Technomic, a recognized and experienced food industry consulting and
research firm in Chicago, released its Top 500 Chain Restaurant Report March
25, providing the company's exclusive five-year sales forecast by menu
category; update on franchise and international activity; five-, 10- and 20-
year trend analyses; outlook for the future; and market share by menu
While the report indicated that the 500 largest U.S. restaurant chains
registered an overall decline in annual sales of 0.8 percent in 2009, there
were also some impressive bright spots.
Darren Tristano, executive vice president of Technomic, told The Produce
News that U.S. systemwide sales for the Top 500 list declined to an estimated
$230 billion in 2009, down almost $2 billion from 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," said Mr. Tristano. "The data in this
report clearly support what we've been hearing in our consumer research
surveys over the past year. Many chains scaled back their U.S. unit expansion
efforts and shuttered underperforming stores, growing units by just 0.3
percent compared with 1.8 percent a year ago."
Mr. Tristano explained that the study typically surveys about 1,500
restaurant chains, which it has tracked every year for the past 35 years.
Technomic receives a few responses to its survey from privately owned
restaurants giving their sales, and considerably more responses from publicly
owned companies, mainly because there is a large difference between
revenue and sales.
"We then have to go through about 100 companies that may have several
chains and estimate the franchise portion of their sales," said Mr. Tristano.
"After going through all of these data, we then look at those chains that have
not reported their estimated sales and base our figures on a verified unit
number. We estimate their sales and cross check our figures against how
each segment performed. The figures are compared to consumer research
reports to confirm that they make sense to us."
Highlights of the report include the growth rate of limited-service Mexican,
bakery café and donut categories, with Chipotle, Panera Bread and Dunkin'
Donuts posting 2009 sales growth of 13.9 percent and an estimated 7.1 and
3.7 percent, respectively.
McDonald's, the largest U.S. restaurant chain, grew 2.9 percent with sales
estimated at $30.9 billion. Subway continued to dominate the growing "Other
Sandwich" segment with 4.2 percent sales growth and total sales of $10
billion, which is considerably better than the 0.8 percent growth rate posted
by the "Other Sandwich" chains collectively. Subway continues as the second-
largest restaurant chain in the United States, followed by Burger King,
Wendy's Old Fashioned Hamburgers and Starbucks.
Growth continued to be driven by fast-casual chains. Chipotle Mexican Grill
and Qdoba Mexican Grill, posting U.S. systemwide sales growth of 13.9
percent and an estimated 6.5 percent, respectively, led the Mexican category.
Standouts in the hamburger segment included Five Guys Burgers & Fries and
The Counter with estimated sales growth of 50.2 and 67.3 percent,
Within the Top 500 full-service restaurants, the real story was in the "Steak"
"It experienced a decline in sales of 6.4 percent, a deeper decrease than the
0.7 percent decline seen in the prior year," said Mr. Tristano. "This group
continued to be affected by declining customer traffic and check averages,
slowing unit expansion and closures. Seafood and Mexican categories also
posted below-average results with sales declines of 4.2 and 4 percent,
Included in the report are the 10 Fastest-Growing Chains with Sales Over
$200 Million, ranked by percentage increase in sales in 2009 compared to
2008. In order of rank, they are Five Guys Burgers & Fries, Tim Horton's,
Buffalo Wild Wings Grill & Bar, Jimmy John's Gourmet Sandwich Shop,
Wingstop, Noodles & Co., BJ's Restaurant & Brewhouse, Chipotle Mexican
Grill, Firehouse Subs and Potbelly Sandwich Works.
Mr. Tristano offered his take on why the top three restaurants on the list of
the top 10 are growing so rapidly. "Five Guys Burgers & Fries is in the better
burger category," he said. "This is a very hot restaurant chain with premium
product and a defined and narrow menu. The franchise is growing at an
incredible pace. It is diverse in the age, race and income it attracts, and it's
great for families. The restaurants are on par with what consumers are
looking for today."
Five Guys opened its first restaurant in Arlington, VA, in 1986. From then
through 2001, it expanded to five locations in the metropolitan Washington,
DC, area. In 2002, it started to franchise in adjacent states but sold out of
franchise territory within 18 months. It started to open the rest of the country
for franchise rights in 2002, and by 2003, there were over 550 locations in
more than 35 states.
"Tim Horton's is rated second," said Mr. Tristano. "It has enjoyed very high
growth and is a dominant chain in Canada. The restaurants focus on not just
donuts but also soups, chili and sandwiches. It's on par with Subway but also
with Dunkin' Donuts. Unit expansion is where you look for strength within an
organization, and Tim Horton's is very well capitalized. This creates
tremendous appeal from franchisees, who want to open the company's
restaurants. The component of growth is based on new unit openings."
Tim Horton's was founded in Hamilton, ON, by Tim Horton, a Canadian
hockey player, and Jim Charade. Franchises spread rapidly and eventually
overtook McDonald's as Canada's largest foodservice operator. The company
opened twice as many Canadian outlets as McDonald's, and systemwide sales
surpassed those of McDonald's Canadian operations by 2002. In 2005, the
chain accounted for 22.6 percent of all fast-food industry revenues in
The third fastest-growing chain restaurant on the Top 10 Fastest-Growing
Chains with Sales Over $200 Million is Buffalo Wild Wings Grill & Bar. "It offers
just about everything a casual restaurant can," said Mr. Tristano. "It has
takeout, fast casual dining and a full-service bar business, which enjoys
strong appeal with the age 21-and-up group. It also attracts teens at certain
times of the day, and it has strong sports appeal, especially among college
students and faculties. The prices are good, it has a family environment and it
has a high vending product in games. From an entertainment standpoint, it
offers something for just about everyone. Its menu is also very appealing,
with a strong lean toward chicken wings. The restaurants are currently
focusing on late-night dining a little more than in the past, which gives it yet
another category of diner. If I were to open a franchised restaurant, this
would be the one I would want."
Buffalo Wild Wings was founded in 1982 after James Disbrow, then living in
Buffalo, NY, had traveled to Kent, OH, to judge a figure skating competition at
Kent State University in 1981. He met up with a friend, Scott Lowery, and the
two went looking for a place to get authentic Buffalo-style chicken wings.
Unable to find one, they, along with Mike Balsom, decided to open their own
restaurant in Columbus, OH. Today, there are 650 Buffalo Wild Wings Grill &
Bar restaurants in 40 states.