Did something happen in 2017?
We ask this because, among the 100 largest restaurant chains in the U.S., four were founded in the 2010s. Three of those four were founded in 2017: Crumbl, 7 Brew and Dave’s Hot Chicken.
Each of those chains, in its own way, represents a brand that has helped to turn the restaurant industry on its head. If we add the Chinese chain Luckin, which might be the most remarkable of all, we have four restaurant chains, each created in 2017, that have helped change the expectations for industry growth.
Let’s take them one by one:
Dave’s Hot Chicken was founded in a Los Angeles parking lot in 2017, got some attention from a local columnist, some key investment from experienced industry executives and then took off. It was sold last year to Roark Capital for $1 billion. The company has helped to inspire a generation of spicy chicken concepts.
Crumbl was founded by a tech company executive and his cousin in Utah, with a unique menu of large, cake-like cookies that changes each week and a tech-forward approach to business. It became the country’s largest treat chain in just a few years and inspired a ton of copycats.
We just wrote about 7 Brew, but it’s worth reminding people that in less than a decade it became the country’s fourth-largest coffee chain. It has the sector’s best unit volumes and the restaurant industry’s best sales-per-square-foot ratio, which is not nothing.
Luckin Coffee—which we also wrote about recently—survived a massive fake orders scandal and bankruptcy to grow into a 35,000-unit behemoth, which is so unfathomable it’s not even funny. And all of a sudden it has 18 locations in the U.S.
Before we go further, we must mention this caveat: Fast growth does not remotely guarantee long-term success and in some respects can hasten a company’s ultimate demise.
Brands often grow beyond their capabilities. Or they outpace demand. Or they inspire copycats. Or some combination of the above. The brands then struggle and decline. Crumbl, in fact, has experienced a number of growing pains as its unit volumes have slowed and the brand now looks for new leadership. So this post is not strictly about praising fast growth for fast growth’s sake.
Yet it’s not just a coincidence to see such fast-growing and often generationally notable brands to all emerge at around the same time.
Why were these brands able to establish themselves so quickly? Here are three reasons:
Franchising. Each of these brands in one manner or another franchises. Franchising enables and encourages fast growth, because it puts the financing of that growth into the hands of many investors, rather than one central entity. Brands that get hot can grow quickly as investors jump on board and eagerly open new locations, hoping to generate that quick return. The fastest-growing restaurant chains are almost always franchises. 7 Brew, Dave’s Hot Chicken and Crumbl all used franchising to great effect to expand this quickly.
Social media. You know what other company debuted in 2017? TikTok, at least outside of China. That is no coincidence. Do not ignore the use of social media in the establishment of these concepts. Each of these brands has leveraged social media to its advantage. Crumbl used its rotating menu to build interest on social media. Dave’s Hot Chicken leveraged media early in its history. Social media has enabled companies to quickly build followings and generate interest.
Technology. Third-party delivery as we know it largely emerged in 2017. Mobile ordering has also become a crucial ordering channel since then. And so it’s no surprise that each of these brands are tech savvy. Crumbl co-founder Jason McGowan was a tech entrepreneur and used data to perfect the brand’s operations early in its history. Luckin is one of the industry’s most tech-forward businesses. You can’t even order at the counter. By leveraging technology so early, it becomes part of the brand’s DNA, preventing some of the operational headaches that come with new tech.
As we said, none of this guarantees success over the long term. Each of these brands may face challenges once the easy sales fade away, something Crumbl is learning now. Yet they’ve all proven that a restaurant chain in the current era can go from nothing to worth billions in a short period of time. This isn’t your father’s restaurant business.