Industry News | May 31, 2006

'Solid Performance Among Chain Restaurant Companies,' Says Technomic

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The 500 largest U.S. restaurant chains registered solid performance, posting 7 percent sales growth in 2005. In its annual report on the top U.S. restaurant chains, foodservice consultancy Technomic found that U.S. systemwide sales for the Top 500 rose to an estimated $199.9 billion in 2005, up $13 billion over 2004 on a same-chain basis.?

"Even as the U.S. economy struggled against rising gas prices and a turn in interest rates, the Top 500 still managed to outperform the restaurant industry at large, which grew 5.6 percent," says Darren Tristano, managing director of Technomic Information Services.

Significant growth continues to come from the limited-service beverage and other sandwich categories with Starbucks and Subway posting 2005 double-digit sales growth of 20.5 percent and 14.4 percent, respectively. McDonald’s, the largest U.S. restaurant chain, grew 5.1 percent, with sales exceeding $25.6 billion. Panera Bread continues to dominate the growing bakery café segment with 28.6 percent sales growth and total sales in excess of $1.6 billion.

Limited-service chains within the Technomic Top 500 accounted for 82 percent of all U.S. fast-food restaurants. As a whole, this group grew at an impressive rate of 7 percent. Other limited-service sub-segments with sales growth above the segment average include bakery café (27.8 percent), beverage (19.8 percent), Mexican (12.4 percent), other sandwich (12.0 percent), donut (11.5 percent), and chicken (9.4 percent).

Growth continues to be driven by leading chains. The Mexican category was led by Taco Bell’s 8.4 percent sale growth and quick-casual standout Chipotle, which grew an estimated 27.1 percent. The doughnut category continues its growth with Dunkin Donuts' 13.8 percent sales and the category’s increased sales of specialty coffee.

The chicken segment saw strong growth of 13.1 percent from Atlanta-based Chick-fil-A and an emerging southeastern quick-casual chain, Zaxby’s, that ended the year with over 330 units.

Within full-service segments, the seafood and Asian categories posted strong sales growth rates of 12 percent and 10.5 percent, compared to an overall full-service growth rate of 6.9 percent. The varied menu category also outperformed the segment with 8.7 percent sales growth, led by America’s largest casual dining chain, Applebee’s Neighborhood Grill & Bar, which increased sales by 8.8 percent.

The Mexican, steak, and Italian categories all posted strong results with sales growth of 8.3 percent, 7.6 percent, and 6.6 percent, respectively. Family-style restaurants continued to struggle, but remained flat.