In the few years leading up to 2015, McDonald's painted the picture of a kingdom in decline. Once the pinnacle of fast food, Mickey D's and its burger peers had lost their luster as clever competitors (Taco Bell, Dunkin' Donuts, Chick-fil-A) and up-and-coming fast casuals (Panera, Chipotle, Shake Shack) stole market share.
But a sequence of events over the past year is finally hinting at signs of a McDonald's turnaround, with system-wide sales enjoying a roughly $350 million boost in 2015 and three straight quarters of comp sales increases at press time. Under the direction of CEO Steve Easterbrook, McDonald's sought to develop two major consumer trends: easy customization and all-day breakfast. The Create Your Taste kiosk program was expanded to more markets, but the latter initiative of (a curated) daylong morning menu really shook things up. Although it wasn't rolled out until October, all-day breakfast helped McDonald's close 2015 on a high note.
While a lawsuit filed by the National Labor Relations Board over joint employer liability has elicited mixed reactions within the industry and beyond, the Golden Arches have made a concerted effort to emphasize its responsibility as a corporate giant in other ways. Earlier this year, it brought health-halo Cutie clementines back to the menu, continued its Happy Meal Books program with a projection of reaching 50 million books by year-end, and raised pay for employees at corporate locations. All the do-good hubbub culminates this month with its Olympic Kids Program, in which 100 kids will be front and center at the opening ceremony in Rio.
There's plenty of fight left in the fast-food giant, and no doubt that it will once again go for the gold.
Starbucks is the industry's chief overachiever. Never one to rest on its laurels and Frappuccinos, the coffee powerhouse continued to launch fresh LTOs—Halloween-themed "Frappula," as well as Cherry Blossom and Caramel Waffle Cone drinks—while also beefing up its less saccharine offerings. After witnessing a 20 percent uptick in its overall iced beverage sales, Starbucks introduced a new cold-bar beverage lineup just in time for summer.
Novelty beverages notwithstanding, the global brand has poured considerable energy into enhancing its adaptability to fit as many meal occasions as possible. Last fall, Starbucks kicked up its convenience factor with the nationwide rollout of Mobile Order & Pay, allowing customers to skip the line and place orders ahead of time. Playing both size extremes, it announced plans to open the second Roastery location in a 20,000-square-foot facility in New York City's Meatpacking District while also debuting its fifth express format store at only 635 square feet.
While some of the 17 million or so customers who actively use Starbucks' loyalty app were miffed in April when the company revised the app to award stars (credit) based on purchase amount rather than frequency, it looks like 'Bucks is betting on other perks—points for making mobile orders or using partner services like Lyft and Spotify—to keep consumers cool.
The past year was tough for Subway. Not only was former spokesman Jared Fogle imprisoned on charges of child pornography and solicitation, but also founder and fast-food pioneer Fred DeLuca died just a month after the brand celebrated its 50th anniversary. The company went into a veritable lockdown, and U.S. sales slid some $400 million.
But Subway, with its gargantuan international presence and streamlined system of sandwich artistry, is hardly down for the count. In early 2016, it launched new premium ingredients like thick-carved turkey and applewood-smoked bacon. Industry experts think this menu upgrade stands to perform best against McDonald's all-day breakfast as other brands scurry to find their own game changer. Subway also continues to emphasize its healthfulness by working to remove undesirable ingredients like high-fructose corn syrup and artificial flavors and colors.
While the second-biggest burger brand didn't make headlines like McDonald's—despite its efforts to do so through a proposed "McWhopper" collaboration—Burger King did manage an impressive surge in 2015. System-wide sales moved up $900 million, and AUVs also enjoyed a boost as the company continued to cull a small number of underperforming stores. Like many brands, Burger King is touting the cleanliness of key menu items, but it is also (rather wisely) trying changes within its wheelhouse. Buffalo Chicken Fries, Grilled Dogs, and a Flame Grilled Chicken Burger might be menu innovations, but they're not so far from the fare you'd expect at a burger joint.
