Special Report | August 2011 | By Sam Oches

The 2011 QSR 50

The top quick-serve and fast-casual brands in the nation.

 

1/McDonald’s

There’s no beating McDonald’s. The quick-serve champ padded its domestic sales by nearly $1.5 billion over 2009. The fast food giant continued to reinvent product innovation in the quick-serve industry by rolling out Real Fruit Smoothies, Angus Snack Wraps, and even oatmeal systemwide, as well as introducing new drinks like the Caramel Mocha.

Head chef Dan Coudreaut says customers can expect more fruits and vegetables on McDonald’s menu as customers demand more healthy offerings. In the meantime, the company is toying with a fast-casual-like prototype in at least one market that executives hope will give the concept more of a sit-and-stay-awhile vibe to compete with the likes of Panera.

2/Subway

Jared Fogle, it seems, is not so much a lucky charm for Subway after all. Even after Fogle, a spokesman for Subway for more than a decade, “retired” in April, the sandwich company continued its explosive expansion all over the world.

In fact, by the end of the year, it could call itself the biggest fast food company in the world. Although light-years behind McDonald’s in terms of sales, the “Eat Fresh” purveyor claimed 33,749 global units at year’s end, a full 1,012 more than the Golden Arches.

A commitment to its $5 Footlongs—seven of which are permanent—helped Subway hold firm in the minds of price-conscious customers. But an upscale prototype in test right now could target a whole different type of clientele.

3/Burger King

Whirlwind may sum up Burger King’s 2010 best. The No. 2 burger chain’s R&D department was hard at work, but it was the finances that really made waves.

In October, the flame-broiled burger brand was acquired by equity firm 3G Capital for a cool $3.26 billion. The transition didn’t hurt Burger King’s product innovation, though. The concept solidified its position in the breakfast daypart in a big way, adding 11 new breakfast items throughout the year and partnering with Seattle’s Best to offer premium coffee. BK also jumped onboard Michelle Obama’s “Let’s Move!” campaign and vowed to keep kids’ meals healthy.

While a heavy push into healthy may not define the brand moving forward, it’s hoping its new 20/20 store prototype and Whopper Bar concept might catch on with a young consumer base.

4/Wendy’s

Trying to reclaim its burger glory from the days of founder Dave Thomas, Wendy’s upped the innovation ante by adding Garden Sensations Salads to the menu and offering a Pair 2 Menu that gave customers a chance to choose among 35 salad combinations for $5.

But the biggest menu change for Wendy’s came in the form of its Natural Cut Fries with Sea Salt, a complete overhaul of the company’s signature fries that kept the potato skin and was fried in proprietary oil. And in a nod to Thomas, Wendy’s even rolled out a marketing campaign starring Wendy herself.

The renewed sense of authenticity might have been top of mind when the company decided to unload sister brand Arby’s in the first half of 2011.

5/Starbucks

The joke always was with Starbucks that the company opened another store faster than you can say orange mocha frappucino. But in 2010, that was hardly the case, and by the end of the year the coffee giant had the same number of stores it had at the end of 2009.

Instead of unit expansion, Starbucks vowed to grow the brand through existing stores by opening up new channels of growth and improving the customer experience. Free WiFi was added, and the brand even tested a modern store design that was one part coffee shop and one part bar—including wine and beer.

Starbucks also worked to increase its position as a multichannel company, adding an iced version of its instant-coffee product VIA and taking its Seattle’s Best brand into new consumer touch points, including at Subway, Burger King, and AMC Theaters.

Of course, the year wasn’t without its Starbucks growth humor; the company did open its first-ever unit on a cruise ship.

Next: QSR 50 Profiles 6 - 10

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6/Taco Bell

Value continued to be the name of the game at Taco Bell, even as most chains pulled back on the deep discounting that became so popular during the recession. The home of 89- and 99-cent burritos followed the quick-serve stampede to the $5 price point, adding its $5-Buck Box to the menu.

