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  • 15 Restaurant Contenders Looking to Break Through

    Emerging Concepts September 23, 2019 By Danny Klein
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    Shake Shack

    Room to grow?

    There is evidence today’s restaurant industry is oversaturated, which could be leading to some of its guest traffic woes (down 3.9 percent in August). Per The NPD Group, last year’s growth was the slowest rate in the past eight years. The data firm counted 660,755 total U.S. restaurants in spring 2018. That was down a percentage point from the prior year.

    Looking at just fast casual, the sector boomed visits 8 percent in 2014 and 2015, but growth fell to 3 percent in the year ending December 2018, according to NPD data.

    Arguably the leading detractor is the simple reality there are too many restaurants. In the past decade, the number of units leapt close to 16 percent, according to the Bureau of Labor Statistics. And based on figures cited by the The New York Times, restaurants are also now growing at twice the rate of the population. To a large extent, investors drove the expansion. Since the early 2000s, banks, private-equity firms, and other financial-backed powers have poured billions into the food industry. Why? Restaurants have proven more tangible than dot-com start-ups in the last decade. It’s why so many public restaurant companies have been taken private lately. And the acceleration of M&A activity in the sector doesn’t show any signs of slowing.

    But we could be starting down a different kind of path moving forward. One not all that different than the split oversaturation forced retail to take during the recession. The idea that the industry won’t vanish by any means, but the cream will rise to the crop. You’re seeing it already with a bifurcated market—some restaurants focusing on speed and accessibility and others zeroing on dine-in experience. The end of the all-things-to-all-people era as we know it, which was so prevalent for restaurants, especially casual-dining brands, just a few years ago.

    Read more about the possible upcoming course correction here.

    All of that said, limited service remains an enormous sector. Thirty-two of the brands on this year’s QSR 50 had 1,000 or more domestic restaurants.

    With the top 50 sorted out, which chains are knocking at the door? Here’s a look at 15 brands just outside this year's rankings. Some are fast approaching the cut, while others are retracting a bit. But there are concepts among the group, like Shake Shack, Tropical Smoothie Café, Smoothie King, and MOD Pizza, to name a few, picking up pace. Tropical Smoothie, in one example, said it plans to hit $1 billion in sales and more than 1,500 locations by 2023.

    So, while the restaurant industry might be a crowded place, there is plenty of room to grow for those chains that know their customer and have defined their brand distinctiveness.

    Note: Figures are domestic year-end 2018. Brands ranked by total systemwide sales.

    A seafood platter at Captain D's restaurant.
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    Captain D's

    1. Captain D’s

    U.S. systemwide sales (millions): $545.34

    Average sales per unit (thousands): $1,048.76

    Unit count: 536

    Franchised stores: 245

    Company stores: 291

    Total change in units from 2017: 5

    Read more in the QSR 50 here.

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    Jamba

    2. Jamba

    U.S. systemwide sales (millions): $510.61

    Average sales per unit (thousands): $660.39

    Unit count: 840

    Franchised stores: 729          

    Company stores: 52

    Total change in units from 2017: 38

    Read more in the QSR 50 here.

    Jamba drops the juice from its name.

    A Freddy’s Frozen Custard & Steakburgers location at night.
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    Freddy’s Frozen Custard & Steakburgers

    3. Freddy’s

    U.S. systemwide sales (millions): $474.70

    Average sales per unit (thousands): $1,447.00

    Unit count: 328

    Franchised stores: 303                      

    Company stores: 25

    Total change in units from 2017: 47

    Read more in the QSR 50 here.

    Podcast: Creating the Freddy's way.

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    Tropical Smoothie Cafe

    4. Tropical Smoothie Cafe

    U.S. systemwide sales (millions): $472.63

    Average sales per unit (thousands): $730.35

    Unit count: 719          

    Franchised stores: 718                      

    Company stores: 1

    Total change in units from 2017: 91

    Read more in the QSR 50 here.

