The annual Technomic Top 500 report found that 2009 was a brutal year for the industry’s largest concepts, with aggregate systemwide sales for the largest chains falling 0.8 percent. Upstarts, however, including Five Guys, Noodles & Company and Potbelly Sandwich Works, were able to post double-digit increases in sales.
Data compiled by the Chicago-based consulting firm revealed that the 500 largest restaurant chains posted aggregate annual sales of $230 billion, down almost $2 billion from a year earlier. In 2008, aggregate systemwide sales for the group had increased 3.4 percent. Many concepts halted expansion plans and closed underperforming locations, resulting in an anemic 0.3-percent increase in unit growth, compared with 1.8 percent growth in 2008.
“As the U.S. economy remained in a recession, restaurant operators continued to face a host of challenges, including cost pressures followed by declines in consumer dining demand,” Ron Paul, president of Technomic, said in a statement. “The data in this report clearly supports what we’ve been hearing in our consumer research surveys over the past year.”
Paul told attendees at the annual UCLA Extension Restaurant Industry Conference last week that growing sales in 2010 likely would remain difficult as unemployment and underemployment are expected to stay near current levels for the rest of the year.
Technomic also found that the country’s 500 largest chains performed better abroad than in the United States. International sales for the Top 500 brands grew 3.3 percent in 2009, and international unit expansion was 5.2 percent.
While the top 500 chains struggled as a whole in 2009, certain brands and industry segments bucked the trend with growth in sales and locations.
The 10 fastest growing chains with 2009 sales over $200 million
Ranked by largest percentage sales increase with concept name; 2009 U.S. systemwide sales; % sales increase
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Five Guys Burgers and Fries; $453 million; 50%
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Tim Hortons; $446 million; 23%
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Buffalo Wild Wings Grill & Bar; $1,496 million; 22%
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Jimmy John’s Gourmet Sandwich Shop; $602 million; 21%
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Wingstop; $307 million; 20%
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Noodles & Company; $230 million; 15%
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BJ’s Restaurants & Brewhouse; $430 million; 14%
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Chipotle Mexican Grill; $1,517 million; 14%
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Firehouse Subs; $206 million; 10%
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Potbelly Sandwich Works; $246 million; 10%
Source: Technomic Inc.
Chipotle Mexican Grill, for example, grew its systemwide sales and unit count by about 14 percent each. Co-chief executive Steve Ells said in a recent conference call with investors that Chipotle would build on that momentum this year with a new marketing campaign to launch in the second quarter, as well as with its first international expansion. Chipotle will open its first location in London in May and is seeking locations in London, Paris and Germany. Technomic also pointed out Qdoba Mexican Grill’s 6.5-percent sales growth in 2009 as sign of fast-casual Mexican’s strength as a segment.
The “better-burger” niche of fast casual also had some winners in 2009, including The Counter, which posted sales growth of 67.3 percent, and Five Guys Burgers and Fries, which boasted 50-percent sales growth and a 52-percent increase in locations. Also among the fastest-growing fast-casual chains with annual sales of at least $200 million was Noodles & Company, which grew annual sales 15 percent and locations 13 percent.
Other segment highlights
Quick service:
While high nationwide unemployment caught up with McDonald’s at the end of last year, resulting in negative domestic same-store sales in three of the last four months of 2009, the world’s largest quick-service chain still finished the year with an estimated U.S. systemwide sales total of $30.9 billion, a 2.9-percent increase. Systemwide sales includes franchised locations sales.
Quick-service Asian:
One segment that grew robustly in quick service was Asian, which posted a 5.9-percent sales uptick, led by Panda Express, which grew sales 8.8 percent to $1.2 billion.
Asian was the lone section of full-service restaurants to show collective sales growth in 2009, rising 2.9 percent and driven by double-digit sales increases at midsize brands like RA Sushi Bar Restaurant, Stir Crazy Asian Grill and HuHot Mongolian Grill. Particular segments of full service struggled, especially steakhouses, which had a sales decline of 6.4 percent, followed by 4.2-percent and 4.0-percent sales decreases in the seafood and Mexican categories, respectively.
Wings:
Buffalo wings specialists Buffalo Wild Wings and Wingstop fared better than most of their peers. Buffalo Wild Wings had U.S. systemwide sales growth of 22 percent and unit growth of 16 percent, Technomic data showed, while Wingstop’s sales rose 20 percent and its number of locations grew 9 percent.
Casual dining:
Dinnerhouse chain BJ’s Restaurant & Brewhouse had a 14-percent increase in sales, while its unit total grew 12 percent.
Sub sandwich:
Subway’s 4.2-percent U.S. systemwide sales growth, to $10 billion, far outpaced its category, which grew 0.8 percent as a whole, according to Technomic.
Three smaller sub sandwich concepts — Jimmy John’s, Firehouse Subs and Potbelly Sandwich Works — had double-digit system sales growth, including 21-percent sales growth and 18-percent unit count growth for Jimmy John’s.
Contact Mark Brandau at [email protected].