Technomic Top 500: Chain restaurants recover from the pandemic

Sales at the largest restaurants bested 2019 levels in 2021, but the success is concentrated among the biggest chains.
illustration: Shutterstock

The 500 largest chain restaurants recovered from their pandemic losses in 2021 and then some, as consumers unleashed pent-up demand for dining by flocking to everything from fast-food drive-thrus to high-end steak chains.

Sales at the biggest chains grew 18% in 2021, according to the 2022 Technomic Top 500 Chain Restaurant Report, which was released this week. That was more than enough to recover from the losses in 2020: The $361.2 billion in total sales for the Top 500 was up 8.4% over 2019.

To be sure, 260 of the 500 chains are still below their 2019 numbers, and most of the volume growth was concentrated among the very biggest restaurants. “Over half of them didn’t recover,” said Kevin Schimpf, director of research and insights at Technomic, a sister company of Restaurant Business. “But the big chains at the top just carry so much volume. They led everyone to far surpass 2019.”

“It’s a really uneven recovery,” he added.

Prices have also dictated a lot of the sales growth. As labor and commodity costs have increased, restaurants have raised prices at unprecedented levels, which has helped fuel much of the industry’s recovery.

Yet all but 12 restaurants on the Top 500 generated overall sales growth in 2021. Chain restaurants’ overall recovery from the pandemic has also occurred more quickly than any prognosticator guessed in March 2020 when governments across the country shut down dining room service—sending operators for a tailspin.

“The industry has certainly improved to a point where we’ve recovered from what has been the worst point in history for the overall restaurant industry,” said Joe Pawlak, managing principal with Technomic.

Big chains dominate

The largest of the Top 500 chains led the recovery. Only two of the 11 largest chains—Subway and Burger King—have yet to return to 2019 levels.

The rest have collectively grown their sales by $19.9 billion over 2019 levels, or nearly the size of Starbucks. Those nine chains—McDonald’s, Starbucks, Chick-fil-A, Taco Bell, Wendy’s, Dunkin’, Domino’s, Chipotle and Sonic—are up an average of 19% over 2019.

By contrast, the rest of the Top 500 is up 6%.

Large chains are more likely to have drive-thru service. But they were also quick to use their scale to add new services, such as curbside, mobile ordering and delivery, all of which proved valuable during the pandemic and remain popular today.

That has helped them grow volume from lower overall customer traffic and fewer restaurants.

McDonald’s, the largest chain in the U.S. by sales volume, generated another $5 billion in sales last year even though it shrunk by more than 400 locations.

Similarly, the largest chain by unit count, the 21,000-location Subway, grew sales by 13% last year even though it closed 5% of its restaurants. Subway last year overhauled its menu, including major improvements to its bread, and upgraded its marketing, all of which helped it generate stronger sales in 2021.

Perhaps the king of generating higher volumes is Chick-fil-A, the third-largest restaurant chain in the nation despite having less than half the locations of any chain in the Top 10 outside of Chipotle. Its sales grew another 15% last year, giving it $15.8 billion. Its sales are up 30% over 2019.

Among the Top 10, only Chipotle has generated more sales growth since the pandemic, 34%. It’s the 10th largest chain in the U.S. now, with $7.5 billion in system sales from 2,900 restaurants.

Total Sales (in billions)

Led by fine dining, full service gets some of its share back

While major fast-food chains grew sales through convenience, consumers also flocked to high-end restaurants the moment they were allowed to last year. No sector did better than fine dining in 2021. Fine dining restaurants grew their total sales by 57% last year, according to Technomic.

That said, the sector as a whole has yet to recover fully from the pandemic. On average, fine-dining chains remain down 5% from pre-pandemic levels. Much of the growth, in other words, came simply from them opening their doors again. And there are fewer full-service restaurants now than there were before the pandemic, which has helped those chains get sales.

Yet many higher-end chains are surging, notably the upscale steak concept STK, which is up 50% from 2019, and the seafood brand Ocean Prime, which is up 42%.

“People had a lot of cash last year because of stimulus payments,” Pawlak said. “When they went out, they wanted to go someplace special and were willing to spend the money.”

But it wasn’t just fine dining. Polished-casual chains like Cooper’s Hawk, the 95th-ranked chain whose sales are up 32% over 2019, have had a strong recovery. Steak chains like LongHorn Steakhouse, Fogo de Chao and Texas Roadhouse are also up well over their pre-pandemic levels.

The results helped the full-service segment recover, though such chains have yet to fully return to where they were before the pandemic—largely because such chains were far more likely to close locations. The share of the Top 500 earned by full-service chains improved from 18% in 2020 to 21% last year. But that remains below the 24% share they had in 2019.

Unit count among full-service chains in the Top 500 was flat last year after falling 4% the year before.

Chains begin building locations again

After chain restaurants closed locations in 2020, they began building them again in 2021. Total locations in the Top 500 grew by 0.6% over 2020 after they declined 1.8% the year before.

But that likely does not tell the full story, largely because of two chains: McDonald’s and Subway.

The two fast-food giants are two of the three largest chains by unit count, and in 2021 they closed a collective 1,500 restaurants and about 3,600 restaurants over the past two years.

Simply remove those two from the equation, and the Top 500 has, in fact, returned to its pre-pandemic unit count—191,595 restaurants, compared with 191,211 in 2019, up 0.2% without McDonald’s and Subway.

Companies like Scooter’s Coffee, Wingstop and Tropical Smoothie Café added more than 100 locations. Chains like Jersey Mike’s added more than 300.

More than 200 restaurants in the Top 500 added new restaurants last year and 333 of them were at least flat. “There were 12 chains that opened more than 100 locations,” Schimpf said. “There’s still a lot of growth.”

Chain restaurants’ strength is expected to continue this year, despite a host of challenges. Technomic expects Top 500 sales to grow 8.6% this year.

The Top 10 of the Top 500 at a glance

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