    Podcast: Tropical Smoothie's new CEO Charles Watson shares big plans.

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    Shake Shack

    5. Shake Shack

    U.S. systemwide sales (millions): $460.00

    Average sales per unit (thousands): $3,407.00

    Unit count: 136          

    Franchised stores: 12            

    Company stores: 124

    Total change in units from 2017: 36

    Read more in the QSR 50 here.

    Inside Shake Shack's bold retention strategy.

    Noodles & Company's new Zoodles-based menu items.
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    Noodles & Company

    6. Noodles World Kitchen

    U.S. systemwide sales (millions): $457.80

    Average sales per unit (thousands): $1,130.26

    Unit count: 459          

    Franchised stores: 65

    Company stores: 394

    Total change in units from 2017: 19

    Read more in the QSR 50 here.

    Noodles puts its people first in comeback plan.

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    Potbelly

    7. Potbelly

    U.S. systemwide sales (millions): $450.00

    Average sales per unit (thousands): $957.00

    Unit count: 478

    Franchised stores: 41

    Company stores: 437

    Total change in units from 2017: 2

    Read more in the QSR 50 here.

    Turnaround-driven Potbelly turns to franchising.

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    Long John Silver's

    8. Long John Silver’s

    U.S. systemwide sales (millions): $440.00

    Average sales per unit (thousands): $607.00

    Unit count: 832

    Franchised stores: 178

    Company stores: 654

    Total change in units from 2017: –58

    Read more in the QSR 50 here.

    Long John Silver's switches up marketing strategy.

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    The Habit Burger Grill

    9. Habit Burger

    U.S. systemwide sales (millions): $435.00

    Average sales per unit (thousands): $1,740.00

    Unit count: 243

    Franchised stores: 20

    Company stores: 223

    Total change in units from 2017: 37

    Read more in the QSR 50 here.

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    Smoothie King

    10. Smoothie King

    U.S. systemwide sales (millions): $420.00

    Average sales per unit (thousands): $498.00

    Unit count: 901

    Franchised stores: 872

    Company stores: 29

    Total change in units from 2017: 86

    Read more in the QSR 50 here.

    Smoothie King promotes new president.

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    Hungry Howie's

    11. Hungry Howie’s

    U.S. systemwide sales (millions): $410.93

    Average sales per unit (thousands): $720.27

    Unit count: 551

    Franchised stores: 519

    Company stores: 32

    Total change in units from 2017: –3

    Read more in the QSR 50 here.

    A look at the tech-forward evolution of Hungry Howie's.

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    Dickey’s

    12. Dickey’s

    U.S. systemwide sales (millions): $400.00

    Average sales per unit (thousands): $762.00

    Unit count: 526

    Franchised stores: 521

    Company stores: 5

    Total change in units from 2017: –41

    Read more in the QSR 50 here.

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    Charleys Philly Steaks

    13. Charleys Philly Steaks

    U.S. systemwide sales (millions): $400.00

    Average sales per unit (thousands): $755.00

    Unit count: 528

    Franchised stores: 471

    Company stores: 57

    Total change in units from 2017: 18

    Read more in the QSR 50 here.

    Charleys hopes 600 units is one milestone of many.

    MOD Pizza now has more than 200 locations across the U.S. dishing personal-sized pizzas.
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    MOD pizza / Lensology.net

    14. MOD Pizza

    U.S. systemwide sales (millions): $400.00

    Average sales per unit (thousands): $988.00

    Unit count: 395

    Franchised stores: 93

    Company stores: 302

    Total change in units from 2017: 98

    Read more in the QSR 50 here.

    Podcast: How MOD became the people place for pizza.

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    Taco John's

    15. Taco Johns

    U.S. systemwide sales (millions): $385.00

    Average sales per unit (thousands): $987.00

    Unit count: 392

    Franchised stores: 381          

    Company stores: 11

    Total change in units from 2017: 0

    Read more in the QSR 50 here.