Fast casual chains lead restaurant-industry growth

March 30, 2009
CHICAGO -- Restaurant-industry growth continues to be driven by fast casual chains, according to data released by Chicago-based consultancy Technomic Inc. in its annual reporting on the top 500 U.S. restaurant chains.
The Mexican category was led once again by Chipotle Mexican Grill and Qdoba Mexican Grill, which posted estimated U.S. systemwide sales growth of 20.7 and 17.8 percent, respectively. Standouts in the chicken segment included Wingstop and Zaxby's, with estimated sales growth of 23.6 and 17.9 percent, respectively.
Growth in the Asian sub-segment was 12 percent and was led by California-based Panda Express, which grew 14.6 percent with estimated sales of $1.18 billion.
The 500 largest U.S. restaurant chains registered slower growth rates overall, posting 3.4 percent annual sales growth in 2008. For the year, U.S. systemwide sales for the top 500 rose to an estimated $230.2 billion, up $7.6 billion over 2007.
Growth continued to come from the Bakery Cafe, Coffee and Other Beverage, and Hamburger categories with Panera Bread, Starbucks and Burger King posting estimated 2008 sales growth of 16.2, 6.9 and 6.6 percent, respectively.
McDonald's grew an estimated 4.4 percent with sales exceeding $30 billion and Subway growing in the Other Sandwich segment with 17.1 percent sales growth and total sales of $9.6 billion. It is now the second-largest restaurant chain in the U.S. followed by Burger King, Starbucks and Wendy's, ranked third, fourth and fifth, respectively.
Limited-service chains within the Technomic Top 500 accounted for more than 80 percent of all U.S. "fast food" restaurants. As a whole, this group grew at a rate of 4.5 percent.
The 10 fastest-growing chains in 2008 with sales over $200 million are:
                                             2008 sales
1. Five Guys Burgers and Fries        $302(a)                   
2. Jimmy John's                            $497                       
3. Potbelly Sandwich Works            $225(a)                    
4. Noodles & Company                   $200                        
5. Wingstop                                 $255                        
6. Peet's Coffee & Tea                   $230                       
7. Buffalo Wild Wings                   $1,229                       
8. Chipotle                                 $1,275                       
9. Pei Wei Asian Diner                    $278                        
10. BJ's Restaurant & Brewery         $377                        
(a)Technomic estimate
In total, the top 10 fastest-growing chains' sales accounted for $4.9 billion, a 24 percent increase over 2007. Unit counts grew 22 percent.
Consumers cut back 
According to results from a recently released The Harris Poll, a new study of 2,355 U.S. adults surveyed online between March 9 and 16, 2009, by Harris Interactive, Americans are cutting back on their spending over the next six months. Specifically:
  • Three quarters of Americans say it is likely they will decrease spending on eating out in restaurants (74%) and reduce their spending on entertainment (74%). This is up from November when 65 percent said they would decrease spending on eating out and 64 percent would reduce entertainment spending
  • Two-thirds of Americans (65%) say it is not likely they will take a vacation away from home lasting longer than a week, while 35 percent say they will vacation away from home. In November, 29 percent of Americans said they would be likely to take a trip
  • Only one in five Americans (21%) say it is likely they will have more money to spend the way they want in the next six months which is slightly down from 25 percent in November
  • 50 percent say it is likely they will save or invest more money while 50 percent say it is not likely they will do so

Topics: Associations, Commentary, Operations Management, Public Companies

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