The Growth 40

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Auntie Anne's, CiCi's Pizza, Nestle Toll House Cafe, Popeye's, Finance, Operations, Franchising, Growth

In October, upstart fast-casual burger concept Burger 21 launched its franchise program. Rather than pursuing partners to build the brand across the national landscape, Front Burner Brands, the Tampa-based parent company of Burger 21 and the popular Melting Pot restaurants, identified its first growth market: Orlando.

“Mickey Mouse does wonders,” Burger 21 vice president of franchise development Dan Stone says. “Orlando may not be Times Square in Manhattan, but it’s the equivalent of that in the Southeast.”

Orlando is surely the town that Disney built, but “The City Beautiful” has become so much more. In the swelling, sunny metropolis with compelling economics, attractions, and households, there are plenty of mouths to feed.

Orlando tops QSR’s 2011 Growth 40 list, an annual rundown of the nation’s top metro areas poised for quick-service growth. It’s followed by Seattle; Portland, Oregon; Riverside, California; Austin, Texas; and Las Vegas, and is the only metro among the top six sitting east of the Mississippi. It’s as much a sign of the West’s continued expansion potential as the compelling features that boost Orlando over hearty competition.

This is the second year QSR has named the hottest markets for restaurant growth, and we took what we learned last year to refine our search, partner with one of the top business insights groups, and take a look at several new factors when deciding the best metros to report.

This year QSR began by analyzing only population numbers of the nation’s 51 metropolitan areas with more than 1 million residents, according to the U.S. Census data, rather than dividing the cities into small, medium, and large, as we did in 2010.

Growth 40 partner American Express Business Insights then identified three key statistical growth areas—spending, average transaction size, and number of transactions—to offer further depth to the report. Next QSR assigned cumulative scores to all 51 cities based on the factors listed above and broke ties in the scores with raw population data. The larger metro ranked higher, and the cities that didn’t make the top 40 were cut.

While American Express Business Insights vice president Peter Niessen calls spending growth the “linchpin,” he says the increases in average transaction size and transaction count provide important insight into consumer psychology. When paired with a quick serve’s growth drivers, such data can spark development exploration.

For instance, if a given market reports declining transaction size, but growth in the number of transactions, it suggests that a concept targeting high traffic might resonate better than a concept relying on higher tickets. Such introspection provides the data’s “biggest takeaway” value, Niessen says.

“Successful operators will understand the specific metrics they should be looking at most closely with respect to their concept type,” Niessen says.

While the numbers from American Express Business Insights specifically spotlight an area’s economic vitality and represent one lens through which to view a market’s growth potential, Niessen cautions that the data is by no means an end-all, be-all.

“The metrics we provide are but a few of several that an operator should consider,” he says.

Other critical data, such as market density, the demographic mix, the socioeconomic climate, the real estate environment, distribution ease, the capabilities of franchise partners, and the competitive landscape, are also important in development decisions.

“You’re looking at what’s nearby, if the area makes sense for your business model, the strength of an existing franchise base, and their motivation to grow. And the list goes on and on,” Auntie Anne’s director of leasing Andy Kmiec says.

Ultimately, there’s a clear indicator every brand values.

“Let’s face it,” says Bruce Evans, vice president of franchise development for CiCi’s Pizza, “we’re all focusing on areas of growth, because that’s what we want in our own businesses as well.”

With that spirit in tow, here’s a closer look at the Growth 40’s top five cities.