CEO Greg Creed says the company will push into the healthy arena by lowering its sodium by 33 percent across its menu in 2011, while maintaining its long-standing focus of giving customers more bang for their buck. Plans are also in place to improve the ambience of units by installing new furniture packages and providing free WiFi access.

7/Dunkin’ Donuts

Egg White Wraps, Pancake Bites, Bagel Twists, and Waffle Sandwiches all appeared on the Dunkin’ Donuts menu in 2010 as the coffee-and-doughnuts concept continued to expand its breakfast offerings.

The company maintained strong expansion numbers as it pushed into new markets and boasted 206 more units at year’s end than the year before. This growth might have been a big reason parent company Dunkin’ Brands decided to finally go public in May 2011.

8/Pizza Hut

Pizza category leader Pizza Hut’s $10 Any Pizza deal failed to make the $10 price point magic for consumers. The Yum! Brands concept retooled its pricing strategy in mid-2010 by slapping an $8 tag on medium pizzas with up to three toppings and $10 on large pizzas with up to three toppings, plus $2 more for specialty pies.

Although growth was relatively stagnant and unit counts dropped, at least one sales number certainly impressed in 2010—the company announced that it expected more than $2 billion in online sales for the year.

9/KFC

Bacon and cheese sandwiched between two chicken breasts may not have been a dream menu item for our quick-serve forefathers, but KFC made it a reality in 2010.

The Double Down was one of the most buzzed-about menu items out of the fast food industry in years. Although it did move about 10 million sandwiches in a month, it ultimately failed to take root as a popular menu option. KFC instead turned to another new sandwich, the Doublicious, and additional grilled items, like the Fiery Grilled Wings, to drum up some buzz with customers.

10/Sonic

A Footlong Quarter Pound Coney and Real Ice Cream treats were added to Sonic’s menu in 2010, but the Oklahoma-based concept couldn’t stop sliding sales, which dropped more than $200 million from 2009 to 2010. A new chief marketing officer, Danielle Vona, joined the company from PepsiCo, where she was vice president of marketing, in hopes to boost the brand’s exposure.

Next: QSR 50 Profiles 11 - 15

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11/Chick-fil-A

Despite its closed-on-Sunday mantra, Chick-fil-A once again defied business odds and enjoyed another year of big-time success. While the Spicy Chicken Sandwich and Spicy Chicken Biscuit won rave reviews from the company’s consumers, it was the new expansion markets that signaled big things might be on the horizon for Chick-fil-A. For the first time ever, the Atlanta-based company entered Los Angeles and Chicago.

12/Domino’s Pizza

The 14.3 percent same-store sales increase in Q1 of 2010 that Domino’s experienced after rolling out its New and Improved pizza recipe was no fluke. The brand maintained that high throughout the year and ended 2010 with a year-over-year sales increase of 9.9 percent.

Just how did they do it? Mostly by sticking to the same transparent, humble message that made the new recipe such a success in the first place.

13/Panera Bread

Rather than push product innovation and fight against quick serves’ takeover of the breakfast and coffee spaces, the No. 1 fast casual tweaked its consumer touch points and customer service. Drive thrus and table service were both tested, calorie counts were added to menuboards systemwide, and a new loyalty program, MyPanera, tracks consumer habits to craft personalized promotions and special offers for each user.

The most innovative—and unusual—move Panera made in 2010 was to open the Panera Cares Community Café in suburban St. Louis, a unit that offers food for whatever price customers feel like paying.

While some deemed the café a gimmick and had no faith in its success, company executives are happy with its results—enough so to open two more of them, one in Michigan and one in Oregon, with plans for more.

14/Arby’s

New Arby’s president Hala Moddelmog had a big task when she joined the brand in May. Arby’s was coming off 2009 when sales had fallen $150 million and store counts had dropped by more than 150 units.

A new value menu struggled to take off, and not even Moddelmog could help the stagnant brand. Sales dropped another $200 million, while the net store count dropped by 69 units in 2010. Things turned from bad to worse early in 2011, even after Arby’s launched its “Good Mood Food” integrated marketing campaign, when Wendy’s announced Arby’s was up for sale. In June, the brand was purchased by private equity firm Roark Capital Group for $430 million.

