Emerge from the pack
This rule tends to stick, year after year. If you want to see where trends are going, look at the brands that are growing. In the six years Fishbowl has released its Emerging Brands Report, its top picks have been a great indicator of just that. One year, burger and pizza restaurants dominated. Then it was “fresh” brands and concepts with strong equity. In 2018, diversity ruled as the list spanned everything from burger chains to Asian, Italian, and Mediterranean concepts. As for this year, restaurants offering healthy, high-quality nutritional foods, salads, and vegan menus reigned.
Another very interesting trend: Fast casual only had 11 brands in the 30-restaurant lineup last year. That’s up to 16 now, including six of the top 10. Quick service tacked on another two chains to give the limited-service segment 18 of the 30 picks (eight were casual dining and four polished casual).
What does this all tell us? Some past differentiators, like being “fresh” or “healthy,” or “ingredient-forward,” are no longer qualities that set emerging chains apart. They’re the price to entry. Also, fast casual, while growing slower than it once was, remains perhaps the quickest and nimblest entry into the space. If you look at the list, many of the brands are newcomers. They’re not legacy chains reworking past models to meet today’s demands; they’re brands built into this new world of consumers—a generation that values standing for something over decades of history. Part of that is also the fact the list looks just at brands with five to 75 units. So many of the classic quick-serve players aren’t considered, because they’re not, by definition, emerging.
Now, all of that said, this conversation does have its pitfalls. There is a certain danger to being so trendy you’re segmented. Winning brands successfully navigate the tension between standing for something while also being broadly accessible. That’s often not the case for hip fast casuals. And that’s OK, if approached accordingly. It’s where some brands have stumbled lately, though, as an oversaturated fast-casual market tightens. There is definitely risk in growing too fast and trying to recreate that day one success in DMAs where it wouldn’t have worked in the first place (the real estate and rent in many dense markets is also a massive issue, to put it lightly, since owning a building appears to be a fleeting dream these days). It can be misguided as well sometimes, to ignite expansion on the notion that the restaurant was popular here, so it should be popular everywhere. Scaling up without infrastructure and operations makes it challenging to guard brand value. Because with concepts this differentiated, if they lose a shred of what they represent in location No. 2, customers will notice. And as much as this generation enjoys trying new things, they’re also arguably the most unforgiving. Brand loyalty might not be as dead as we think, but it’s definitely a rough carbon copy of what it once was. Not to mention, fast-food leaders have the tools and tech to win every day on price and incentives. And their food and experience is rapidly improving.
Fishbowl has hit it out of the park in past years, identifying brands like Sweetgreen and its $1 billion valuation, and Shake Shack, as chains on the rise.
It uses survey analytics to garner nominations from industry experts, food enthusiasts, industry executives, advisers, and thought leaders. It also studies blogs, industry publications, and media mentions. The company then leverages its proprietary social data software to analyze more structured reviews, check-ins, and ratings. With the data, Fishbowl sees how brands position against one another and evaluates growth in consumer enthusiasm over the past two years, using ratings and frequency trends.
Now, on to the rankings:
Fishbowl Social Score: 9.8
Cava, founded in 2006, sent waves through fast casual last year when it snagged Zoes Kitchen for $300 million. Ron Shaich, founder, chairman, and former CEO of Panera Bread, created Act III Holdings, the investment vehicle that financed the deal. Shaich then took on the role of chairman at the combined Mediterranean brands. We’re still in the very early stages of seeing what this means for both chains, but it really took Cava’s presence to another level. Childhood friends and first-generation Greek Americans Ted Xenohristos, Ike Grigoropoulos, and Dimitri Moshovitis first opened full-service restaurant Cava Mezze in Washington, D.C., in 2006. The fast-casual spinoff, Cava, opened in nearby Bethesda, Maryland, in 2011.
Zoes had 261 locations at the time of the deal. So the company is working with a much larger base now—a pretty alluring thought. Because food and sentiment wise, Cava was already a home run.
Fishbowl gave Cava high marks for fans’ descriptions of the fast casual’s “like Chipotle” model in reference to the ability to customize meals. Service and staff were lauded, too. Cava uses sensor technology, such as motion detectors, to track patterns of activity in stores. Cava then leverages that data to adjust staffing, inventory, and even configuration of tables for the best return on investment.
This will be Cava’s last year on the list, as it’s graduated into the next tier of size.
Fishbowl Social Score: 9.7
Full-service restaurant group Del Frisco’s bought bartaco, along with Barcelona Wine Bar, for $325 million in cash in May 2017. Heading into the deal, bartaco recorded $67.1 million in net sales the previous year, including an impressive 7.3 percent lift in same-store sales. Restaurant-level EBITDA was $17.5 million, representing a 26.1 percent margin. AUV clocked in at $5.6 million and average check was about $22. Sales to investment was three times, and cash return of 87 percent. But beyond the appealing financials, bartaco provided Del Frisco’s something it didn’t quite have before: a serious growth vehicle. The company said the brand had market potential of between 200–300 domestic restaurants. In 2019, Del Frisco’s plans to open three to four bartacos as it continues to integrate the brand into its system. Same-store sales gained 1.6 percent, year-over-year, in Q4.
