Restaurant Franchises Saw Improvement Last Year

Restaurant chains experienced a rebound in 2010 with a 1.8% increase in sales of America’s top 500 chains. Starbucks, Dunkin’ Donuts and Pizza Hut were among the highest …

Restaurant chains experienced a rebound in 2010 with a 1.8% increase in sales of America’s top 500 chains. Starbucks, Dunkin’ Donuts and Pizza Hut were among the highest growing restaurants. See the following article from BlueMauMau for more on this.

America’s largest 500 restaurant chains registered a 1.8 percent increase in annual sales in 2010. According to food researcher Technomic Inc , U.S. system wide sales for the top 500 increased $234 billion in 2010, up more than $4 billion over 2009.

"We are pleased to see improvements in the U.S. economy begin to translate into improved performance for the leading restaurant chains," said Ron Paul, President of Technomic. "The industry has a lot of ground to recover and still faces many challenges. But our latest findings on 2010 chain performance are certainly encouraging." 

Growth came from pizza, donut and coffee categories with Starbucks, Dunkin’ Donuts and Pizza Hut posting estimated sales growth of 8.7, 6.1 and 7.8 percent, respectively. McDonald’s, the largest U.S. restaurant chain, grew 4.4 percent with sales of $32.4 billion. Subway continued to dominate the growing Other Sandwich segment with 6 percent sales growth and total sales of $10.6 billion, which is considerably better than the 1.8 percent growth posted by the Other Sandwich chains collectively. Subway continues as the second-largest restaurant chain by sales in the U.S., followed by Starbucks, Burger King and Wendy’s Old Fashioned Hamburgers.

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As a whole, limited service grew at a rate of 2.5 percent. Asian, which grew at 9.3 percent, was another limited-service sub-segment with sales growth well above their segment average. Within this group, Panda Express, a California-based chain, grew 12.8 percent with sales of $1.4 billion.

According to Technomic’s Top 500 Chain Restaurant Report, growth continued to be driven by fast-casual chains. The Mexican category was led once again by Chipotle Mexican Grill, posting U.S. system wide sales growth of 20.7. A standout in the hamburger segment was Five Guys Burgers and Fries with estimated sales growth of 37.8 percent. (See table. Chains in red are franchised.)

Within Top 500 full-service restaurants, the real story was in the Steak category, which recovered from a 6.4 percent decline in 2009 to a sales gain of 2.2 percent in 2010. While the Steak chains continued to be affected by slow unit expansion, additional closures and the decline in customer traffic and check averages, they were not alone in surpassing average full-service sales performance.

In total, the top 10 fastest-growing chains’ sales accounted for $7.8 billion, an 18 percent increase over 2009. Unit counts grew 14 percent.

More than 50 percent of the Top 500 restaurant chains posted at least nominal sales increases; only 231 of these chains suffered sales declines in 2010 compared to 283 in 2009. Both winners and losers appeared in each segment and menu category. These widely-mixed results demonstrate the overall competitiveness of the industry and the need for suppliers and operators to carefully identify and focus on the winners.

International performance by the Top 500 restaurant chains continued to outperform their domestic counterpart growth in 2010. International sales (up 3.1 percent) outpaced U.S. sales (up 1.8 percent); international unit growth was also up 3.7 percent versus 0.5 percent for U.S. units.

This article was republished with permission by BlueMauMau.

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