the mall staple, "consumers say that they believe it to be fresher and healthier," said Bonnie Riggs, restaurant industry analyst at NPD Group.
Panda Express plans to expand its number of restaurants over 70% to about 2,300 nationwide by 2015. Much of that growth is planned for the eastern part of the U.S. Still, with roughly 1,330 units at the end of 2010, the company posted 12.8% growth in U.S. sales, and a 4.9% increase in locations, according to Technomic.
As for Panda Express' marketing plans, Glenn Lunde, chief marketing officer, said, "We are increasing our investment in guest-focused initiatives to continue our commitment to exceptional dining experience for every guest. This will always be our priority and best marketing strategy."
In 2010, the chain spent about $6.5 million on U.S. measured media, nearly all of which was on spot TV. It works with Siltanen & Partners, Los Angeles, for creative and Pal8, Santa Barbara, Calif., for media.
Other regional restaurants have expansion plans. P.F. Chang's fast-casual outlet Pei Wei -- the No. 2 limited-service Asian restaurant in the U.S. by sales, according to Technomic -- had 168 stores in the U.S. at year-end 2010 with sales of $310 million, and plans to open 10 to 12 units in 2011. Minnesota-based Leeann Chin's, which had about 42 locations at the end of 2010 and estimated U.S. sales of $46.7 million, according to Technomic, has talked of franchising nationwide.
But with all this potential for growth, there lie some hurdles.
One failed experiment, perhaps too far ahead of the curve, was China Coast, which shuttered in 1995. The Darden-owned chain lasted five years and grew to 51 units before the company pulled the plug.
Ms. Riggs said full-scale development in the Midwest could pose challenging. "The most developed areas for Asian food are in the Mountain and Pacific regions of the country, and the Mid-Atlantic. ... It's going to be a challenge for these concepts in the Midwest, because people are exposed to other kinds of food less."
Hear from Fortune 500 brands that have been forced to pivot as consumer preferences evolve, as well as entrepreneurs building brands from scratch to meet new consumer needs. This event peels apart the layers of brand building with a carefully crafted roster of top marketing, technology, and creative leaders.Learn more