Many restaurant chains have fully recovered from sales challenges during the pandemic—or before in some cases—as they’ve adapted to changing consumers or consumers adapted to them.
Brands are now hoping to translate this sales growth into new unit growth. They’re looking to grow in both international markets and domestic, hopeful that a recovering economy and their own recovered economics can prove beneficial in the coming years. They’re often growing through franchisees, in part as operators look to build more units and more franchisees look to get into restaurants.
With a sense that the market is more favorable, brands are turning their full attention to development, with many concepts hoping to accelerate growth after either stagnating or declining for years.
Last week, for instance, the burger chain Jack in the Box—which has had only slight unit growth over the past decade—detailed strategies to kickstart its restaurant development strategies. “With the past 10-year, refranchising process now solidly behind us,” CEO Darin Harris declared, “Jack’s next 10 years are going to be driven by new unit growth.”
Jack in the Box currently has fewer units than it had in 2012, especially after operators closed 19 underperforming locations in the first three months of this year. Still, the company anticipates pushing unit growth, especially in existing markets.
Papa John’s fortunes have turned around so quickly it’s almost impossible to keep up. Two years ago, the chain was spending money to keep franchisees from closing. Its sales surged during the pandemic, and the company now has hopes to aggressively add locations.
The Louisville, Ky.-based chain opened 68 new locations in the first three months of 2021 and expects to open 140 to 180 new locations this year. It brought in new Chief Development Officer Amanda Clark from Taco Bell to improve its development strategies, adding better site selection and franchise selection capabilities in the process.
While some of the new unit growth in the first quarter was openings delayed from last year, “it’s definitely a start to realizing the benefits of the investment that we’ve made the last year and a half,” CEO Rob Lynch said in an interview.
Papa John’s, similar to Jack in the Box, is the same size as it was in 2012—though it had grown and then saw locations close in the years since then. Executives hope that its new units are good units.
“We have hired an entirely new team,” he added. “We have a bunch of data analysts. They’re taking data and helping franchisees find great sites and get through the process and have a whole construction team set up to help our franchisees get through the process. And then we’ve built an opening capability in our ops team to help franchisees get off to a great start. We do not want to open bad restaurants.”
Wendy’s has the same number of U.S. locations that it did in 2010. With the company’s new breakfast daypart and some incentives for franchisees to grow, the chain is hopeful that operators will build more restaurants in the near future. It is expecting modestly higher unit growth in the U.S. this year.
It also has high hopes for Europe. The chain is going big into the U.K., for instance, with plans to open a location in Reading, U.K., in the first half of the year. Wendy’s expects 3% global unit growth this year. “We feel very confident about our development pipeline,” CFO Gunther Plosch said. In the U.S., he said, “we have now several franchisees that have never built before starting to show interest.”
It’s not just burgers and pizza chains. Noodles & Co., which has 38 fewer locations than it did in 2015, has accelerated its unit growth targets, with plans to quickly reach 10% unit growth annually until it reaches 1,500 locations. It expects to increase systemwide unit count by 7% in 2022.
“Our restaurants opened in 2019 and 2020 remain the best performing classes in the history of the company,” CEO Dave Boennighausen told investors last month, according to Sentieo. “We’re extremely excited about the unit growth opportunity ahead for the company.”
Del Taco, the 600-unit Lake Forest, Calif.-based Mexican fast-food chain, has been growing locations by a rate of just over 1% a year for the past decade. But it, too, has hopes to accelerate unit growth using a combination of company and franchise growth.
The chain on Monday announced plans to grow aggressively in Florida as part of a strategy to quickly grow in the Southeast. The company signed a multi-unit deal with a franchisee to operate locations in Florida. Another franchisee, Navdeep Bassi, expects to open a location in Melbourne, Fla., on Wednesday.
Del Taco has expects to open four company restaurants, while franchisees expect to open eight. Company executives credit the chain’s new “Fresh Flex” prototype, which is more flexible than its previous prototype, along with the chain’s sales growth for generating the stronger interest.
“We certainly have momentum in this area,” CEO John Cappasola said last month, according to Sentieo, noting that the company is getting strong franchisee prospects. “We’re seeing a really nice quality candidate coming to the table that wants to grow from restaurant one.”