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QSRs, fast casuals among top-performing segments in 2014

The fastest-growing brands over the past 25 years aren't those with double-digit, same-store sales growth year after year, but those with steady growth that consistently perform well, while minimizing losses and adapting to changes during down cycles.

June 19, 2015

The 25th annual edition of the Chain Restaurant Industry Review by GE Capital, Franchise Finance found that over the past 25 years American dining habits have changed significantly and that the restaurant industry competition is increasingly fierce, the company stated in a press release.

The industry itself, faced with technological challenges and rising labor and commodity costs, has grown increasingly complex in order to adapt. "Twenty-five years ago, sandwich chains like McDonald's and Burger King dominated the industry," GE said in the release. From the 25 largest restaurant chains, sandwiches comprised 63.5 percent of sales. By 2014, QSR sandwich chains on the Top 25 list generated 54.5 percent of sales.

Consumers today eat away from home more and more, but they're not limiting themselves to traditional meal times, according to GE. They enjoy snacking throughout the day and quality, inexpensive food, which has led to the popularity of fast casuals.Emerging fast-casual brands are increasing market share, with snack and fast casuals generating 16.5 percent of revenue at top brands.

"It's the nature of restaurants to innovate," Kimberly Savilonis, senior vice president of strategic marketing for GE Capital, Franchise Finance, said in a statement. "The lines separating traditionally distinct restaurant segments are blurring. For customers, the result is a significantly enhanced experience."

"The most successful operators over the next 25 years will be those that continue to evolve their businesses to stay in tune with customer preferences," she said.

GE's The Chain Restaurant Industry Review includes an analysis of the top 100 chains in the U.S. The study showed that the fastest-growing brands over the past 25 years aren't those with double-digit, same-store sales growth yea.after year, but those with steady growth that consistently perform well while minimizing losses and adapting to changes during down cycles.

"The strongest brands continue to be those that differentiate themselves through customer contact such as social media, broaden their customer base to embrace Millennials, offer healthier choices and better service, or create unique experiences,"Savilonis said.

Based on post-recession trends, QSRs outperformed full-service restaurants last year. Same-store sales growth for QSRs has remained positive for almost five consecutive years (up 3.4 percent in 2014). Full service restaurant same-store sales remained positive for only three consecutive quarters (up 0.6 percent in 2014), the report found. Chains in the snack and fast casual segments had the largest growth in system-wide sales.