One of the biggest themes to emerge from this year’s Top 500 ranking is the continued slowdown of chain growth. Aggregate sales from the Top 500 chains rose just 3.1% in 2017, down from 3.5% the previous year. Total sales growth for the entire restaurant industry rose 3.5%, though, showing that independent restaurants are outpacing the Top 500 chains. This paradigm shift between chain and independent restaurant growth began in 2014 and is expected to continue, says Joe Pawlak, managing principal with market research firm Technomic. Technomic expects chain growth to reach only about 3.5% over the next few years, says Kevin Schimpf, Technomic’s manager of industry research. Still, chains are seeing healthy pockets. Here's a look at some of the trends most influencing the largest chains as well as newcomers to the Top 500.
Nearly half of the top 100 chains have said they are testing or have committed to developing delivery service. At first, several chains jumped into delivery in order to compete, learning in real time. Now, many have moved beyond that phase and are taking a closer look at understanding the challenges and economics of the off-premise market. They are examining third-party versus self-delivery, full or limited menus, packaging and more.
National brand relevance
Casual-dining chains are struggling to stay relevant, especially with millennials and Gen Z customers who are not visiting these concepts. While Technomic’s Joe Pawlak predicts that there will be some reprieve for this fledgling segment, “They will need to reinvent themselves. They will need to look at technology,” he says. Delivery is where they can play strong, he adds, if done correctly via a combination of menu, packaging and value.
Beyond the dayparts
Four out of five consumers say they snack between meals once a day, and their definition of snacks expands beyond a granola bar or bag of chips. So operators are adjusting to capture between-meal dollars. Menu developers are thinking beyond breakfast, lunch and dinner, from shareable snacks offered at happy hour to protein-rich, on-the-go snack boxes and sides that sub in as snacks.
Restaurants get smarter
To gain more consumers who want to feel a personal connection to the restaurants they frequent, marketing continues to shift from broad, national campaigns to hyperpersonalized, targeted efforts. And social media is just the start to build that loyalty and drive repeat visits. Operators are collecting data on their customers through apps, geotracking and more to better understand their audience and what drives purchasing behavior.
Private-equity and investment firms poured a lot of money into chains in 2017. Torchy’s Tacos, among the top 10 in both sales and unit growth, sold a minority interest to General Atlantic last April.
Domino’s, Chipotle and others saw the resignation of longtime CEOs, while other big brand higher-ups moved to smaller chains, such as Paul Damico moving from Focus Brands to Naf Naf Grill.
Biggest Sales Growth
|Chain Name||Top 500 Rank||2017 Sales ($000,000)||% Growth||2017 AUV|
|Fuzzy's Taco Shop||184||188*||31.7%||1435*|
|Cooper's Hawk Winery & Restaurants||149||241.8||30.5%||8,775|
|Raising Cane's Chicken Fingers||50||966.4||30.2%||3,132|
|Tropical Smoothie Cafe||101||393||25.1%||675|
Biggest Sales Decline
|Top 500 Rank||2017 Sales ($000,000)||% Growth||2017 AUV|
|Old Country Buffet/HomeTown Buffet||174||$206.5M*||-37.2%||2810*|
|Joe's Crab Shack||135||275*||-25.7%||3150*|
|Tilted Kilt Pub & Eatery||221||143*||-20.8%||2180*|
|Romano's Macaroni Grill||158||222.5*||-17.0%||2060*|
|Souplantation & Sweet Tomatoes||153||235.7*||-12.8%||2300*|
|UNO Pizzeria & Grill||159||222.5*||-11.6%||2080*|