Given the extraordinary environment in 2020 and 2021, it perhaps shouldn’t be a big surprise that many brands began a remarkable ascent in 2022 once regulations and uncertainties started to fade. According to Datassential’s 2022 Top 500, sales and estimated sales per unit growth were booming for the most part.

The average percentage of year-over-year sales growth across the top 500, for instance, was 18.6%. Every industry segment experienced positive sales increases, with nine out of 16 segments recording double-digit growth. Of course, much of that sales has come from menu price increases, which averaged 6.3% across the industry and 8.2% at the top 500 chains, according to Datassential.

The pricing tactic, however, has been a necessity in response to historically high inflation, and as the industry’s push for financial recovery meant prioritizing systemwide sales over unit count expansion. Consider that just two segments (limited-service chicken and limited-service salad/healthful) expanded unit count by more than 2.5% versus the prior year.

Overall, there were 311,645 total chain restaurants in December 2022. Other than the Omicron-impacted month of February 2022, unit counts were steady and, in fact, for five months in 2022, chains experienced more new openings than permanent closures. As inflation begins to cool and the operating environment becomes less challenging, the sales and unit count column may be a bit more balanced next year.

Dave's Hot Chicken, pictured, grew sales by 155% last year.

—Alicia Kelso

At the end of 2021, the 500 largest chains in the country had a total of 228,456 restaurants. A year later that number was just over 1% higher at 230,902. Although total sales of those chains are up by more than 8%, most of them did that without opening many locations.

It’s possible that this means that the real estate market is saturated, that there are no more suitable locations for restaurants to open. But chains such as Crumbl Cookies (pictured) and Scooter’s Coffeehouse, which both opened more than 100 locations each in 2022, certainly found good spots: Crumbl’s estimated sales per unit were up by 9% and Scooter’s remained about the same, up 0.2%. Although some of those new locations might have housed restaurants previously, it’s unlikely that they all did.

However, as chains learned to become more efficient over the course of the pandemic, perhaps the need to open new restaurants has become less urgent, and the increased costs of labor, building materials, and transportation of them has made openings more expensive.

Meanwhile, customer traffic has started to falter and operators have gotten better at getting more out of the guests they have, mining their data with loyalty apps and engaging them more with rewards programs.

In fact, operators that have focused on running existing units better showed considerable success in 2022: Chains that didn’t open any locations grew their sales at a rate of 1.4 times that of chains that opened restaurants, according to Datassential.

—Bret Thorn

Despite the inflationary challenges and labor setbacks of 2022, overall the restaurant industry is stabilizing for the first time since the pandemic began. According to Datassential, even though new unit counts are down overall since 2019, there are fewer patterns of permanent closures as well. In fact, throughout 2022, there have been fewer oscillations between openings and closures as the industry regulates itself in this post-pandemic economy.

Here are some highlights:

• There were 311,645 total chain restaurants in Dec. 2022, which is very close to the average counted for the entire year (just north of 312k)
• Despite two-thirds of operators concerned about rising food costs and more than three-quarters of operators struggling to fully staff their restaurants, consumers are eager to dine out post-pandemic
• Sales were boosted not just by consumer spending, but also by increased menu prices (on average the top 500 restaurants increased their prices by 8.2%)
• On average, the top 500 restaurants experienced faster growth in sales (8.6% growth) than unit counts (1.1% growth) in 2022 compared to 2021
• Dessert, snack, and salad chains were the categories that experienced the largest percentages of growth, both in sales and unit counts

BB.Q Chicken, pictured, grew units by 46.5% last year.

—Joanna Fantozzi

The West remains the largest region for the top 500 restaurant chains, with 43% of total units being located in Colorado and points west.

California, the most populous state, saw 547 units open last year, second only to Texas, where 814 units opened, according to market research firm Datassential.

But Western states with relatively low populations, including Arizona, Colorado, and Utah, saw pretty high numbers of restaurant openings at 178, 122, and 99, respectively.

Chains with heavy concentrations of restaurants in the West grew faster than the national average both in terms of unit counts and sales.

