The Nation’s Restaurant News annual Second 100 report is the second installment of a comprehensive series of reports generated through exclusive research by NRN editors.
The Second 100 report and last month’s Top 100 report provide a detailed, brand-by-brand assessment and three-year performance comparison of the largest organizations in foodservice. The forthcoming Next 20 report analyzes the chains best positioned to rise into the Top 200 in the future.
The census is NRN’s annual endeavor to compile and rank results of the industry’s cash-cow brands and corporations. This year’s report give readers a panoramic view of the market share battles for the dining budgets of America’s consumers.
The Next 20, with data covering emerging chains, will debut in August.
More focused than other rankings of the industry’s largest organizations, NRN’s Top 100 and Second 100 seek to present relevant comparisons of the largest foodservice competitors by tracking only consumer foodservice sales and revenue generated in the United States. Parallels therefore exist between the federal government’s shift in emphasis from gross national product, which included overseas results of U.S.-based multinationals, to the gross domestic product standard for assessing today’s economy.
In addition to excluding foreign results, the series of reports factor out business activities not directly related to consumer foodservice. For example, McDonald’s Corp.’s reported $3 billion-plus in annual revenue derived from domestic franchisees’ rent payments are not included.
By virtue of an apples-to-apples focus on food and beverage sales, the market data yields what we believe is a more relevant appraisal of U.S. market shifts among the industry’s leading brands and the fast-advancing emerging chains.
To augment direct company sources, NRN editors tapped corporate documents and research studies as well as information from government agencies, chain officials, franchisees and industry analysts. The resulting data were collated and organized into the study’s rankings by various criteria, including segment comparisons that portray fluctuating market-share results of direct competitors.
The final reports are analytical tools that can help define which chain concepts and market segments are prospering or struggling and where consumers are spending their dining dollars.
As the basic criterion for inclusion in the statistical universe, the study first ranks individually branded chains on the basis of domestic systemwide sales for their most recent fiscal years ended closest to Dec. 31, 2014.
Separately, companies are ranked on the basis of their domestic foodservice revenue. Qualifying organizations then also are assessed over a three-year span on the basis of their sales and revenue growth rates, estimated annual average sales per location, growth in average sales per location, and rates of expansion in total outlets and franchised units.
Explanation of Terms
Definitions of column headers for chain and company tables throughout the report:
Chain: The brand name of the restaurants, retail stores or other entities in a multiunit organization, as identified by signage, logos or trademarks.
Chains/divisions: The names of the chains or foodservice groups operated or franchised by the company or its operating subsidiary. In some instances the listed chain or chains are franchises of restaurant brands owned by other companies.
Company: The business entity that ultimately owns the specified foodservice revenue. An asterisk indicates a U.S.-based entity whose stock is publicly traded in the United States.
Estimated Sales Per Unit: An estimated sales per unit (ESPU) figure represents an approximate unit-level sales output for all locations within a system. ESPU figures are calculated from a chain’s systemwide sales for a given year divided by the midpoint average number of units open in that year.
Fiscal year-end: The ending date of the fiscal year represented in the Latest-Year column. If a fiscal year’s actual ending date occurs in the first half of a month, the preceding full month is shown as its fiscal year-end, pursuant to conventional financial-reporting practices.
Latest Year, Preceding Year and Prior Year: Three consecutive years, the most recent of which ended or will end in the month and year indicated in the fiscal year-end column.
Latest-Year rank: The Second 100 chains and Second 100 companies are ranked in descending order on the basis of actual, estimated or projected systemwide food and beverage sales for the organizations’ latest fiscal years, generally the year ended or ending nearest Dec. 31, 2013. Data are limited to the chains’ systemwide food and beverage sales in the United States only; company data are limited to domestically generated revenue derived from foodservice only. Ties are assigned the same rank.
Preceding-Year rank: The same Second 100 chains and Second 100 companies are ranked on the basis of U.S. foodservice sales and revenue in their preceding full fiscal year.
Parent company: The business entity that owns a chain’s trademarks and master franchising rights, whether directly or through an operating subsidiary, and that ultimately profits from operating, franchising or licensing its concepts. An asterisk indicates a U.S.-based entity whose stock is traded publicly in the United States.
Segment: The type of restaurant or foodservice operation run by the chain, as defined generically by its food type, service style, retail context or operating format. Most concepts are self-defining and categorized by Top 100 traditional categorical parameters. Full-service concepts are distinguished from one another by dissimilar price-point ranges and whether full bar service is included in operations, as in casual-dining restaurants.
U.S. food and beverage revenue: Sums generated through U.S. consumer foodservice activities by the company or its operating subsidiaries. U.S. dollar amounts are irrespective of foreign-currency conversions by foreign-based companies. Included are sales at company-owned operations as well as food and beverage sales royalties and fees collected from franchisees. Excluded from revenue figures are total sales at franchised restaurants, revenues generated by manufacturing or wholesaling of food or other products, foodservice distribution revenues, and other revenues from nonfoodservice sources. Figures for hotels, contractors, in-store feeders and theme parks exclude nonfoodservice retail sales and contract activities.
