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How growth chains are growing

The two keys to restaurant growth in this sluggish economy? Innovation and relevance.

The industry as a whole is sluggish and barely keeping pace with inflation, but Technomic attested at its Growth Chain Conference yesterday that some concepts are still blazing a path of prosperity with innovative menus and of-the-moment branding.

McDonald’s, Subway, Chick-fil-A, Starbucks, Chipotle and Panera—all top 500 chains that saw big growth over the past year—focused on menu innovation to help drive increased sales. Big Mac has launched new McCafe offerings and premium Angus hamburgers. Subway pushed breakfast options. Chick-fil-A introduced a spicy chicken biscuit. Starbucks’s Sweet Petite offered indulgence under 200 calories. Chipotle offered soup, it’s first new menu item in three years. And Panera introduced sirloin steak items.

Meanwhile, the renovation revolution sweeping the industry is helping some chains remain relevant in their customers’ eyes. Growth chains like Mama Fu’s, East Coast Wings & Grill, Taco Bell and McDonald’s are all undergoing major facelifts to keep on pace with customer expectations.

And what sort of growth lies ahead for the re-inventors? Technomic handicapped the growth race by segment:  

Fast Casual
Fastest growth, over $1 million in sales: Five Guys Burger and Fries, Chipotle, Noodles and Company; from $25-$100 million: Smash Burger, Zoe’s Kitchen, Freebirds World Burritos

  • Fast casual will continue to lead the industry’s growth.
  • Early pioneers—think Boston Market, Fuddruckers, etc—will need to evolve or further lose relevance.
  • A greater priority on reducing the cost of unit development.

Casual dining
Fastest growth, over $200 million in sales: Yard House, Cheddar’s, Buffalo Wild Wings; from $25-$200 million: Brickhouse Tavern + Tap, Seasons 52, Tilted Kilt

  • Continued shakeout of traditional, less differentiated concepts.
  • Restaurant footprints downsizing.
  • Improvement to convenience, quality and customer ease of takeout
  • Contemporary and polished concepts leading growth
  • More healthy fare and ethnic inspired flavors

Quick Service
Fastest growth, over $200 million in sales: Jimmy John’s, Tim Hortons, Papa Murphy’s; under $200 million in sales: Mechie’s, Red Mango, Yogurtland

  • Technology becoming a great factor (digital menu boards that help with menu labeling, social media)
  • Healthy positioned chains will benefit from new legislation
  • Greater emphasis on drive-thru convenience advantage
  • Dollar menu and value-price positioning likely to continue
  • More renovation of older, stand-alone units

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