By now it's obvious that Taco Bell's years-long success is anything but a flash in the pan. The top Mexican quick serve jumped a spot on the QSR 50 and continues to find favor among younger consumers with its tongue-in-cheek humor and zany menu options like the Quesalupa and Beefy Crunch Burrito. What's new is its approach to ingredients. Over the past year, the company has made commitments to only source cage-free eggs and to remove artificial colors and flavors, as well as antibiotics.
The system bulked up with an additional 200 stores, but Taco Bell isn't putting all its (cage-free) eggs in a single basket. Last year, the urban-hip Taco Bell Cantina debuted in Chicago and San Francisco, and in May the company unveiled four new upscale store designs with a special emphasis on reflecting the local community.
Usually neck and neck with Burger King, Wendy's failed to keep up the pace and fell a spot in the rankings—but not from lack of effort. In the past year, Wendy's has worked to update nearly every facet of its business, from founding its tech-focused 90° Lab and creating a vegetarian black bean burger to promoting CFO Todd Penegor to chief executive and teaming up with pop band American Authors for a special promo.
Couple those moves with the fact that Wendy's AUV still outperforms the top five brands (save for McDonald's), and the Freckled Lady might just make a rebound.
Dunkin' is holding steady with its aggressive growth plan, totaling 1,125 new stores in just three years while pushing system-wide sales nearly $500 million in 2015. Next year it will enter Hawaii for the first time while also driving big deals in international markets like South Africa and Switzerland. And after promoting five internal managers to vice presidents, the company can be expected to stay true to its course.
Dunkin' has also made impressive strides with its outreach; in December it became the first corporate sponsor of the newly launched National Women's Hockey League (NWHL), and soon after became the league's "official coffee shop." Dunkin' also tapped social media celebrity Logan Paul to create content for video-sharing app Vine that highlights the DD Perks rewards program.
Whoever says you can't boost your annual sales more than $1 billion in a single year while maintaining a six-day workweek obviously has not visited Chick-fil-A.
The once-regional quick serve is spreading its wings and gliding into new territory. Its spring debut in New York City was highly anticipated and well received and the company has a dozen more locations in the pipeline for the Big Apple.
On the menu side, Chick-fil-A highlighted its healthy side by adding a new salad to the lineup and introducing a Superfood Side—kale and broccolini with dried cherries and roasted nuts—developed in collaboration with Atlanta chef Ford Fry.
While 2015 was hardly a banner year for the biggest pizza chain—average unit volumes once again slipped and the net unit count fell by more than 100—there were also hints at a course correction. From an emoji collaboration with Pepsi and a Leap Day celebration in Texas to Marvel Comics pizza boxes and off-the-cuff ads with "SNL" star Bobby Moynihan, Pizza Hut reestablished itself in the last year as a cultural touchstone.
Of course, long-term success lies in consistent initiatives, and for Pizza Hut that includes the $5 Flavor Menu, its commitment to remove preservatives and antibiotics, and those zany stuffed crusts. Stuffed garlic knot pizza crust, anyone?
Panera Bread keeps its place as the only fast casual to break into the top 10. AUVs held steady at $2.5 million while the brand added nearly 100 net stores in 2015 and opened its 2,000th domestic location in March. Panera hasn't made any revolutionary announcements since its No-No List of banned ingredients last year, but that doesn't mean it's not setting lofty goals. According to a Fortune article in February, Panera expects digital sales (through its popular kiosks) to reach $1 billion by 2017.
Look out Yum! Brands;
Domino's is coming for you. This year, the brand displaced KFC for the No. 11 spot on the QSR 50, outperformed Pizza Hut in AUV, and closed the sales gap between the two pizza titans to $900 million. The brand continues to push the envelope in ordering and delivery through Apple Watch and Amazon Echo ordering, zero-click app ordering, and a growing fleet of DXP delivery vehicles, complete with a warming oven and 80-pizza capacity.
Chipotle had a great 10 months in 2015 … and then the bottom dropped out, with E. coli and norovirus outbreaks devastating the fast-casual leader's tremendous momentum. Chipotle managed to post a $500 million sales boost and open 216 new stores last year, but it's almost certain these numbers won't be as strong in next year's report. Sales in the first quarter alone dropped 29.7 percent compared with the same period in the previous year, despite free burrito promos. Founder and CEO Steve Ells has made numerous reassurances—in the form of television appearances and new company policies—to quell public doubt, but only time will tell if the company can rebuild customer trust.
