The aftermath of September's attacks has led Americans to change their eating habits. As a result of wartime fears, and to display strength in the face of further attacks, Americans are finding solace in communal activities and food. Although this is good news for the food retail industry, not all restaurant segments will gain. The mid-priced 'fast casual' sector stands to emerge as the new star of the industry.

Displaying unity and determination, Americans are abandoning individualism and now flock to communal places to socialize and regain a lost sense of togetherness. At hotels, travelers are coming out of their rooms to bars and are talking to each other instead of reading newspapers or books. Hotel restaurateurs are also noticing interesting differences - many people are returning to basic comfort foods, oblivious of calorie counts.

Marriott's senior vice president for food and beverage and retail service, Robin Uler, says that customers are ordering meatloaf and mash potatoes with beers, Knockout Nachos, pizza with lots of toppings or their Triple Play Platter, an appetizer stacked with a dozen Buffalo chicken wings, waffle cheese fries and four mini-cheeseburgers.

Humans have been known to take solace in foods and this time is no different. So, is this good news for food retailers? Yes and no. Unfortunately, not all types of food retailers will benefit from this trend. The economic slowdown will deter eaters from dining out in fancy restaurants, and fast food eateries are suffering from a bad health image.

The mid-priced 'fast casual' segment, the category sandwiched between fast food and upscale, is the best positioned to benefit. These restaurants are comparatively inexpensive and, with concepts that range from traditional American to trendy Asian, the fast casual sector is markedly more diverse than its fast food counterpart.

Between 1998 and 2000, total fast casual sales increased from $28.9 billion to $31.3 billion, a 15% increase.  In comparison, the food industry as a whole normally grows at a rate of only 2-3% per year.  Even companies like McDonald's, with its minority investment in Chipotle Mexican Grill, have begun eyeing this segments.

Datamonitor expects overall growth in the fast food sector to hover between 3-5% through 2005, 2-8% below that of the fast casual. Move over fast food, here comes fast casual.

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