Special Report

2010 QSR 50

There’s no other list like this one. The QSR 50 brings the biggest names in the quick-service and fast-casual industries together in an all out sprint to the finish. Their domestic sales would make companies like Nike, Whirlpool, and Progress Energy blush. They are the top 50 companies shaping our industry. How does yours stack up?

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McDonald’s

McDonald's

1Once smoothies and frappés were in the pipeline, McDonald’s wasted no time making another splash with beverages. Reports that the chain would reprice all sodas at $1 initially drew scoffing—from franchisees as much as competitors. But within weeks the home office confirmed to QSR that “many local markets” had already adopted the discount. Now units are being revamped into places where you might kick back with your latte, frappé, or$1 Coke.

Subway

2Subway’s success simply can’t be stopped. So far this year, the company has opened more than 1,000 new locations around the world, crossed the milestone of 33,000 locations and premiered its new breakfast menu at about 25,000 U.S. and Canadian stores. The only potential chink in the brand’s armor? Oversaturation.

Burger King

3The roll out of a new charbroiler, the foundation of Burger King’s open-flame cooking process, was completed last year, opening the menu to products like ribs and stuffed burgers. But it remains to be seen if the company will rally a franchisee community that all but yelled “Death to the King!” during the past year’s deep discounting. Some fear the brand has conditioned customers to shop for price, quality be damned.

Wendy’s

4Wendy’s is focusing on prepping for a breakfast re-entry and what CEO Roland Smith termed a “significant” facelift for stores. But the new a.m. lineup won’t be available systemwide until late 2011. Meanwhile, the brand’s new owners have vowed to raise comp sales by alternating limited-time deals with premium options. The chain is also following Starbucks’ lead in setting prices on a store-by-store basis.

Starbucks

5After a whirlwind year for Starbucks, expect more of the same, say executives of the resurging coffee brand. Efforts to sustain the turnaround will bring more health-oriented products, along with higher-quality food, says CEO Howard Schultz. Meanwhile, the brand is reaping the benefits from its revamped loyalty program, My Starbucks Rewards, the No. 1 reason customers say they visit the brand more often than they did six months earlier.

Taco Bell

6Taco Bell officials call them “sales layers,” the departures from business-as-usual for the Big Tamale of Yum! Brands’ portfolio. The chain bid for the health-minded by trumpeting a Drive-Thru Diet Menu and, more recently, it’s expanded tests of breakfast and tinkered with a do-it-yourself taco bar that feeds four for $14.99. Management hints that more menu departures may be on the way.

Dunkin’ Donuts

7The transformation of Dunkin’ Donuts into a broad-menu contender with a doughnut bent is quickening. The past year brought the sort of new products you might expect from a burger or sub specialist, like chicken and tuna wraps, a value menu, and a new snack called bagel twists. Meanwhile, Dunkin’ grew faster than many of the full-menu brands, with 171 domestic units added during ’09 and 131 more in the franchise pipeline.

Pizza Hut

8Follow this zen logic, Grasshopper: Pizza Hut’s growth will come not from pizza, but from wings and pasta. But the challenge of the moment, execs cryptically point out, is reviving pizza sales. If that doesn’t lead to head scratching, consider that officials want to improve the perceived value of pies as a means of boosting wing and pasta sales. So they added a permanent discount, the $10 Any Pizza deal. Huh?

KFC

9With KFC, “we have our work cut out for us,” acknowledged David Novak, CEO of franchisor Yum! Brands. The daunting to-do list includes improving operations, consumer perceptions, and menu appeal. The home office is hoping to improve the appeal and service of units by providing additional field-level support. Already visible is the brand’s effort to be viewed as a bargain option, most clearly with the new value menu.

Sonic

10Hammered more than most chains by the economy, Sonic hopes to rebound by playing up its quick-service quirks. Marketing has focused on points of difference like the use of roller skaters to serve meals car-side. One of the few major chains to feature hot dogs, Sonic bulked up its Coney to four ounces and made it a true footlong. The chain hints about defending its rep as a beverage innovator by uncorking new selections.