15/Jack in the Box

The masters of advertising (the company won another gold Effie Award for its Jack campaign), Jack in the Box rolled out several new menu options in 2010, including a Breakfast Pita, Pastrami Grilled Sandwich, Really Big Chicken Sandwich, and a Grilled Chicken Sandwich. The company also provided a new value opportunity on its menu; customers could choose three items from a list of eight that included a Hamburger Deluxe, a small fountain drink, and french fries, and pay just $3.

Next: QSR 50 Profiles 16 - 20

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16/Dairy Queen

The biggest dessert player in the quick-serve industry offered a new way for customers to experience its massively popular Blizzard when it rolled out the Mini Blizzard in April 2010. The new treat was the center of attention as DQ celebrated its 25th anniversary in style, driving a food truck around the country and handing out free Mini Blizzards.

Meanwhile, new integrated marketing campaigns featuring a family of DQ fanatics (the Blizzmans), and a humorous new pitchman resonated well with the coveted young male demographic.

17/Papa John’s

Plenty of quick serves invest marketing dollars into sports, but Papa John’s really depends on it. The pizza company became the Official Pizza Sponsor of the Super Bowl in 2010 and followed that with several one-off sports promotions that delivered its pies to hungry fans. A new iPhone app and increased online ordering are helping the brand become more accessible to its younger clientele, too.

18/Chipotle

Chipotle marked its 1,000th store opening in 2010 and celebrated a growth of $300 million in sales over 2009. A marketing push behind the company’s long-time slogan, “Food With Integrity,” helped take advantage of an increasingly eco-conscious consumer base, a move spokesman Chris Arnold says will continue into 2011.

CEO Steve Ells’ exposure on the NBC show “America’s Next Great Restaurant,” meanwhile, shouldn’t hurt the brand. And experiments with the Shophouse Southeast Asian Kitchen concept, which is set to open its first store in Washington, D.C., in 2011, should continue to give Chipotle good buzz.

19/Hardee’s

Hardee’s focused much of its 2010 innovation on its popular Made from Scratch biscuits, with several new biscuit breakfast dishes, like the Country Fried Steak ‘N’ Gravy biscuit. Fried chicken, another Southern mainstay, also reappeared on the menu in the form of Hand Breaded Chicken Tenders, which customers could order alone or in a Chicken Tender Wrap.

Of course, no year for Hardee’s would be complete without another big burger addition. For 2010 it was the Texas Toast Bacon Cheese Thickburger. Imagine the surprise of customers when Hardee’s and sister brand Carl’s Jr. launched a Turkey Burger in the spring of 2011.

20/Popeyes Louisiana Kitchen

On August 25, 2010, Times Square passersby may have thought New Years had come early, as a celebratory crowd had collected there. Instead, a group of Popeyes staffers and fans had gathered to celebrate a taste test that favored the company’s Spicy and Mild Bonafide chicken over KFC’s Original Recipe. The Bonafide chicken, as well as the new Wicked Chicken, helped the brand to net unit and sales increases as it settled into its “Louisiana Kitchen” moniker.

Next: QSR 50 Profiles 21 - 25

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21/Quiznos

Taking the biggest unit tumble of 2010, Quiznos’ net store count dropped by a whopping 600 units from 2009. The sandwich concept did work to encourage sustainability through its packaging and suppliers, and even jumped on the smaller-portion bandwagon with a Choose 2 menu that let customers choose two items among Quiznos’ Toasty Bullets, flatbread Sammies, soups, and salads for $5.

22/Panda Express

The top Asian concept’s popular talking pandas, Eddie and Tom-Tom, returned to talk up Panda Express’ first-ever premium shrimp entrée. Then a Korean-influenced dish, Kobari Beef, hit the menuboards in September. Panda Express also tested online ordering in select stores with its Order Panda program.