That includes this year’s fastest growing chain in terms of sales and units open — Crumbl Cookies, based in Lindon, Utah — and Dutch Bros of Grants Pass, Ore., which is now the third largest coffee chain in the country, having passed Tim Hortons. Dutch Bros’ unit count is up by 18%.

Yum Brands subsidiary The Habit Burger Grill (pictured), based in Irvine, Calif., now has 338 units, up by 10.1%, and Yard House, also based in Irvine, increased its footprint by 4.9%

Other fast-growing Western chains include P.F. Chang’s, based in Scottsdale, Ariz., which increased its unit count by 4.7%, and Noodles & Company of Broomfield, Colo., which is up by 2.9%.

Sales are also up at many chains based in the West. BJ’s, based in Huntington Beach, Calif., enjoyed a sales boost of 15.2%, and Chipotle Mexican Grill, based nearby in Newport Beach, Calif., had sales of $8.6 billion last year, an increase of 14.4%. It’s now the ninth largest chain in the country in terms of sales, up from 10^th last year.

The Cheesecake Factory, based in Calabasas, Calif., also saw 14.4% growth in sales and is now the 36^th largest chain, up from 37^th.

—Bret Thorn

Once the U.S. cleared the first few months of the pandemic’s omicron variant emergence in 2022, full-service restaurants saw a resurgence in estimated sales per unit, according to Datassential’s Top 500 survey.

Brands like the 28-unit Eddie V’s (pictured), the high-end seafood restaurant from Orlando, Fla.-based Darden Restaurants, saw its estimated sales per unit skyrocket by 51.6%, settling at $9.2 million in 2022 versus $6.1 million in 2021. And Maggiano’s Little Italy, the 54-unit brand from Dallas-based Brinker International, saw its sales-per-unit number pop 51.5%, to $8.1 million in 2022 from $5.3 million in 2021, according to Datassential.

Even big casual-dining chains enjoyed growth in their AUV; both Applebee’s Neighborhood Grill & Bar, the 1,569-unit division of Glendale, Calif.-based Dine Brands, and Chili’s Grill & Bar, the main concept at Brinker, saw increases.

Meanwhile, some quick-service operators saw estimated unit volumes decline in 2022 from their lofty pandemic highs. KFC, for example, the chicken division of Louisville, Ky.-based Yum Brands, saw estimated sales per unit at its more than 3,900 locations slip to $1.2 million in 2022 from $1.3 million in 2021.

The highest percentages of unit sales growth were among younger brands, like the 52-unit Cooper’s Hawk of Down’s Grove, Ill., with a 27.1% increase, and the 44-unit Lazy Dog Restaurant & Bar of Huntington Beach, Calif., with a 22.1% increase, according the Datassential’s Top 500 survey.

—Ron Ruggles

Restaurants in 2022 squeezed more sales out of fewer hours as they continued to face labor constraints coming out of the pandemic.

Brands that had been traditionally open 24/7 before the pandemic found themselves stretching to staff the overnight hours and encountering franchisees balking at a return to the full-day operations.

Take Denny’s (pictured) as an example. In May of this year, Denny’s said it was moving toward its goal of finally returning to 24/7 operations.

The Spartanburg, S.C.-based family-dining brand, which also owns Keke’s Breakfast Café, continued to push “forward on increasing the number of domestic restaurants operating 24 hours, which is currently at approximately 71% of the domestic system and continuing to grow,” said Kelli Valade, Denny’s CEO, in a first-quarter earnings call.

However, the limited hours didn’t quash sales at the brand in 2022, as it was bolstered by off-premises, third-party-only delivery digital brands like Burger Den and The Meltdown.

In Datassential’s Top 500, Denny’s 1,445 locations enjoyed an 8.4% increase in estimated sales per unit, up to $1.8 million in 2022 from $1.6 million in 2021. In January, Valade said staffing had allowed about 63% of the system to return to full-day hours.

Franchisees are seeing increased retention and staffing improvements, she said, which is helping them see the profitability of the late-night daypart.

“The late-night daypart is still strong for us and growing, and so that business case is there,” Valade said. “It's just a matter of being good stewards, being good partners with them and continuing to have the conversation. But our plans are still in place and we are working toward that every day.”

