Hungry investors transform eating out in Asia

Alt Pizza

Asia's food and beverage (F&B) scene is undergoing a shakeup as a new breed of investors look to establish a fast-casual sector in the region's infamously capricious industry.

"In the U.S., you have successful fast-casual brands like Chipotle but there are few iconic brands in Asia outside Japan. We want to change that," Hari Kumar, co-founder of investment firm LionRock Capital, told CNBC.

Fast-casual refers to restaurants that offer fresh, high quality ingredients but where customers pay for their orders at the counter as they would at a fast food resultant. Unlike casual dining, no wait staff is employed but an inviting decor sets it apart from quick-service restaurants, a.k.a. fast food chains.

Fast-casual has taken the U.S. market by storm in recent years, with the likes of Chipotle Mexican Grill and Panera Bread consistently surpassing their fast food rivals. For example, Panera reported a 7 percent annual revenue increase during the first quarter, compared to McDonald's 11 percent slide in the same period.

Taking a bet on the U.S. model, Singapore-based LionRock launched Zest Group three years ago, a firm focused on building fast-casual chains in Asia.

Read MoreThe next big trend in fast casual?

Presently, Zest owns and operates three brands: Artisan Boulangerie, Twelve Cupcakes and Alt Pizza. Combined, the three have more than 40 outlets across Asia. Zest's strategy is to come up with the food concept, such a bakery or pizzeria, and then create operations from the ground up.

Product quality differentiates Zest's brands from the rest of the region's F&B space, according to Kumar. For Artisan Boulangerie, Zest brought in award-winning chef Eran Mayer from France and even imports flour from Paris on a regular basis.

"Things like that will be a standard," he said. "When it comes to expanding these brands throughout Asia, we focus on marketing. Unlike other brands that customize products from country to country, we're all about international, cosmopolitan trends, not local markets."

Fast casual dining's recipe for success
Fast casual dining's recipe for success   

Private equity firm Everstone Capital is also zooming in on the sector. The Southeast Asia-focused firm has a separate arm running a portfolio of brands, called F&B Asia Ventures, but unlike Zest, it tends to buy established franchises that it believes it can develop further.

The company did not respond to CNBC's request for comment.

Is Asia ready for fast-casual?

A booming middle class and rising wealth levels has sophisticated the palette of Asian consumers, making them an ideal target for fast-casual growth.

Indeed, high disposable incomes and developed dining cultures are prime characteristics for fast casual, noted Elizabeth Friend, senior consumer analyst at Euromonitor, in a May report. The Philippines was one of 2014's largest fast-casual markets outside the U.S. with a market capitalization of nearly $500 million, she added.

"The long-term opportunity in fast casual lies in the fact that global consumers are changing their habits and shifting toward more flexible, more casual and more ingredients-focused dining experiences. That has moved past fad to megatrend, and it's not expected to slow down any time soon," Friend said.

But investors hoping to see a U.S. style growth explosion may be disappointed, she warned.

In developed markets outside the U.S., fast-casual has expanded at a much slower rate, with the largest countries [Germany, the U.K. and France] experiencing a 2-8 percent annual growth rate over the past five years, versus 11-12 percent in the U.S.

"There is likely never going to be another market that mimics the success of U.S. fast casual on such an enormous scale, but there are now smaller, targeted but nonetheless lucrative, opportunities all over the world," Friend said.