This post is part of the On the Margin blog.
Much has been made, particularly in this space, of the sudden weakness in the quick-service segment over the summer. Traffic is down this year, and same-store sales have been weak, at best.
But things aren’t all doom and gloom. A few publicly traded companies have done fairly well, notably Del Taco Restaurants Inc. and Yum! Brands Inc.'s KFC concept.
We also have heard from some private companies that they, too, have outpaced the category this year. Here are three of them:
Arby’s Restaurant Group Inc. Same-store sales rose 2.4 percent in the third quarter, the company said last week.
That doesn’t sound like much, but consider the two-year trend was 12 percent in the period. Also, consider this: It’s still much better than average for quick-service concepts in the period.
For Arby’s, transactions have grown for 10 straight quarters, and the company’s same-store sales have now increased for six straight years.
The sales growth at Arby’s has helped push unit volumes to $1.1 million. The company’s success comes from its ability to recognize who its customers are and focus exclusively on them. In this case, those customers are meat lovers who want an upgraded experience from quick service.
“Where the brand has historically been successful is when it's not in direct competition with burger chains, but not too high up, either,” Arby's CEO Paul Brown said at MUFSO. “We’ve gone back and forth. We got too close to QSR burger, and then overcorrected and tried to go upscale. The right space is the middle ground between QSR and fast casual.”
Pollo Campero. Speaking of long streaks, Pollo Campero on Tuesday said same-store sales rose 9.1 percent in the third quarter — the 19th straight quarter of growth for the Latin chain.
Year to date, the company said same-store sales have risen 9 percent. That, plus new unit openings, has driven revenue 22 percent higher. The company has opened eight new restaurants in the U.S. this year, and plans to nearly double its restaurant count in the next three years. The chain currently has nearly 70 locations.
“We continue to see strong growth despite a restaurant industry slowdown this year,” Pollo Campero International CEO Tim Pulido said in a statement.
Pollo Campero is known for Latin chicken, and it started as a family-owned restaurant in Guatemala in 1971. There are more than 350 locations around the world.
Fazoli’s. Fazoli’s, the Lexington, Ky.-based fast-casual Italian chain, said same-store sales for the second quarter ended Sept. 30 increased 5.1 percent. That’s 14 straight quarters of same-store sales growth for the chain, which was acquired by Sentinel Capital Partners last year.
Same-store sales have also risen in 17 of the past 18 quarters.
The chain has upgraded its menu, added a catering program and is rolling out more customer-facing technology. The 220-unit chain has also started upgrading restaurants.
“The key to our company’s success has been listening to and understanding our guests’ tastes and preferences and adjusting our brand strategy accordingly,” Fazoli's CEO Carl Howard said in a statement. “There has never been a better time for our brand, and it’s showing in our sales trends and strong franchise development.”
The one thing these chains have in common — along with the aforementioned KFC and Del Taco, for that matter — is that in each case the chains are coming back from extreme weakness going into and coming out of the recession. They’ve compiled years of sales growth and continue to grow even as the industry has weakened.
That should provide some hope to sagging chains hoping to reverse their fortunes. And there are plenty of those out there right now.
Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.