Technomic: Top 500 Chains Show

In its annual report on the top U.S. restaurant chains, Technomic found that U.S. systemwide sales for the Top 500 rose to an estimated $199.9 billion in 2005, up $13 billion over 2004 on a same-chain basis.

"Even as the U.S. economy struggled against rising gas prices and a turn in interest rates, the Top 500 still managed to outperform the restaurant industry at large, which grew 5.6%," said Darren Tristano, managing director of industry researcher based here.

Significant growth continues to come from the limited-service beverage and other sandwich categories with Starbucks and Subway posting 2005 double-digit sales growth of 20.5% and 14.4%, respectively. McDonald's, the largest U.S. restaurant chain grew 5.1% with sales exceeding $25.6 billion. Panera Bread continues to dominate the growing bakery cafe segment with 28.6% sales growth and total sales in excess of $1.6 billion.

Limited-service chains within the Technomic Top 500 accounted for 82% of all U.S. "fast food" restaurants. As a whole, this group grew at an impressive rate of 7 percent. Other limited-service sub-segments with sales growth above the segment average include bakery cafe (27.8 percent), beverage (19.8%), Mexican (12.4%), other sandwich (12%), donut (11.5%) and chicken (9.4%).

Growth continues to be driven by leading chains. The Mexican category was led by Taco Bell's 8.4% sale growth and quick-casual standout Chipotle, which grew an estimated 27.1%. The donut category continues it's growth with Dunkin Donuts' 13.8% sales and the category's increased sales of specialty coffee. The chicken segment saw strong growth of 13.1% from Atlanta-based Chick-fil-A and an emerging southeastern quick-casual chain, Zaxby's, that ended the year with over 330 units.

Within full-service segments, the seafood and Asian categories posted strong sales growth rates of 12% and 10.5% compared to an overall full-service growth rate of 6.9%. The varied menu category also outperformed the segment with 8.7% sales growth, led by America's largest casual dining chain Applebee's Neighborhood Grill & Bar, which increased sales by 8.8%. The Mexican, steak and Italian categories all posted strong results with sales growth of 8.3%, 7.6% and 6.6%, respectively. Family-style restaurants continued to struggle, but remained flat.

Five chains with sales over $2 billion achieved double-digit growth in 2005 including Starbucks (21%), Subway (14.4%), Dunkin Donuts (13.8%), Sonic Drive-Ins (13%) and Chili's Grill & Bar (11.1%).

While the Top 500 chains posted strong growth in the aggregate, individual results varied dramatically with sales ranging from Five Guys Burgers and Fries' 194% growth to Big Bowl Restaurant's 39% estimated sales decline. Fully 76% of the Top 500 restaurant chains posted at least nominal sales increases; 111 of these chains suffered sales declines in 2005. Both winners and losers appeared in each segment and menu category. These widely mixed results demonstrate the overall competitiveness of the industry and the need for suppliers and operators to carefully identify and focus upon the winners.

International performance by the Top 100 restaurant companies remained strong in 2005. International sales (up 8.5%) outpaced U.S. sales (up 6.3%); international unit growth was also up 5.4% vs. 3.8% for U.S. units. International sales leader McDonald's posted systemwide sales growth of 6.1% internationally.


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