Arby’s

11Having Wendy’s as a sister concept won’t stop Arby’s from pushing its sandwiches as a trade-up from burgers. But the chain’s usual high-end message will be tempered near-term by increased attention to value, including a $1 menu and bundled meals priced to compete with the deals of Subway and Quiznos. Simultaneously, 100 units run by the franchisor will be given an overhaul, the first step in a three-year, $75-million-plus renovation drive.

Chick-fil-A

12Not long ago, Chick-fil-A could be pigeonholed as a sleepy Southeastern chain with little on its menu but fried-chicken sandwiches. Now it’s finding new roosts as far afield as California and Chicago, with products ranging from yogurt parfaits to a proprietary coffee. Sales topped $3 billion last year, putting it in rarified company. The one constant: Every store still shuts on Sunday.

Jack in the Box

13Jack in the Box is targeting a spectrum of fast food customers, but the crosshairs keep falling on bargain hunters. It’s been adding premium products, including grilled sandwiches touted as a notch above fast food. Yet the focus was on the attractive price. Ditto for oversized burgers, which were offered for $1. Add a value breakfast menu and limited-time deals, and you have a chain looking to boost traffic first, check average second.

Domino’s Pizza

14With customers unhappy with the taste of Domino’s pies—some said they tasted like cardboard—the company did the unthinkable: It updated its signature recipe. The bold move paid off, and then some. Q1 same-store sales in 2010 were up a staggering 14.3 percent over 2009.

Panera

15A rare change in leadership may lead the news reports on Panera Bread, but subtler shifts will likely affect sales more than the retirement of longtime CEO Ron Shaich. Next on the to-do list of successor Bill Moreton is the roll out of a customer-loyalty program. It follows a redo of an admittedly misconceived catering program and an upgrade in merchandising to push gift items like Panetone and specialty breads during holidays.

Dairy Queen

16For a brand that once seemed stuck in time, Dairy Queen is acting pretty hip these days. It’s been ahead of the quick-serve pack in embracing the small-plates phenomenon (it now has a half-sized Blizzard), the truck-restaurant boom (it rolled out its BlizzardMobile in April), and the reliance on social media as a marketing tool (with the goal of attracting 2.5 million followers to a Blizzard fan page).

Papa John’s

17Ah, to have the coffee concession for Papa John’s marketing department. The squad has been buzzing like a college dorm on the night before finals, brainstorming promotion after promotion. And these weren’t your usual two-fers. A whole ad campaign was built on John Schnatter’s old wheels. But the hoopla didn’t spare the brand from the pizza market’s price slashing. Among its head-turners was an offer of two pies for $17—undercutting Pizza Hut’s $10-a-pie deal.

Quiznos

18After going bun to bun with Subway streetside, Quiznos is challenging its archrival in the booming convenience-store market, where the Brand That Shrank Jared has a considerable lead. Quiznos is betting breakfast will be the bomb. This year it rolled out an a.m. menu into the 175 units that already operated in conjunction with a retailer, and plans to use it as a selling point to double the tally within two years.

Hardee’s

19An original breakfast innovator, Hardee’s isn’t passively watching as the a.m. competition rises. Morning additions have been a key way for the chain to tout a bargain (a double-sausage biscuit sandwich), as well as options the horde can’t yet match (blueberry biscuits). The nod to tradition and comfort foods was also evident in a new grilled cheese sandwich line, though Hardee’s supercharged its version with a patty and bacon.

Popeyes Louisiana Kitchen

Popeyes Louisiana Kitchen

20After working the same sales strategy for more than a year, Popeyes is making some tweaks. “We now know what the vital few initiatives are that drive Popeyes results,” says Cheryl Bachelder, CEO of parent company AFC Enterprises. So what are they? The development of more Louisiana-themed products, improving operations by using surveys to verify that staffers hustle, and stepping up expansion.

