Technomic details chain restaurant growth slowdown
March 25, 2010
by Bryan Salvage
CHICAGO — The 500 largest U.S. restaurant chains posted a 0.8% annual sales decline in 2009.
Technomic Inc. data in its annual reporting on the top U.S. restaurant chains found that U.S. systemwide sales for the Top 500 declined to an estimated $230.0 billion in 2009, down almost $2 billion over 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 Ron Paul, Technomic president. “Sales among the Top 500 restaurant chains contracted 0.8% in 2009, versus 3.4% growth in 2008. Many chains scaled back their U.S. unit expansion efforts and shuttered underperforming stores, growing units by just 0.3% compared with 1.8% a year ago."
The limited-service Mexican, Bakery Café and Donut categories experienced growth with Chipotle, Panera Bread and Dunkin’ Donuts posting 2009 sales growth of 13.9%and an estimated 7.1% and 3.7%, respectively. McDonald’s, the largest U.S. restaurant chain, grew 2.9% with sales estimated at $30.9 billion. Subway continued to dominate the growing Other Sandwich segment with 4.2% sales growth and total sales of $10 billion, which is considerably better than the 0.8% growth posted by the Other Sandwich chains collectively. Subway continues as the second-largest restaurant chain in the U.S., followed by Burger King, Wendy’s Old Fashioned Hamburgers and Starbucks.
Limited-service chains within the Technomic Top 500 accounted for 85% of all U.S. "fast food" restaurant sales. As a whole, this group grew at a rate of 0.1%. Asian, which grew at 5.9%, was another limited-service sub-segment with sales growth well above their segment average. Within this group, Panda Express, a California-based chain, grew 8.8% with sales of $1.2 billion.
Growth continued to be driven by fast-casual chains. The Mexican category was led again by Chipotle Mexican Grill and Qdoba Mexican Grill, posting U.S. systemwide sales growth of 13.9% and an estimated 6.5%, respectively. Standouts in the hamburger segment included Five Guys Burgers and Fries and The Counter with estimated sales growth of 50.2% and 67.3%, respectively.
Full-service chains within the Technomic Top 500 accounted for roughly 40% percent of all U.S. restaurant sales within this segment. As a whole, this group decreased sales 2.9%. Asian, which grew at 2.9%, was the only full-service sub-segment with positive sales growth. Within this group, several mid-sized brands, including RA Sushi Bar Restaurant, Stir Crazy Asian Grill and MuHot Mongolian Grill, drove its growth with double-digit sales increases.
Within Top 500 full-service restaurants, the real story was in the Steak category, which experienced a decline in sales of 6.4%, a deeper decrease than the 0.7% decline seen in the prior year. 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 4.0%, respectively.
In total, the top 10 fastest-growing chains’ sales accounted for $5.9 billion, a 19% increase over 2008. Unit counts grew 16%.