23/Carl’s Jr.

Carl’s Jr. has always aimed for the “young, hungry male” and in 2010 added two new burgers aimed squarely at that demographic: the Grilled Cheese Bacon Burger and the Philly Cheesesteak Burger. Still, a Teriyaki Chicken Sandwich, Hand-Breaded Chicken Tenders, and Hawaiian Grilled Chicken Salad spoke to customers looking for something lighter, and this year’s addition of a Turkey Burger really wowed the health-conscious.

Did we mention there was also a marketing campaign featuring Kim Kardashian?

24/Little Caesars

Little Caesars is clawing its way back into the upper pizza echelon and proving that not all Detroit-based companies are doomed. Once the third-biggest pizza chain, Little Caesars has used its value offering of the $5 Hot-N-Ready pizza to hold firm at No. 24 and, in 2010, added 152 new stores. A continued investment in its new college football bowl game, meanwhile, hopes to lure sports fanatics.

25/Whataburger

A Texas mainstay since 1950, Whataburger celebrated its 60th year in 2010 with new chicken menu items like the Grilled Chicken Melt and the Honey BBQ Chicken Strip Sandwich, plus a contest to find the company’s biggest fans. Stoking the passion of its consumer base may be key to keeping up Whataburger’s growth, since the In-N-Out juggernaut is moving into Dallas and “better-burger” newbie Mooyah Burgers is homegrown in Texas.

Next: QSR 50 Profiles 26 - 30

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26/Church’s Chicken

A “Chicken Genius” ad campaign ramped up exposure for Church’s Spicier Spicy Chicken offering, and Crispy Chicken Tacos gave customers an option that fit in different dayparts.

But the biggest change for Church’s, the one that really set it up for future success, was the shakeup in management; a new president of U.S. operations, vice president of advertising, and executive vice president of supply chain all joined the fold, among other new management hires.

27/Steak n Shake

The 77-year-old Midwest burger fave announced that it would do something it had never done before: move west of Texas. The concept opened its first unit in Las Vegas in December, significant not just because it established West Coast roots for the chain, but also because it was a rare urban location. Much of the hype now rests on the shoulders of the concept’s new prototype, which shrinks the store footprint and offers a sleeker look.

28/Zaxby’s

The fried-chicken fast casual took advantage of its 20th anniversary in 2010 by opening its 500th unit. Also, a steady stream of celebrities has been in and out the Zaxby’s doors to lend the company some marketing help, including Terry Bradshaw and Jaime Pressly in 2010 and later Ryan Stiles and Giuliana Rancic in early 2011.

29/Jimmy John’s

Never one to spend much time with product innovation, Jimmy John’s instead spent 2010 focused on its steady growth. The company opened its 1,000th store, grew sales by about $130 million, and boasted one of the biggest unit expansions in the industry with 162 new stores in the year. But the concept’s home turf of progressive college towns may be coming back to haunt it; the company made headlines all year as employees in several stores attempted to unionize.

30/Five Guys

Five Guys continued its meteoric rise into the quick-serve elite, experiencing the biggest rankings jump in the QSR 50 this year. In fact, only Subway and Dunkin’ Donuts opened more stores than Five Guys’ 195 new units in 2010.

Five Guys’ biggest success in 2010, however, may be in the Better Burger wars. The company continued its growth into West Coast markets and strengthened the roots it planted on In-N-Out’s turf two years before. Not only does Five Guys have deals in place to have almost twice as many units than In-N-Out has in Southern California, but there are also whispers that the East Coast chain is forcing even the fiercest of In-N-Out fans to reconsider their brand loyalties.

Next: QSR 50 Profiles 31 - 35

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31/Bojangles’

The chicken-and-biscuit specialist celebrated its 30th year much as it’s celebrated many other years: by opening new stores, expanding into new markets, and encouraging franchisees and other employees through incentives and contests. Rumors abound, however, that the Charlotte, North Carolina–based brand may soon have a “for sale” sign.