U.S. systemwide foodservice sales: Foodservice sales at all domestic restaurants, stores or other outlets in a chain, including company-owned, company-managed, franchised and licensed units. Sales from manufacturing, distribution, merchandise, video games, facilities rentals and other nonfood sources are excluded.
Frequently Asked Questions
Why wasn’t my chain or company included?
If a chain did not generate at least $150.5 million in domestic systemwide sales in its Latest Year — the result attributed to the No. 200 chain in this year’s study — it will not appear in any of the Second 100 chains listings. Similarly, a company had to generate at least $95.3 million in U.S. foodservice revenue to appear in this year’s Second 100 companies rankings.
How do systemwide sales differ from revenue?
Systemwide sales are a total for every domestic company-owned, franchised and licensed outlet within a chain or multiunit operation. Revenue is a company’s top-line income from food and beverage sales, generally from company-owned and -managed units and from foodservice-related fees and percentage-of-sales royalties collected from franchisees.
What is estimated sales per unit and how is it calculated?
An estimated sales per unit (ESPU) figure represents an approximate unit-level sales output for all locations within a system. The intended use of ESPU is to present a comparable presentation of store-level volumes across hundreds of different brands that may use a variety of selective average-unit-volume calculations. ESPU figures are calculated from a chain’s systemwide sales for a given year divided by the midpoint average number of units open in that year. The midpoint average is determined by adding the year-end number of units for that given year and the preceding year, then dividing the sum by two.
Why have you added an average unit volume column to your estimated sales per unit table?
NRN ESPU calculations may not reflect average unit volumes as calculated and reported by foodservice companies. Conversely, certain company calculations may not reflect the breadth of unit volumes included in the NRN calculation for ESPU. This year, NRN presents both figures when available and reported. Footnotes explain the variances and calculation methods when offered. Going forward NRN will accept for consideration self-reported AUVs and increasingly seek out self-reported appropriate AUV data from publicly filed documents.
What is meant by Second 100’s market share figures?
Within the context of Second 100, the “market” is the aggregate sales or units of only those chains ranked in the study within a specified segment or category. Market share is an individual chain’s proportional share of that total only during each of the three years compared.
Why do some Preceding-Year and Prior-Year rankings and data differ from corresponding data and rankings in last year’s published study?
The statistical universe is unique each year, largely because growing entities qualify for first-time inclusion and supplant other entities. Moreover, each year’s research may yield more precise information, particularly with respect to privately held entities, necessitating revisions of previously reported data. Additionally, previously reported data may be restated from year to year to reflect continuing operations following newly completed mergers, acquisitions or divestitures.
With respect to the separate rankings of the Top 100 and Second 100 entities in the June 15 and July 13 issues, respectively, it should be noted that consecutive ranks of No. 1 through No. 200 are assigned only in the rankings of systemwide sales and corporate revenue. After the Top 100 and Second 100 groups are divided, subsequent rankings on the basis of growth, number of units, sales per unit and market share are assigned in two exclusive 1-through-100 ranges within the respective Top 100 and Second 100 statistical sets.
My chain appears on other industry sales rankings but not yours. Why?
Varying studies employ different criteria. We believe NRN market data is the industry’s most meaningful survey of domestic volume, growth and market trends because it compares leading organizations only on the basis of their consumer foodservice results in the United States.
But my chain has more units or higher sales per unit than do some of the chains included in those rankings. Why wasn’t it included?
Only the Top 100 and Second 100 chains, as determined by systemwide sales, are ranked by such other criteria as number of units, sales per unit and rates of growth. In other words, the universe for those rankings is limited to chains that appear in the table titled “U.S. systemwide foodservice sales.”
My company’s revenue far exceeds the figure shown for many of the corporations ranked, and yet you omitted my company. Why?
Companies were included in the Top 100 or Second 100 because of their foodservice revenue, not their total revenue. The Second 100 study attempts to exclude proceeds from all other business activities, such as manufacturing, distribution, general retail, nonfood contract services, property rental and amusements.
Some tables’ ranking numbers are duplicated and some numbers are not assigned. Why?
Ties. Alphabetical order is not used to assign a lower ranking to chains or companies whose results exactly match those of other entities.
Why are some major hotel companies no longer included in the Company revenue census?
Some hotel companies, including Marriott International Inc. and Hyatt Hotels Corp., long ago stopped publicly reporting their food-and-and-beverage revenue. Despite that, NRN continued to model estimated results based on past performance, indirect indicators included in public reports and industry trends. However with no new information available to refresh and fine tune our revenue-estimating models, we have decided to discontinue coverage of such groups to focus on organizations for which more reliable information can be found and whose inclusion will strengthen the validity of the Top 100 and Second 100. A number of hotel and casino operators, who through public reports provide a significant amount of information about their food-and-beverage operations that NRN can report or model to estimate domestic results, remain in the Company census, including Caesars Entertainment Corp., Host Hotels & Resorts Inc. and MGM Resorts International.