Multiunit franchisee growth outpacing restaurant industry growth

July 16, 2014

According to new data from the Restaurant Finance Monitor’s annual "Monitor 200" ranking, the 200 largest restaurant franchisees in the country saw their total revenues grow by 9 percent in 2013. This growth "easily" outpaced the overall restaurant industry’s growth, according to a news release.

The average franchisee now has $143.5 million in total revenue and 109 locations and operates more than one concept. In 2009, the average franchisee had $109 million in sales and 84 locations. Both numbers are up about 30 percent.

The largest restaurant franchisees are adding new units, either by acquiring smaller operators or by purchasing locations from the franchisor in a refranchising deal.

"This period of consolidation among restaurant franchisees is almost unprecedented," Jonathan Maze, editor of the Restaurant Finance Monitor, said in the release. "A number of these companies operate more units or have more revenues than most restaurant brands."

The Monitor 200 ranking lists the largest restaurant franchisees based on revenue.

The largest company on the list was Flynn Restaurant Group, a San Francisco-based operator of Applebee's and Taco Bell, which was the first franchisee in the U.S. with $1 billion in revenues. That company was joined in the $1 billion club by the second largest franchisee, Overland Park, Kan.-based NPC International, which operates Pizza Hut and Wendy's locations.

In addition to those two companies, nine others had sales more than $400 million last year.

"It makes sense for franchisees in today's market to continue to grow larger," Maze said. "Food costs are rising. Labor costs are rising. Obamacare is going to add costs at some point and consumers still love discounts. Bigger franchisees are more equipped to handle those challenges."

Topics: Franchising & Growth, Operations Management, Trends / Statistics

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