Denny's domestic systemwide same-store sales rose 8.4% in the first quarter, including increases of 8.1% at domestic franchised restaurants and 11.4% at company restaurants.

—Ron Ruggless

There may be some silver linings shining from Datassential’s 2022 Top 500 report, particularly against the grim backdrop of 2020 and 2021. That’s not to say challenges don’t continue, however. Consider that 90.1% of the top 500 chains increased their annual sales, but when adjusted for inflation, just two in three retained positive sales growth. The biggest challenges remain and may be hindering the industry’s full growth potential as consumers have proven their willingness to continue eating out. They include:

Food costs

Operators continue to deal with cost pressures not seen in a long time, if ever. Two-thirds of operators struggled with inflated food costs in December 2022, for instance — an 11% increase since January 2022, according to Datassential. A smaller bottom line compromises all else in the business and morale has taken a hit accordingly, with 47% of operators saying their employee morale has worsened in the past year.

Labor

Further, nearly 40% of operators struggle with rising labor costs, while 33% struggle to fill positions all together, Datassential reports. Fewer employees have led to fewer operating hours, leaving money on the table. The average restaurant in late 2022 was open 6.4 fewer hours per week than it was in 2019, for instance, or a decline of 7.5%. The labor shortage has pressured independents disproportionately; the largest chains reduced their weekly hours by 4 on average compared to single-unit locations, which lost 7.5 hours per week on average.

Supply chain

Supply chain pressures also remain a burden, with 32% of operators experiencing ingredient shortages or unavailability in the past year.

—Alicia Kelso

Dig: Unofficially, the New York City-based fast-casual brand formerly known as Dig Inn exploded in growth over the past year, nearly tripling in size from 11 units to 31 in just 12 months.* Officially, it was more of a resurrection, as the numbers include several New York City locations that were closed at the end of 2021. As a result, sales were up nearly 200% in 2022. It’s a big comeback story for the healthy bowls and salad brand that is now back up to 2019 levels. In 2022, the company also added a lot of new faces to its leadership team, and it will be expanding its footprint to six states by the end of this year. 

Hawaiian Bros (pictured): Hawaiian Bros Island Grill is surging in the quick-service Pacific Islander comfort food category. The brand’s unique menu of huli huli chicken and luau pig and first foray into franchising in 2022 were likely major contributors to Hawaiian Bros’ growth last year. The company added 12 units in 2022** and experienced 80% sales growth, which is pretty significant for an emerging brand. 

Salad and Go: The Phoenix-based drive-thru salad brand more than doubled in size in 2022, adding 44 units to its growing portfolio for a total of 82 locations, making it the fastest growing salad brand in the Top 500, percentage-wise. This growing brand’s growth spurt can be attributed largely to CEO Charlie Morrison, who abruptly left Wingstop in spring 2022 to helm Salad and Go. The brand has been rapidly expanding ever since.

* According to Datassential’s reporting, Dig ended 2022 with 30 open units

** According to Datassential’s reporting, Hawaiian Bros added 20 units in 2022

—Joanna Fantozzi

After a super-hot 2021, the pizza category cooled off somewhat last year, with most of the big players experiencing stagnant or slightly negative growth in sales or unit count. Let’s break down some key points of this category that’s now normalizing in a post-pandemic world:

Papa Johns was the winner out of the Big Three: While both Domino’s and Pizza Hut experienced a negative sales trajectory in 2022 (Pizza Hut was down by 4.3% and Domino’s was down 0.8%), Papa Johns was the only chain out of the traditional “pizza war” contenders to have positive sales growth, which was 6.5%.

This isn’t surprising, because Papa Johns outperformed Domino’s all year, with an added boost from menu innovation and third-party delivery partnerships. That latter strategy has hurt Domino’s in the long-run. Papa Johns has seen a major momentum boost since the start of the pandemic, coming off a few PR scandals and several challenging quarters. But it’s yet to be seen if the company can carry this momentum into 2023.

Little Caesars was the real winner of the pizza wars: Though usually not included in discussion of the Big Three pizza chains because the company is not public, Little Caesars (pictured) outperformed Papa Johns, Domino’s and Pizza Hut, and it’s now hot on Pizza Hut’s heels, having moved up four spots on the Top 500, from 20 to 16 with an 11.6% sales growth.   

