When looking for growth in the fast-food sector, don’t look at the center of the plate.
Amid what has been an anemic year for the industry as a whole and quick-service restaurants in particular, there are two general menu items that appear to be doing just fine: Drinks and desserts.
We examined the quick-service restaurants on the Technomic Top 1500 restaurant chains. There are 512 such chains on that particular list, and total sales among that group grew just 2.29%, suggesting seriously weak traffic after accounting for menu prices and unit count growth. Nearly half of those brands, 212 in total, lost sales last year.
In short, it was not a great year for the business of fast food.
And even that might not quite tell the full story. There were 37 fast-food chains that grew system sales by 25% or more, making them legitimate growth brands.
Of those, only 11 brands—Shah’s Halal Food, Playa Bowls, Smalls Sliders, Savvy Sliders, Angry Chickz, Wing Snob, bb.q Chicken, Snarf’s Sandwiches, West Coast Sourdough and Sourdough & Co.—are center-of-plate brands specializing in chicken, burgers, sandwiches or “other.”
In other words, of the 512 fast-food restaurant chains, only 10 of them, about 2%, are center-of-plate growth brands.
To be sure, we need to again point out that there are plenty of center-of-plate growth brands in the fast-casual sector, many of which could undoubtedly be considered quick-service chains with a modest tweak in definition. But that simply helps explain the state of the restaurant industry right now.
All the development is taking place among higher-end brands with larger check averages and not theoretically lower-priced fast-food brands.
The exceptions to this rule are in drinks and desserts. Of those 37 growth chains, 18 of them serve either coffee, boba tea or smoothies. Another nine serve frozen desserts or items like doughnuts and cookies. So more than two-thirds of those growth concepts are specialized brands targeted at very specific occasions.
The beverage revolution has been well-documented on this website. But there are several high-growth chains that focus on beverages.
They include 7 Brew, the drive-thru coffee chain that has been the fastest growing restaurant brand for two years running. They also include lesser-known brands like Summer Moon Coffee (61% growth), Better Buzz Coffee (53%) and Ellianos Coffee (48%).
There’s also brands like Swig (49%) Pure Green (43%) and HTeaO (40%). Among the dessert brands, we have Parlor Doughnuts (86%) and the cookie brands Dirty Dough (63%) and Chip City Cookies (60%).
Much of this growth in specialized concepts is coming because these brands are franchised, which can supercharge unit development thanks to the aggressive efforts of eager operators.
A lot of franchises specifically target drinks or desserts because the brands are easier for prospective franchisees to operate and are often focused on trendy items, thus the number of boba tea and cookies. These brands can grow quickly.
They are also risky, because these types of brands often grow quickly and fade fast as consumers move onto the next big thing. The concepts are also prone to franchise systems that sell too aggressively without the proper support systems.
To wit: Nine of the 17 chains that lost the most sales last year, including once-high-growth chains like Black Rifle Coffee Company and Clean Juice, sold beverages or desserts. So it’s not as if drinks and dessert brands just hang a sign out the door and start printing money.
Nevertheless, the numbers show how consumers are shifting more of their spending toward these more specialty brands that serve drinks and snacks, and less of it toward full meals. Consumers are looking for value, and a single calorie-filled drink costs less than a burger and fries. And younger consumers are less likely to eat three full meals a day, anyway, which has helped fuel some growth in many of these snack and drink categories.
All of which means that consumers are changing, and the fast-food world is changing with it.