Chipotle

Chipotle

21About every fourth Chipotle restaurant this year will feature the new A Model format, designed specifically for Tier 2 trade areas. Translation: It’s going after not-so-perfect sites with a smaller, lower-cost prototype. That thrust will lower the average cost per restaurant to $800,000 from $900,000. Meanwhile, the burrito specialist is investigating in an expansion of its sales day by testing breakfast, starting with an airport location.

Carl’s Jr.

22Carl’s Jr. hasn’t abandoned its strategy of promising better quality at prices still typical of fast food. But it remains to be seen if the chain’s new owner is going to stay that course when even fraternal-twin Hardee’s is doing better with the traditional value approach. There were a few detours even before the sale, including a discount for a Six Dollar Burger—once the epitome of Carl’s strategy.

Panda Express

23Panda Express apparently didn’t get the memo. With the drop in shopping, particularly in the chain’s home market of California, the standard corporate directive was to focus marketing on inexpensive products.

So what’d mall-concentrated Panda do? Tout its first shrimp dish and a premium chicken entrée. It also adopted a mobile ordering service, promising to save patrons time, not necessarily money. Results apparently left it content to stay off the routing slip.

Whataburger

24Whataburger is kicking up its new product development, hoping to woo economizing customers with cookies and milk and chicken sandwiches. With units concentrated in Texas, one of the states hit worst by the recession, the venerable chain also tried several limited-time steals, including its signature taquitos offered at nearly half price.

Little Caesars

25The Detroit Tigers haven’t reigned as champs in their league for a while, but Motown-based Little Caesars can do some serious trash talking. In a segment marked by discounting, owner Michael Ilitch pinned its offense on the Hot-N-Ready, a 14-inch carryout pie priced at $4.99. Make that $3.99 during a promotion. Offering pies at half Pizza Hut’s price earned Caesars a third Best Value in America award. Dynasty, baby.

Church’s Chicken

Church’s Chicken

26After last year’s sale to a private equity firm, there’s been nary a peep from Church’s Chicken, an about-face from the crowing of prior years. The new owner, Friedman Fleischer & Lowe, installed one of its own, Mel Deane, as CEO and rounded out the senior team with industry vets like CMO Tony Lavely, an alumnus of chains ranging from Domino’s to Ruth’s Chris. Along the way Church’s bought and converted 23 Mrs. Winner’s units.

Steak ‘n Shake

27The increasingly secretive Steak ‘n Shake granted shareholders a peek this spring at its new prototype, a smaller, less-expensive building that should assist the chain’s franchising efforts. According to one account, the new building measures 3,200 square feet, compared with the earlier standard of 4,200 square feet, and costs $1.5 million to build, a savings of about one-third. The exterior will largely be glass, allowing passers-by to peer into the kitchen.

Zaxby’s

Zaxby’s

28Despite the recession, the chicken-fingers specialist invested in an online training system for managers, helped stores build individualized consumer Web pages, and kept pressing a program to cut drive-thru serving times. Along the way Zaxby’s opened 30 stores, a head-turning clip by Great Recession standards, and kept in step with the quick-serve segment’s new product binge. It even held the line on prices.

Long John Silver’s

29During a conference call with analysts, officials of Yum! Brands were asked if they’d lost interest in Long John Silver’s and were thinking of selling it. Not at all, CEO David Novak said. Sure, the company was focusing on its powerhouses, but Yum had every intention of strengthening the seafood chain and pairing it with Yum siblings where warranted. Meanwhile, the chain continues to explore new waters with products like a $1 fish taco.

Checkers

30While most chains were pulling over to wait out the recession, the drive-thru specialist doubled its expansion pace last year, opening some 40 outlets. Most were fill-ins within markets already served by a franchisee, according to the home office. Now, with two Dunkin’ Donuts vets on the franchising team, headquarters may be pressing the gas pedal a little harder.

