Technomic: 2012 Was A Good Year For Restaurants
The restaurant industry had a good 2012, or at least the 500 largest chains did, according to Technomic. The Chicago-based restaurant consulting firm said today that sales for the 500 largest concepts grew 4.9 percent last year—a post-recessionary peak.
The rate of growth was considerably higher than the 3.5 percent growth that Technomic’s list recorded in 2011. “It is certainly encouraging to see overall industry growth rates return to levels not seen since 2007,” Ron Paul, Technomic’s president, said in a statement. Still, he noted, performance varies from one chain to the next as concepts adapt value propositions to meet consumer demand and refine operations to meet industry challenges.
Fast-casual chains led the charge, helping drive overall sales growth in the limited-service sector to about 5.6 percent, compared with a more modest 2.9-percent growth among full-service chains. “It’s driving growth, but it’s also pulling away growth from quick-service and casual dining,” said Darren Tristano, executive vice president at Technomic. “Those parts of the business are going to be negatively impacted by the growth of fast casual.”
The fastest-growing chain last year was the Dallas-based fast-casual barbecue concept Dickey’s Barbecue Pit. Dickey’s aggressive growth—unit count grew by more than 40 percent last year—led to 46.5 percent sales growth, easily tops on the ranking, ahead of No. 2 Firehouse Subs, which saw 33.5 percent sales growth on 19.3 percent unit growth.
Missing from this year’s ranking was Five Guys, which had topped Technomic’s closely-watched ranking each of the past three years. Five Guys’ sales grew 13.9 percent and its unit count grew 15.55 percent, Tristano said. Both are healthy numbers, and good enough to push its system sales over $1 billion for the first time, but it was a dramatic slowdown from recent years.
Indeed, average unit volume fell 9.3 percent, from $1.156 million to $1.059 million—confirming things we’ve been hearing in recent months: that the proliferation of better burger concepts is dragging on the sub-sector’s leading player. We’ve heard that Five Guys is struggling in markets with a high number of better burger concepts. Tristano agreed. “I’ve talked to a number of Five Guys franchisees and I’ll be honest with you, it’s mixed,” he said. Some stores remain strong, but others are weakening. And when sales slow, operators slow development.
One chain that has maintained consistent growth has been Chick-fil-A. The Atlanta-based chicken concept had 14.1 percent sales growth last year. That wasn’t enough to make it on the list of 10 fastest growing concepts, but it was good enough to get on another list: the nation’s 10 largest restaurant chains overall. Chick-fil-A leapfrogged Applebee’s to become the 10th largest chain in the country, Tristano said.
Another point: the company may well be larger than KFC now. Last year, Tristano said, Chick-fil-A’s domestic system sales trailed the traditional chicken giant by only about $40 million. Given their respective growth rates—Chick-fil-A grew by 14 percent, KFC by 1.3 percent—it’s highly likely that Chick-fil-A has surpassed the Louisville-based KFC by now. “I’ve seen some of the store openings,” Tristano said. “There was one in Ohio that was barely open a week. It was crazy in terms of the number of people inside the store, wrapped around the restaurant.”