The only quick serve on the 50 with a drive-in format, Sonic kept its head down and did what it does best—with a twist. As the Oklahoma-based chain ventures further into the Northeast, it is tweaking its design to include dine-in service in some cases. For sunnier locations, corporate stores have begun experimenting with solar panels—the ideal addition to its long canopies. Menu additions like the Ultimate Chicken Club LTO and a new lineup of shakes in flavors such as Wildberry & Lavender ensure the old-school chain doesn't feel tired.
No amount of Colonel Sanders impersonators seems capable of changing this fried chicken brand's fate. Continuing a years-long decline, KFC fell two spots on the QSR 50 and saw its system-wide sales drop another $100 million. Its Nashville Hot LTO was a bright spot; not only was it the first national chain to offer the dish, but it also kicked off the promo with a buzz-worthy food-truck road trip.
Still, KFC seems to be putting a lot of eggs in one basket, hoping a retrofitted design (slated to be in 70 percent of stores by the end of 2017) will enliven more than the décor.
It's steady as they go at Carl's Jr. and Hardee's. Over the past three years, the dual brands have added stores, boosted AUV, and increased revenue at a manageable pace. Still peddling meaty, macho burger specials, the two brands have broadened their spokesperson approach to include UFC champ Ronda Rousey and tattoo-clad celebrity chef Michael Voltaggio.
Arby's turnaround efforts continue to yield fruit. System-wide sales were up for the third year in a row, and the brand at last began to move back up the QSR 50. It continues to take its premium deli meats and the "Fast Crafted" experience seriously, but can't resist a little irreverence, whether it's a satirical promo for vegetarians (same menu, no meat) or CEO Paul Brown lambasting Jon Stewart on "The Daily Show" finale.
Dairy Queen kept its cool in 2015 following the launch of its new DQ Bakes! initiative. Broadening its menu beyond cool treats and hot dogs, this legacy brand stands to benefit from a new lineup of artisan-style sandwiches and snack melts.
Although the Detroit-based chain saw modest system-wide gains last year, its neighboring brands (namely Arby's and Dairy Queen) had more of a go-getter attitude and managed to push the Hot-N-Ready slinger down a few slots.
Jack in the Box
Once again, Jack in the Box demonstrated its ability to think outside the... well, you know. While many brands focused on cleaning up their ingredients, Jack—dressed in full Revolutionary garb—issued a "Declaration of Delicious" during the Super Bowl to spotlight upgrades to 29 menu items.
Popeyes Louisiana Kitchen
Jumping one spot on the list (and $700 million in sales), Popeyes continues to mine its Louisiana roots with no end in sight. In fact, it seems to be turning the heat up with even spicier specials like Wild Pepper Tenderloins, Spice Packed Wings, Spicy Pepper Ranch dipping sauce, and Magnolia Blossom Chicken—with spicy orange dipping sauce, naturally. Read more about the brand's big success on Page 92.
Ubiquitous might be one way to describe the past year for this pizza purveyor. Papa John's continued to play up its status as the official pizza of the NFL, but even more attention was paid to its wholesomeness. Last year, it recommitted to "better ingredients" and created its own list of 86 undesirable ingredients. That commitment is holding as the brand started 2016 with a Quality Guarantee and appointment of a "chief ingredient officer." Read more about Papa John's commitment to "better ingredients" on Page 100.
The top Asian concept in the QSR 50 dipped its toes in some new projects over the past year. It returned to Manhattan after closing an unsuccessful location more than a decade ago, and it teamed up with the sitcom "Fresh Off the Boat" for a Chinese New Year promo. Most importantly, parent company Panda Restaurant Group bought a minority interest in Pieology Pizzeria and an undisclosed interest in fast casual Just Salad within a two-month period, signifying the company has plans far beyond the ethnic food sector.
Delivery isn't the only thing this sandwich concept is doing fast; Jimmy John's added 296 net units in 2015 and a total of 845 since 2013. AUV slipped slightly, but the brand still boosted overall sales and managed to move up a slot.
