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What's driving chain restaurant growth?

Some operators are turning to technology and regionality to safeguard their brands.
business bar growth

The Top 500 chains saw a year-over-year sales boost of 3.6% in 2016, down from 2015’s 5% gain and just under the overall industry’s 3.9% growth. Unit buildup among the Top 500 also slipped to 1.7% (though chains fared slightly better than the rest of the industry). “Large chains will struggle for years,” says Technomic’s Darren Tristano. But there is hope: “There are opportunities, but today you have to be more differentiated,” he adds. “Standing still is no longer an option.”

Some operators are turning to technology and regionality to safeguard their brands.

Regionalization

Many of the biggest growth chains have a regional presence. “They know their market. If they go outside their market, they will struggle,” says Tristano. But, he adds, they are in a much better position to adapt quickly to a changing audience, whereas large chains will continue to struggle as millennials, in particular, push back against national brands.

Automation

Technology continues to reshape the industry, in part due to labor issues. But operators need to be cautious about how they spin their use of automation; many consumers are likely to repel brands that say they are using tech to cut labor costs. Instead, chains like Domino’s and Panera are claiming the advances simply improve the experience, helping them customize, keep costs stable and improve accuracy—something tangible to diners. 

Off-premise

Operators are rethinking their business models to grow sales through takeout, catering, delivery and other off-premise options—and consumers have grown to expect the convenience. This boom has driven a lot of change, in areas such as restaurant layout and design as well as staffing and throughput. Many operators are turning to the burgeoning third-party delivery market, though Tristano believes that consolidation of the different partners is imminent. Still, he says, there’s tech in place today to make delivery easier than before, and operators will have to contend with paying fees if they don’t want an in-house fleet.


Biggest sales growth

2017 Rank

Chain Name

Sales Change

Unit Change

213MOD Pizza129.8%103.3%
461Pie Five Pizza Co.110.4%63%
405Mission BBQ94.3%110%
350Sim Chickens90.3%93.3%
191Blaze Pizza82.1%62.5%
229Pieology Pizzeria81.2%66.7%
463Metro Diner78.4%93.3%
473Modern Market66.7%45%
334Sweetgreen58.5%64.1%
372Rock & Brews58.1%50%
458Snap Kitchen55.6%37.1%
478Pizza Rev51.8%37.5%
339BonChon49.4%48.6%
430Smallcakes a Cupcakery and Creamery47.5%47.8%
311Taziki's Mediterranean Cafe46.5%44.2%
411Nando's44.8%35.78%
130Shake Shack40%44.9%
243WaBa Grill39.8%39.1%
333Bareburger37.5%37%
464Torchy's Tacos37%28.9%

Source: Technomic's Top 500 Chain Restaurant Report


Biggest sales decline

2017 Rank

Chain Name

Sales Change

Unit Change

209Ryan's-34.4%-50%
302Coco's Bakery Restaurant-31.4%-22.5%
116Old Country Buffet/HomeTown Buffet-31%-51.9%
343Elephant Bar Restaurant-30.7%-60.7%
161Quiznos-27.2%-20.5%
301Red Mango-22.1%-28.2%
476Blimpie America's Sub Shop-19.2%-15.7%
417Texas Land & Cattle Steak House-17.9%-42.3%
445Tony Roma's-17.2%-26.7%
288Fox & Hound Sports Tavern-16.9%-23.1%

Source: Technomic's Top 500 Chain Restaurant Report

 

View the full Top 500 report

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