32/Long John Silver’s

The leading seafood quick serve puttered along in 2010, doing exactly the same in sales as it did in 2009. But an uninspired year might have been the straw that broke the camel’s back for Yum! Brands—Long John Silver’s and A&W Restaurants were put up for sale early in 2011.

33/Culver’s

The Wisconsin-based burger concept doesn’t skimp on its menu innovation and continued to find new twists on the company’s iconic ButterBurger in 2010. New dishes included the BBQ Cheddar ButterBurger and the 3-Pepper Chipotle ButterBurger, both of which were offered as LTOs. Culver’s even invited customers to create their own ButterBurger through the Ultimate ButterBurger Build-Off Contest.

34/Checkers, Rally’s

The tried-and-true double-drive-thru sister brands may have had a set-back in 2010 in terms of sales and store counts, but expansion into new markets and a strengthened executive team are giving the company reason to believe in the near future.

In June 2010, a new director of real estate, director of franchising and new business development, and senior manager of franchise administration joined the team to assist the company’s franchise efforts.

35/Papa Murphy’s

Papa Murphy’s rode into 2010 on a high and rode out of it on one, too. The company is once again celebrating the highest sales and store count in its history, despite April’s sale to Lee Equity Partners.

All of this came before Papa Murphy’s launched its “Join the Take ‘N’ Bake Revolution” marketing campaign in early 2011, which will pump as much as $35 million into its efforts to attract new customers.

Next: QSR 50 Profiles 36 - 40

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36/Del Taco

Taco Bell may be the king of the Mexican segment, but Del Taco is making a hard push for the young, value-minded customers that Taco Bell has always claimed. The company offered its 59-cent tacos for an unheard-of 39 cents, and also featured its Value Bean and Cheese Burrito at 49 cents, both for a limited time.

37/Baskin-Robbins

Although much of Baskin-Robbins’ 2010 was spent offering LTO flavors for its Flavor of the Month program and churning out social media promotions, the company really grabbed attention when it retired five flavors to its “Deep Freeze.”

To make room for new flavors, Baskin-Robbins sent French Vanilla, Caramel Praline Cheesecake, Campfire S’mores, Apple Pie a la Mode, and Superfudge Truffle packing.

38/El Pollo Loco

El Pollo Loco president and CEO Steve Carley departed for Red Robin in August but left the company with much to grow on. Early in 2010, El Pollo Loco added flame-grilled sirloin steak to its menu, and in March the concept rolled out three new sides: Flame-Grilled Corn, Sweet Corn Cake, and Sweet Potato Fries.

39/CiCi’s Pizza

In honor of CiCi’s 25th anniversary, the pizza chain offered its signature buffet for just $3.99; the promotion was so popular that it returned later in the year. In September, the company brought on industry veterans Bill Spae and Nancy Hampton to be chief development officer and chief marketing officer, respectively, and focus on driving brand growth.

40/White Castle

No other quick serve can claim that it released a candle carrying the scent of its signature product and sold out of them within 48 hours. The slider-scented candle made a splash across the industry (not to mention with the 90-year-old concept’s passionate consumer base), but so did news that White Castle was testing three new concepts: Deckers, a sandwich shop; Blaze Modern BBQ; and Laughing Noodle, with noodle dishes, soups, and salads.

Next: QSR 50 Profiles 41 - 45

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41/Boston Market

Many things changed at Boston Market in 2010, not the least of which was its CEO. Even by the time George Michel replaced industry veteran Lane Cardwell as Boston Market’s head honcho in October, many upgrades and changes were shifting operations across the system’s roughly 500 units.

Aside from adding a new lunch menu, Boston Market also upgraded disposable plates and cutlery to real plates and stainless ware, added carving stations, and hired extra staff to improve hospitality.

42/Jason’s Deli

2010 was business as usual for Jason’s Deli, which, for this Beaumont, Texas–based fast casual, is good news. Store count and systemwide sales were both up, as was its AUV—a number that puts it at third-best in the QSR 50, behind Chick-fil-A and McDonald’s. The company also maintained its status as a popular destination for health-conscious diners and landed at the top spot on Parents magazine’s list of best family restaurants.