The regional burger player hoped to tap into one of the most popular events in its home state of Texas, SXSW, as a late-night sponsor.
But just ahead of the event, the brand was jilted by event organizers. That didn't stop Whataburger from running its french fry pedicabs around the streets of Austin throughout March, and, later in the spring, fanning the flames of its customers' famous loyalty through a promotion in which it awarded a teenager and his friends a white-tablecloth prom dinner and chauffeur.
If it ain't broke, don't fix it. While better-burger competitors work to spice up their menus with new flavors and outside-the-box LTOs, Five Guys sticks to the basics—and it's not a bad formula. While Five Guys' growth isn't as monumental as years past, the 52 net stores and $100 million sales boost are nothing to sneeze at.
Based on sales projections, Zaxby's kept steady in 2015. The brand finished the year on a strong note. After breaking the billion-dollar barrier in the previous year, the regional chain has now passed the $1.5 billion mark and opened dozens of new stores, including its first foray into Nashville, Tennessee.
The better-burger concept has a substantial head start when it comes to supporting and spotlighting its agriculture partners. Culver's started 2016 with a $1 million donation to the Future Farmers of America (FFA) and continues to fundraise through its "Thank You Farmers" initiative. The Midwest chain is now targeting the South for future growth, with new stores planned for North Carolina and Georgia.
Like Chick-fil-A and Zaxby's, Bojangles' is catching the wave of demand for Southern favorites. The brand, which has become something of a cult classic among younger consumers, kicked up its engagement with branded emojis—"Bomojis," if you will—and live-tweeted a road trip from North Carolina to California, bringing the NFL's Carolina Panthers the brand's Legendary Iced Tea ahead of the Super Bowl.
Steak 'n Shake
Steak 'n Shake climbed into the $1 billion tier in 2015, but otherwise stayed under the radar. The same couldn't be said for CEO Sardar Biglari, who installed himself as the editor of Maxim magazine (an acquisition from 2014), where he proceeded to stir up scandal.
The other pizza Papa moved up a space this year as its take-and-bake format continued to find favorability. A consumer study by Market Force Information found that Papa Murphy's was consumers' favorite pizza chain for the third year in a row. It also took home top marks for food quality and healthy options.
Church's Chicken got its feathers ruffled up a bit last year. System-wide sales fell a little more than $40 million, and the brand's net unit count dropped by 37 stores. The brand did unveil a new store design in March, but with far bigger birds in the Southern chicken category, Church's is fighting an uphill battle for market share.
The top chicken-wing quick serve jumped two places on the QSR 50 this year. Net unit count rose by 133 in 2015, and this May it threw open the doors to global store No. 900. With wings increasingly becoming America's favorite party food, chances are Wingstop (clocking in at $821 million in sales last year) will continue to soar.
Sister brands Checkers and Rally's have fashioned themselves as consumers' favorite underdog—well, at least in the "Wiener War," in which it challenged Burger King after the latter's launch of its Grilled Dogs program. Shortly afterward, Checkers/Rally's watched its own hot dog sales double.
Qdoba Mexican Eats
Chipotle's biggest category rival enjoyed a bit of a surge in 2015. The brand's system-wide and average unit sales both climbed, and in the fall it replaced the "Grill" in its name with "Eats" as a way to differentiate itself from other Mexican fast casuals. It's also ramping up its beverage program and opened a restaurant with a full-service bar in April.
El Pollo Loco
Pumping out impressive AUVs to the tune of about $1.8 million per store, El Pollo Loco continues to grow, albeit at a measured pace. It's also playing up its Cali-Mexican-chicken status with menu additions like the Chile Lime Shrimp LTO and Monterey Bacon Chicken Guacamole Tostado permanent item.
Not afraid to embrace its wonky side, the North Carolina–based doughnut chain did everything from Talk Like a Pirate Day–themed GIFs to an animated mobile coupon with video footage of freshly made doughnuts to a Superhero Day box with comic illustrations. The efforts paid off; Krispy Kreme is a leading brand for Facebook engagement, according to Engagement Labs' eValue data.
