The category that includes Chipotle Mexican Grill, Panera Bread and Noodle & Company grew 7 percent in the 12 months from May 2012 to May 2013, NPD Group reported.
These restaurants are defined as upscale compared to McDonald's with higher quality menus and higher priced offerings.
"Traditional quick service restaurants have taken notice and are working to compete with fast-casual chains' offerings, especially in terms of the freshness and quality of food," said Greg Starzynksi, director of product management for NPD's Foodservice division, the Los Angeles Times reported Monday.
By example, Noodles & Co., was the best performer among the year's initial public offerings with share values up 104 percent, the Times reported.
Then it was eclipsed by Spouts Farmers Market's debut, the Times said.
Stock at Chipotle's has risen 35 percent in 2013. Panera, in turn, reported profits were up 16 percent in the second quarter.
Net income at McDonald's has been sluggish by comparison, rising 4 percent in the second quarter.
While fast-casual is out-performing expectations, McDonald's expects the year to "remain challenged," Chief Executive Officer Don Thompson said.
McDonald's stock is up 10 percent on the year, the Times reported.