Shifting their test kitchens into wartime production while scoping out new sales turf, the country’s leading quick-service chains yanked enough spending from the weak and wobbly to stamp 2008 as more boom than bust.
Indeed, foodservice’s top 10 chains overall enjoyed their greatest collective sales gain since 1987, propelled by the nine quick-serves in the group, says David Henkes, vice president of the research firm Technomic Inc. (Applebee’s was the lone full-service player to make the cut.)
Not all quick-service brands came out of last year with happy memories, to be sure.
Wendy’s fell for the second year in a row, this time being beat out by Starbucks for the No. 4 spot. The once top-three brand sits at No. 5 in the ranking. Several other brands also took in fewer dollars during ’08, from KFC (still No. 9), to Domino’s (No. 13), Quiznos (No. 19), and Cold Stone Creamery (No. 46). Yet the QSR 50, as the dominant group of quick-service players, seemed to be the biggest beneficiaries of the segment’s updraft.
“While the overall chain market was relatively soft, it was very strong for fast-food chains,” Henkes says. “There’s clearly a trading-down effect going on. They’re ubiquitous, and they have a compelling value proposition.”
Pricing wasn’t the only factor that worked in their favor. To accompany this year’s annual sales ranking for the sector, QSR analyzed and profiled all 50 of the top finishers. Among the trends that clearly emerged:
- Menu innovation was a preoccupation. McDonald’s pushed super-premium coffee. Starbucks pushed everything but super-premium coffee, and most of the other top finishers seemed to have their R&D teams working double-time. The prime example might be Yum! Brands and its four QSR 50 finishers, with milestone introductions by Pizza Hut (pasta), KFC (grilled chicken), Taco Bell (fruit smoothies), and Long John Silver’s (grilled fish).
- If there was a common strategy, it had to be, “Hold the turf you own and push out the edges.” As Henkes puts it, “The big guys have clearly demonstrated that it’s a matter of building off their core competencies without going too far afield.” So Taco Bell, a clear leader in value, adds another tier of deals while introducing options for the health-minded, hardly its usual clientele. Subway, the king of lunch, tries breakfast. Popeyes vies for more lunch traffic with a new menu. Burger King, Domino’s, and McDonald’s, among others, extend their sales days by expanding hours.
- Despite the blistering business conditions, the CEO post wasn’t the usual hot seat. Only about six of the QSR 50 had an executive change that merited a “left to pursue other opportunities” whitewash. “There was a sense of, ‘We’re all in this same mess together,’ which might explain why fewer heads rolled than in other downturns,” Henkes says.
- This year’s ranking didn’t exactly abound in upsets. The 10 chains topping the QSR 50 for ’09 were the same top 10 last year, though their positions varied slightly. Nor were there many newcomers. And there was only one addition (Tim Hortons, No. 50) and one deletion (Fuddruckers, last year’s bottom-rung-holder).