It's been a busy year for Del Taco. After its merger with Levy Acquisition Corp., the brand ramped up plans for growth beyond its West Coast base. Although its unit count fell by three stores 2015, Del Taco signed new deals in the Southeast and Pacific Northwest. Additions to the Buck & Under Menu, along with new items like Mexican chorizo, could also boost appeal.
The regional slider brand turned 95 this year but is staying relevant with important trends. White Castle brought back its bite-sized Nibblers and introduced new Yoplait yogurt–blended smoothies, hoping to lure the ever-growing legion of snackers.
Jersey Mike's continues to scale the rankings faster than any other brand; in four years, it's moved up 21 spaces on the QSR 50. The brand raked in $675 million in system-wide sales and grew by 189 net stores. Still honoring its philanthropic mission, Jersey Mike's raised more than $4 million during its sixth annual "Month of Giving" in March, while continuing to empower franchisees to choose their own charities.
Firehouse Subs leapfrogged a number of QSR 50 spaces this year (five) with a $100 million hike in sales and the addition of 95 net stores to its system (it's expected to hit 1,000 before 2016 is out). The company also launched a new loyalty rewards program with the mission of attracting tech-savvy Millennials.
Long heralded for its health halo and strong commitment to core values, Jason's Deli is hoping to beef up its techie side. This year it teamed up with both Tapingo and DoorDash to bring on-demand delivery to its college campus units and other markets, beginning with Texas.
Moe's Southwest Grill
Moe's journey up the QSR 50 slowed a bit this year, but the brand still grew by 57 net stores. In May, parent company FOCUS Brands announced it would open the first cobranded Moe's and Scholtzsky's Deli unit in Wyoming.
While this Canadian-born coffee shop that merged with Burger King in 2014 isn't going to dethrone Starbucks anytime soon, it did manage to add nearly $70 million in system-wide sales. Plus, like other java purveyors, Tim Hortons is beefing up its presence in other dayparts, specifically through a new line of lunch sandwiches.
Despite its emphasis on healthful options and endorsements from the likes of actor Kate Walsh and WNBA star Lisa Leslie, Boston Market continues to backslide. Consumers are demanding more wholesome options, and the brand is trying to provide with programs like its 550 Calories or Less Menu, but it can't seem to bridge the disconnect.
Like the quintessential West Coast surfer, this California brand is going with the flow but still catching big waves. Sure, it slipped a few spaces in the QSR 50 based on sales projections, but AUVs and system-wide sales are strong, and the company's loyal fan base is as crazed about its Double Double Animal Style as ever. That's not bad for a regional brand with just over 300 locations.
The 31-flavors originator is still a bit frozen, but sales are up incrementally and the brand grew by 19 units. Taking a page from the growing ranks of premium cookie ice cream sandwiches, Baskin-Robbins rolled out its own Warm Cookie Ice Cream Sandwiches and Sundaes in March.
McAlister's yo-yoed itself back into the top 50 after previously slipping to No. 54. The spud-and-sandwich-centric concept expanded its menu offerings with new entrées like Chicago Style Sausage Pasta and Big Bold Sandwiches including a California Turkey Reuben.
Pushing its AUV past the $1 million mark, Captain D's hit its 18th consecutive quarter of same-store sales growth earlier this year. The brand is also hoping to make a splash by applying the Nashville Hot style to fish.
The world's largest soft pretzel franchise got back into the game of developing new pretzel products after taking a couple of years off. New in 2015 was the Cheddar Stuffed Pretzel Nugget LTO, which offered melted cheese in a bite-sized pretzel. Auntie Anne's also partnered with peer quick-service chains on new products; last September, it joined with Schlotzsky's to develop that concept's Pretzel Dippers, which were sandwiches served on pretzel rolls along with dipping sauces. And earlier this year Auntie Anne's lent its signature item to Carl's Jr. and Hardee's for their Pretzel Breakfast Sandwich.
For the second year in a row, Jamba Juice slipped again and might soon find itself off of the list entirely. There's a certain disconnect to the juice chain's plight: Consumers are drinking healthy beverages more than ever before, and yet AUVs are down more than $40,000. Still, the company is hoping features like order-ahead apps and express units like the one recently opened in a Key West resort could extend its reach and its sales.