43/Sbarro

Once a major player in the quick-serve pizza category, Sbarro now looks like a shadow of its former self. The losses in 2010 and throughout the recession—a period that hit malls, one of Sbarro’s favorite locations, particularly hard—paved the way to the chain’s filing of Chapter 11 bankruptcy in early 2011. But 2010 wasn’t a complete waste for Sbarro. The company announced two major international franchise deals, one for 1,250 stores in Japan and another for 1,000 stores in Brazil.

44/Qdoba

A new store prototype helped give Qdoba a little more Mexican authenticity in 2010, but its Craft 2 menu was what really spurred innovation last year. Director of strategic product development Ted Stoner says the new menu, which lets customers pair smaller portions of two menu items together, has given customers the green light to try new things—which, he says, gives him the green light to test outside-the-box new menu items, like the new Mini Street Tacos that debuted in March.

45/In-N-Out Burger

The iconic California-based burger chain made a splash late in 2010 when it announced that it would enter the Dallas market—the first time in its 63-year history that the company would move that far eastward.

The company swears that the Dallas expansion—complete with a major distribution center, just the second for In-N-Out—does not signal any kind of all-out East Coast takeover strategy. Nor, they say, is it a response to the West Coast growth of rival Five Guys. Of course, when the doors opened to the first Dallas unit in early 2011 to five-hour lines, execs at the family owned company probably thought twice about its slow-and-steady growth.

Next: QSR 50 Profiles 46 - 50

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46/Tim Hortons

The Canadian coffee staple continued its U.S. invasion, finishing the year with 39 more stores and $29 million more in sales than in 2009. A move into more nontraditional markets, like its January opening at Naval Station Norfolk and its addition of several more kiosks at Tops Friendly Markets in New York and Pennsylvania, expanded the number of channels where Tim Hortons could deliver its signature coffee.

47/Captain D’s

Captain D’s continued its slide down the QSR 50 ranks, as well as its six-year-long systemwide sales decline, but leadership changes in 2010 gave the brand reason to be optimistic.

Sun Capital Partners acquired the seafood chain in May, and when former CEO David Head jumped ship for O’Charley’s in September, the company hired industry veteran Phil Greifeld to replace him. Greifeld has already positioned the Nashville, Tennessee–based brand for growth by canceling planned price increases and refocusing both the franchising and lunch-menu strategies. Part of the lunch strategy includes two new sandwiches that debuted this year: a chicken sandwich and a cod sandwich.

48/Einstein Bros.

One of the earliest Facebook-giveaway success stories was Einstein Bros.’ free bagel offer for new Facebook fans in January, which gave the brand an explosive start to 2010. The Einstein Bros. fan page—which was brand new at the time—climbed from 4,700 fans to more than 450,000 fans in just one week. Additional coupon offers on its Facebook page throughout the year helped the brand maintain active engagement with consumers online.

49/Cold Stone Creamery

Cold Stone entrenched itself in product innovation in an effort to grab a bigger piece of the dessert pie. The Gold Cone collection of flavors launched in April 2010 offered a new LTO ice cream flavor each month, and a line of Ice Cream Cookie Sandwiches also debuted in stores. The biggest product innovation, however, loomed on the horizon for early 2011 in the form of a new spinoff concept: frozen yogurt.

50/Krystal

Cult favorite Krystal made a push for sports fans across the South by rolling out new Game Time Wings. But it’s the opportunities it gave its avid fan base to become a more intimate part of the company that supported the brand through slight downsizing. Early in 2010, Krystal plastered Hall of Fame members’ faces on its iconic Krystal boxes, and later in the year the company invited customers to craft their own design of the boxes online. Vice president of marketing Brad Wahl says Krystal will expand its customer design promotion to other packaging options and merchandise, like T-shirts.

Next: Top 50 Chart