Technomic Sees Slowing Sales, Unit Growth at Top 500 Chains

Domestic system-wide sales for the top 500 rose $7.6 billion to an estimated $230.2 billion in 2008.

Last year's growth, some of which can be attributed to higher menu prices, came amid a recession that has consumers cutting back on meals away from home. At the same time, those who still dine out have been favoring value meals and other promotions as they try to find less expensive alternatives.

"Restaurant operators faced a host of challenges, including cost pressures followed by declines in consumer dining demand," Technomic president Ron Paul said.

The sales increases came from publicly held limited-service eateries, including bakery-cafe Panera Bread Co., coffee chains such as Starbucks Corp. and Peet's Coffee & Tea Inc., and hamburger chains such as Burger King and McDonald's.

Privately held companies such as Subway, Panda Express, Five Guys Burgers and Fries, and Jimmy John's Gourmet Sandwich Shop posted some of the industry's fastest rates of sales growth, according to Technomic.

Sales in the Mexican, steak and seafood categories declined 1.8 percent, 0.7 percent and 0.4 percent, respectively.

Last year, the weak U.S. dollar fueled a 13.4 percent rise in international sales at the top 500 restaurant chains, Technomic said. International sales growth was 7.9 percent in 2007, according to the research firm.

As the economic slowdown dents demand, several restaurant companies are opening fewer new outlets. "Many chains scaled back their U.S. unit expansion efforts, growing units by just 1.8 percent" in 2008 compared with 2.6 in 2007, Paul said. International unit growth rose 9.9 percent in 2008.


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