Bojangles’

31Confident that fans need just a nudge to crave the fried chicken and biscuits that have been its nearly exclusive focus for 33 years, Bojangles’ is rolling into longtime markets with new marketing, a new look, and new locations. A Bojangles’ RV set off this spring on a South Carolina store tour, with price rollbacks at every stop. Meanwhile, headquarters used social media to foster connections. Renovations are under way, as is a franchising push.

Culver’s

32Buttered ground beef and high-fat frozen custard are hardly me-too products for a quick-service burger chain. So it shouldn’t be a shocker that Culver’s new lures include a sandwich of slow-roasted brisket dressed with barbecue sauce. The home of indulgence conceded to the segment’s price pressures by offering value meals as LTOs. But the focus has largely been on products distinct to the concept, like a BBQ ButterBurger, promoted through social media.

Papa Murphy’s

33The new owner of the Papa Murphy’s take-and-bake pizza concept said it’s not about to up-end the pie. Even before it took title of the chain, Lee Equity Partners indicated it would maintain existing management and continue the expansion blitz that brought 83 openings last year. “We are very excited about the expansion possibilities into areas of the country where they have little or no presence today,” says Lee Equity president Thomas H. Lee.

Jimmy John’s

Jimmy John’s

34At Jimmy John’s rate of product development, the next menu addition should come sometime in 2013. “We don’t rely on gimmicks, promotions, and new menu additions to fool people into coming in and buying our sandwiches,” founder Jimmy John Liautaud said when the Ultimate Porker sandwich was introduced last winter, breaking a four-year R&D hiatus. Meanwhile, the system keeps growing at the rate of 150-plus units per year—80 percent of them opened by existing franchisees.

El Pollo Loco

35With a menu sporting more than grilled chicken-on-the-bone, El Pollo Loco is pursuing a new look. The franchisor said this spring that it would develop a “compelling” prototype with a lower investment cost than the existing format. The new look will be adaptable to a variety of sites, and for the new sandwich line or steak.

Baskin-Robbins

36Baskin-Robbins wants consumers to realize there’s more to the concept than 31 flavors. Like options that ease patrons’ fears they’ll be candidates for next season’s Biggest Loser. This year brought extensions of the scoop king’s lighter Brighter Choices line, described in terms like “premium churned,” “no sugar added,” and “reduced fat.” The efforts to expand the brand’s appeal coincide with the appointment of a new marketing director, Brian O’Mara, previously of McDonald’s.

Del Taco

37Competing with a marketing loudmouth like Taco Bell has to be tough for Del Taco, a chain less than a tenth the size of the segment’s Big Enchilada. The distant also-ran tried to stay on value hunters’ minds by showcasing new bargains, including a $1.49 soft taco kicked up Santa Fe–style with a salsa of roasted corn and black beans. A shrimp taco, replete with lime wedge, was dangled briefly for $1.89.

CiCi’s Pizza

38In January, CiCi’s Pizza recast its marketing department as the Brand Value Group, run by a chief brand value officer answering to the CEO. In a segment known for deal-making, the chain wants to be the outstanding bargain. But how do you claim that niche when pies are selling for $5? CiCi’s is using its buffet as the pitch, alerting consumers they can access the pizza and salad spread for “5 bucks and change.”

Boston Market

39Boston Market may not be ready to get rid of its home-meal replacement strategy, the label it claimed (and coined, to much scorn) when it started growing. But after making its name with chicken dinners and homestyle sides, the brand is eyeing new turf. Rotisseries, a kitchen signature, now share space in some locations with fryers, which open the menu to french fries and chicken fingers. Experimental condiment bars sport tortillas and salsas. And a lunch push is under way.

White Castle

40Now that everyone’s doing sliders, White Castle is touting the romance of its concept, one of the industry’s first quick serves. Among its more-talked-about offerings of the last few months was a candle that gave off the aroma of the chain’s signature mini-burger. Other attention-getters include the annual transformation on Valentine’s Day into a full-service concept with menus and tablecloths.

