Chains Restaurants Still Grabbing Market Share
For all the talk about the performance of small, upstart concepts and independents armed with unique food offerings and a more aggressive use of social media, chain restaurants still rule the day in the restaurant industry.
At least that's what we can glean from the most recent Chain Restaurant Industry Review, from GE Capital, Franchise Finance. Restaurant industry sales rose 3.1 percent last year to $440.2 billion. Yet sales at the 100 largest chains grew 3.5 percent in that period.
Sales at the 100 largest chains totaled $218 billion—49.5 percent of all restaurant sales. Chain restaurants account for 44.5 percent of all US restaurants, or 633,043 locations.
Chain restaurants have numerous advantages over their smaller counterparts, not the least of which is their ability to flood the airwaves with ads as well as their broad appeal. They've used those advantages in the post-recession environment to increase their market share, while independents have struggled with unit closures.
This hasn't stopped some from insisting that chain restaurants are dying, or that chain restaurants are falling behind independents. To be sure, there are lots of hot, young upstart chains, and social media has helped level the playing field a bit between small concepts and big ones. Independents that take advantage of social media can quickly build a following.
Yet, for the most part, the numbers still favor chain restaurants, the biggest of which are grabbing market share.
To be sure, the industry remains in a difficult spot. While sales overall increased, because consumers spent more per visit, the number of visits actually declined—and industrywide same-store sales fell 0.1 percent. That average check increased 2.6 percent. In other words, the industry would have been stagnant but for menu price increases.
Meanwhile, consumers continue their shift from table service to counter service. QSRs' growth outpaced their full-service cousins last year for the sixth straight year, according to GE.