Consumer Trends

Technomic digs deeper into the Top 500 chains at the 2019 National Restaurant Show

Expert insights revealed that bar programs, breakfast and premiumization are among the trends powering growth in the restaurant industry.

Restaurant chains fared pretty well in 2018, with 18 of the top 25 showing growth, and total sales among Technomic’s Top 500 reaching $556 billion. But top chain growth is in a maturation phase, said Joe Pawlak, managing principal, and Pat Noone, executive vice president, business development of Technomic, during their presentation, “Predicting the Future of Foodservice,” at the 2019 National Restaurant Association Show. “Chains are slowing down unit growth and looking more at growing sales within existing locations,” they told attendees.

The pair began by looking back over the past 40 years, when Technomic first began tracking chain growth and top chain sales peaked at $65 billion. McDonald’s claimed the No. 1 spot back then and still does today, but consumer demands and industry trends are changing the dynamics of growth. Pawlak and Noone shared insights into these demands and trends, as revealed by Technomic research:

• Differentiated bar programs are driving growth in casual dining. The chains that are doing well in this segment are focusing on alcohol, said Noone, pointing to concepts such as The Brass Tap and Twin Peaks for their beer offerings and Cooper’s Hawk Winery & Restaurants for its wine program.

• Breakfast is a force in the family-dining segment, powering such concepts as First Watch, IHOP and Black Bear Diner, which does breakfast all day. “If you don’t have booze, you better have breakfast,” Noone added.

• There’s been 54% growth in plant-based items on menus, with items such as faux beef burgers, zucchini noodles and veg-forward bowls fueling the better-for-you movement.

• But consumers aren’t abandoning traditional proteins. Chicken chains are growing by 8%, with Chick-fil-A leading the charge. But concepts such as Raising Cane’s, which focuses on premium chicken fingers, and Wingstop, with a wing-centric menu, are moving up in the ranks.

• Eatertainment concepts are pacing for growth, as 70% of consumers prefer this type of restaurant for group get-togethers over classic casual-dining chains. Brands such as Top Golf are meeting this demand, and Buffalo Wild Wings is rebounding with a focus on esports fans.

• Third-party delivery partnerships are a must-have: Every major chain has at least one. Delivery accounts for $10 billion in restaurant sales, and it’s only going to increase going forward.

• Consumers are looking for premiumization, said Pawlak. The growth chains to watch, with over $200 million in sales, are offering better burgers (Shake Shack), custom pizzas (MOD Pizza and Blaze Pizza) and hand-sliced meat sandwiches (Jersey Mike’s).

• Chains with under $200 million in sales that are moving up tap into trends and offer points of differentiation. CoreLife Eatery, for example, is sparking growth with better-for-you ingredients, while Jinya Ramen Bar boasts an authentic Asian menu and Metro Diner is extremely service-oriented.

Looking ahead, competition will intensify, with tech being the new battleground, said Pawlak. Although Top 500 sales were up almost 4%, traffic remains a big issue, as independent restaurants, emerging chains, c-stores and grocery encroach on the old guard, added Noone. Consumers have lots of choice, and, despite favorable economic conditions, restaurant chain growth will remain modest in 2019, the pair concluded.

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