 

Sbarro

41Having most of your restaurants in shopping malls and airports can be a pointed challenge when shopping and travel fall. As a result, Sbarro closed 113 units during 2009. But 78 stores fired up their ovens for the first time. The chain is concentrating on a broader range of sites, including universities and downtown areas.

Jason’s Deli

42In February, Jason’s Deli asked patrons if they’d appreciate the removal of all artificial dyes and colorings from the fast-casual chain’s fare. Two months later, the additives were yanked. Now Jason’s is gauging consumer interest in gluten-free sandwiches. Stay tuned. After eliminating high fructose corn syrup and MSG from menu items, the concept quietly continues to pursue “stealth health”—better-for-you options without any noticeable sacrifice—as a point of differentiation.

Captain D’s

Captain D’s

43Having a “for sale” sign hammered into the concept’s front lawn didn’t interrupt Captain D’s from pursuing a niche as an economical alternative to seafood dinner houses, with customer lures like wild Alaskan salmon and shrimp kebobs. Still, it’s been forced to float a few discounts, including $5 platters. Sun Capital announced its acquisition of D’s from Sagittarius Brands in May.

In-N-Out

44On April Fool’s Day, jokesters in New York City outfitted an empty storefront with a sign announcing the opening of an In-N-Out Burger. The Internet buzz wouldn’t have been louder if Elvis himself had held the sign. But the hubbub just as quickly died down as fans remembered that this was In-N-Out, a brand growing at a painstakingly controlled pace from its West Coast roots. Its last significant change: a price hike in mid-spring.

Five Guys

45There’s nothing like a plug from Barack Obama to help a brand on the rise. Then again, Five Guys might’ve made the QSR 50 this year even without a visit from the president, an avowed fan of the fresh-beef burgers and hand-cut fries. The limited menu and cult-like following have prompted comparisons with Hot-N-Now, though Five Guys is growing far faster. Management promised 200 openings for 2010 alone.

Qdoba

46Qdoba joined fellow burrito specialists in packing its menus with new draws for children, lighter eaters, and deal seekers. In the case of Jack in the Box’s little sister, the new lures included a pick-two deal, priced at $5.99. Catering will be getting a push, as will a stepped-up customer-loyalty program.

Cold Stone Creamery

Cold Stone Creamery

47Cold Stone Creamery is trying to sweeten its appeal through two major initiatives: cobranding with Tim Hortons and the Rocky Mountain Chocolate Factory chain and the addition of new menu options. So far, most of the Tim Hortons–Cold Stone pairings have come in Canada. The more noticeable U.S. effort has been the product push, with new draws like a 10-flavor Gold Cone premium ice cream line.

Krystal

48You gotta watch those quiet ones. Chains larger than Krystal have generated considerable buzz with innovations like free WiFi, improved drive-thru ordering systems, comfier dining rooms, and packaging imprinted with real customers’ photos. Now drive-thru-only units are being selectively recast into full-fledged restaurants so patrons can kick back and relish the changes.

Tim Hortons

Tim Hortons

49Tim Hortons continues to look for a formula that will deliver the same success in the U.S. that the brand enjoys in its native Canada. Components include the 10-site test of a new format that presents Tim Hortons as a bakery/café, not a doughnut shop. The brand is also being paired with Cold Stone Creamery mix-in treat shops. Meanwhile, the menu R&D department is focusing on beverages, sandwiches, and soups.

Einstein Bros. Bagels

50New products will be the caffeine in Einstein Bros.’ effort to jolt sales this year. An executive recently divulged that the bagel chain will rev up its promotional efforts to 10 LTOs in 2010. Recent menu additions included new breakfast and lunch items containing no more than 400 calories and a probiotic yogurt parfait. Tests of a gluten-free bagel were still under way at press time.