Don’t sleep on Marco’s Pizza: Marco’s Pizza has been the fifth-largest pizza chain for a while, but quietly outperformed all four of its larger competitors, with 18.2% sales growth and nearly 5% unit growth in 2022.

Fast-casual pizza is back: During the pandemic, fast-casual pizza struggled quite a bit as dining rooms shut down, but almost all of the major fast-casual pizza chains — including MOD and Blaze Pizza — had positive sales. One of the biggest winners was &pizza, which grew sales almost 37% with just nine new unit openings in 2022.

—Joanna Fantozzi

2022 was a great year to sell coffee, with all of the top 500 coffee chains reporting an increase in sales. That ranged from 2.6% for 57-unit Dunn Brothers Coffee (even though the chain based in Roseville, Minn., shrank by a net six locations last year) to 71.5% for Mead, Colo.-based Ziggi’s Coffee, which increased its unit count to 65 from 45 while also increasing estimated sales per unit by 15.1% to $874,000.

Among the big chains, Starbucks of course continues to outperform everyone else with sales of $27.5 billion, up by 12%, despite having closed a net 54 restaurants over the course of the year (leaving it with a mere 15,396 restaurants).

Dunkin’, in second place, opened a net 126 locations and saw sales go up by 8.3%.

Dutch Bros, with its 97 new locations, leapfrogged Tim Hortons and is now the third largest coffee chain in terms of sales. Its unit economics slipped a little, with estimated sales per unit down by 4.3%, but at more than $2 million per store it’s still above Starbucks’ $1.8 million.

On a percentage basis, Scooter’s Coffeehouse (pictured), based in Omaha, Neb., opened the second most units, after Ziggi’s, but from a much higher baseline. It opened a net 155 restaurants, closing out the year with 555, and saw sales jump by 44.4% to $398 million.

Black Rock Coffee Bar of Portland, Ore., opened 18 units, giving it a total of 100, with a sales bump of 39.9% to $65.8 million.

The success of coffee comes on the heels of the full recovery of breakfast from the pandemic, coupled with a surge in the popularity of energy drinks, of which coffee is the grandfather. But many coffee chains have also launched their own non-coffee drinks in that category, including Ziggi’s, PJ’s Coffee, Scooter’s, and Dutch Bros.

The growth in snacking in the mid-morning and afternoon dayparts, coupled with photogenic social-media-friendly beverages, has no doubt also been a contributing factor. So has the growing popularity of iced coffee drinks, which are now the bulk of Starbucks’ sales, and which tend to be drunk all day long.

—Bret Thorn

As workers returned to central business districts amid the easing of pandemic restrictions in 2022, urban-based restaurant brands saw their sales trends revert to more normal tracks.

For example, the 429-unit Potbelly (pictured), the limited-service sandwich chain based in Chicago that has many of its stores in urban areas, saw its estimated sales per unit increase 22.3% to $1.2 million in 2022, up from $947,080 in 2021, according to the Top 500. The company, subsequent to the year’s end, also signed a new refranchising effort in New York City.

Datassential research earlier in 2022 had found that the average restaurant was open 6.4 fewer hours per week than it was three years prior, which pointed to a decline of roughly 7.5%. But those restrictions eased as the year went along.

Datassential also found that independent operators, a group not represented in its Top 500 survey, were hit the hardest. Independent restaurants closed an average of 7.5 hours a week more in 2022 than in 2019.

The mid-2022 research found three out of the top five restaurant chains that lost the most operating hours were breakfast chains, including Denny’s, IHOP and Einstein Bros. Bagels (the other two were Texas Roadhouse and Subway), which might indicate people having breakfast at home with hybrid and work-from-home schedules.

Robert Wright, Potbelly’s president and CEO, said in an analyst call for the first quarter ended March 26 that the brand was continuing to recover from the COVID restrictions.

The brand was seeing high volumes in non-traditional airport locations, and Wright said the company had invested in the sales team for those non-traditional sites.

“We actually think this is a very ripe area for additional unit growth for the brand,” Wright said.

—Ron Ruggless