Nation's Restaurant News on the Go #74

Informed and inspired

Happy start of summer readers! NRN editor-in-chief Sam Oches here.

Last week my family and I celebrated the end of the school year with a matinee at the movie theater. Before the flick, we grabbed three boxes of candy, three drinks, and one popcorn at the concession stand — and proceeded to collect our jaws off the floor when we discovered it was $48.

“Wow,” said the teenager who was ringing us up. “That’s expensive.”

That’s right, folks, prices are so out of control that even employees are saying the quiet part out loud. Of course, inflation has been a slow boil for the last two to three years. But as I wrote last month, it seems like we’re finally hitting a tipping point where everyone is horrified by how expensive everything is (even, it seems, the employees!) and simply giving up. Exhibit A was first-quarter earnings, which offered proof that even giants like Starbucks and Yum! Brands were not immune to inflationary pressures and consumers’ inclination to pull back on spending for food and beverage outside the home.

Exhibit B is this year’s Technomic Top 500, the first comprehensive look we have at 2023 performance. The annual ranking of the 500 biggest restaurant chains in America by systemwide sales seems to show industry growth last year: Sales across the top 500 chains grew by 7.8% to $424 billion, while unit counts grew by 1.8% to more than 233,000 locations. But those numbers bely the true state of the industry. Consumer prices rose by an average of 7.1% in 2023, meaning restaurants just barely outperformed inflation. And while there were no doubt some overachievers, a full third of Top 500 chains decreased their unit counts last year.

Here’s a stat that really blew my mind, one that perhaps indicates not only where things stand in 2024 but also where we could be heading in the future: The top 10 restaurant chains in America accounted for 44% of the Top 500’s sales in 2023 — more than $185 billion! — and outpaced the rest of the list with 9.1% sales growth. In 2019, the top 10 made up 42% of the Top 500’s sales. While 2 percentage points may not seem like much, remember that we’re talking about a number with 11 digits.

Scan the top 10 and you’ll understand why this growth is important. Perhaps only with the exception of Starbucks, those chains are all fast, accessible, and — critically — affordable options, and they’re leaning into those characteristics to steal market share from the rest of the industry. May that be your first lesson from this annual report: If you want to survive the choppy waters we seem to be sailing into, you’ll need to emphasize speed, accessibility, and value.

Is the sky falling? No, I don’t think so. Call me an optimist, but I’m holding on to the fact that people have to eat. (You know who should be more worried? Hollywood. Just ask me if I’m about to return to the movie theater any time soon.) But you also shouldn’t bury your head in the sand in seasons like this. Stay informed and inspired. Bookmark the Top 500 — see below for more — and learn from what your peers are doing. With this map in hand, you can navigate to the other side of the choppy waters.

Meet the 2024 Top 500: The biggest restaurant chains in America

At first glance, the Technomic Top 500 appears to show healthy growth for the biggest restaurant brands in the U.S. Sales grew by 7.8% to a robust $424 billion, while unit counts grew by 1.8% to more than 233,000 locations —?the highest rate of new location growth since 2016, according to Technomic.?

Look a bit deeper, however, and you’ll spot signs of trouble for the restaurant industry. The 7.8% sales growth is only slightly higher than the 7.1% average increase in consumer prices, illustrating an ongoing trend that carried over from 2022: sales increasing not from traffic so much as inflation-induced price increases. Indeed, 2023 performance — and, subsequently, 2024’s first quarter —?suggest that the industry has reached a tipping point where consumers are starting to pull back on discretionary spending and trade down to more value-oriented meal options.??

READ MORE

2024 Top 500: The 50 biggest restaurant chains in America

Every year, Nation’s Restaurant News presents the Top 500 biggest restaurants in America, ranked by systemwide sales in the previous fiscal year. This year, we’re using data from our partners at Technomic to give you the best report yet.

In this gallery, meet the crown jewels: the 50 largest restaurant chains in the country. For each, you’ll also learn their systemwide sales and unit counts for 2023.

You may think there’s nothing to see at the top of the list, but you’d be very wrong. These 50 chains saw astounding success last year, bringing in more than $322 billion in sales between their 163,473 units. 47 of them saw systemwide sales growth, and 35 added net new units.

READ MORE

Chick-fil-A’s momentum continued in 2023 — and there’s no end in sight

American consumers have been shifting more toward chicken for the past two or three decades now and arguably no chain has been better positioned for this trend than Chick-fil-A. The numbers prove it: What started as a regional chain near Atlanta in 1967 has since grown into the third biggest restaurant chain in the country by sales. Its momentum started about a decade ago and continues to pick up speed; in 2023, the company added nearly 15% in sales, to over $21.5 billion, while growing its footprint by nearly 6%, to nearly 3,000 restaurants.

Chick-fil-A has been a case study in consistent growth, leapfrogging a number of legacy brands throughout the past several years on the Top 500 report, despite being closed on Sundays and, in many cases, having a smaller unit count. Chick-fil-A’s staggering success has ignited plenty of imitation — both in menu innovation (chicken sandwich wars) and operating model (owner/operator) — and the chicken segment as a whole has benefitted accordingly. Last

year marked the fifth straight year of double-digit growth for chicken chains, with sales increasing in the category by over 12% to a total of $49 billion. There are now five chicken chains with more than $1 billion in sales that achieved double-digit growth during 2023: Chick-fil-A, Popeyes, Raising Cane’s, Wingstop, and Bojangles.

READ MORE

Casual-dining segment hits the skids

While casual dining showed some improvement in 2022, the segment ran out of post-pandemic steam in 2023, a trend that has accelerated in 2024.

Retrenchment has been pronounced this year, as 2024 has seen high-profile bankruptcy filings like that of Orlando, Fla.-based Red Lobster and closures of underperforming units as in the case of Applebee’s Neighborhood Grill & Bar and Outback Steakhouse.

READ MORE

The Top 500, Rubio's bankruptcy, and Cracker Barrel's rebrand

Want more Nation's Restaurant News?

• Subscribe
• Listen to our weekly podcast Extra Serving featuring Nation's Restaurant News editors & industry executives
• Follow us on Instagram