Fishbowl said bartaco’s reviewers raved about customer service and unique food, from pork belly, rock shrimp, duck and fish tacos to cucumber salad and rice bowls. Fans also highly recommended the restaurant to friends and said they would return. It was one of the best values on the market.
3. True Food Kitchen
Fishbowl Social Score: 9.6
Last year’s No. 1-ranked brand, the Oprah-invested chain continues to resonate thanks to a menu that caters to a wide variety of preferences—gluten free, naturally organic, vegetarian, and vegan. True Food Kitchen is a brand with serious growth potential as well. Private equity firm Centerbridge, the company that recently dealt P.F. Chang’s, remains the controlling shareholder of True Food Kitchen. Between 2016 and 2018, the brand doubled its footprint, going from 12 restaurants to 25 restaurants, and plans to open six to 10 locations per year as it aims to double again by 2021.
In preparation, True Food Kitchen has bolstered its leadership. Shannon Keller was recently promoted to CMO—a first for the chain. Since the end of 2016, it’s added CEO Christine Barone, former Starbucks executive; CFO Allison Schulder of P.F. Chang’s; and COO James Liakakos, former VP of operations for Jean-Georges Management. Last year, it also brought in Robert McCormick from Daniel Boulud as brand chef.
True Food Kitchen’s brand distinctiveness and ability to cater to dietary preferences, was a conversation sparker, Fishbowl said. Items like edamame dumplings, kale
salad, quinoa burgers, pad thai, and even chocolate cake topped the list of mentions. The concept centers around the anti-inflammatory pyramid developed by co-founder Andrew Weil. It puts vegetables, fruits, and whole grains center stage with minimal animal proteins.
4. Dig Inn
Fishbowl Social Score: 9.5
Dig Inn is in growth mode after securing $30 million in a Series D funding round led by AVALT, with Monogram Capital Partners and Bill Allen, the former CEO of OSI Restaurant Partners. The brand said it plans to open as many as 15 additional units by the end of 2019.
Dig Inn has long been a leader in the sustainable-eating world. It works with 102 farmers to plan what it will harvest and cook, and crops are set in conjunction with menu ideation. Dig Inn even has its own farm in the Upstate New York. The chain keeps prices reasonable with cooking techniques that minimize waste, like approaching vegetables stem to leaf. Dig Inn was a member of QSR’s inaugural 40/40 List. Adam Eskin founded the brand as a lunch and carryout destination with the goal of leading the “farm-to-counter” movement.
Fishbowl said diners recommended the mac n cheese, sweet potatoes, brown rice, Brussels sprouts, and a variety of chicken dishes. The staff was also a frequently discussed asset.
5. Mendocino Farms
Fishbowl Social Score: 9.4
The Southern California-based brand sold a majority stake to TPG Growth in November 2017. TPG Growth acquired its stake from L Catterton. At the time, it was announced that Harald Herrmann, the former president of Darden’s $1.5 billion Specialty Restaurant Group and co-founder of Yard House, would become CEO. In late February of this year, he left to join Second Harvest Food Bank of Orange County in the same role.
Founded by Mario Del Pero and Ellen Chen, and also a member of QSR’s first 40/40 list, the brand plans to open five additional units in the near future and expand outside of its home market, including stores in Northern California and Texas.
Fishbowl’s social score buzzed as guests recommended a number of sandwiches and salads, such as chicken, pork belly, banh mi, chicken salad, steak sandwich, quinoa salad, and taco salad. Friendly staff was noticed, too.
6. Urban Plates
Fishbowl Social Score: 9.3
This seems to be a trend, but Urban Plates is another brand that recently received an equity boost to grow. Last September, the California-based fast casual closed a $38 million growth and working capital facility with Goldman Sachs Specialty Lending Group. The company said it would “use the proceeds to expand the brand by building new restaurants in various geographic areas around the country.”
Founder and CEO Saad Nadhir was a principal in the early development of quick-service giant Boston Market. Nadhir and John Zagara opened the first Urban Plates in San Diego in 2011. The brand plans to triple in size with the funding.
Fishbowl said customers enjoy the cafeteria-style service and fresh, high-quality food. Grass fed steak is one of the most often mentioned offerings, along with mashed potatoes, Brussels sprouts, beet salad, mac and cheese, and chicken salad.
Fishbowl social score: 9.2
Lemonade merged with Modern Market in February to form Modern Restaurant Concepts. They now reside in LA-based private equity firm Butterfly’s portfolio. In total, the companies form a nearly 60-unit footprint spread across 10 markets, including California, Colorado, Arizona, Texas, Washington, D.C., and Maryland. Executives from both concepts remained in leadership roles. In the new company, co-CEOs and cofounders Anthony Pigliacampo and Rob McColgan of Modern Market join Lemonade’s chief executive officer Larry Kurzweil, who will take the role of operating partner of Butterfly and adviser to the company. On February 20, the company announced other hires that round out the company’s leadership team. Former chief development officer of Carl’s Jr. and Hardee’s Jim Sullivan was named chief development officer.
Both Modern Market Eatery and Lemonade were recognized on QSR’s inaugural 40/40 List in 2017. In February 2018, Butterfly acquired Modern Market to give the brand the resources it needed to grow at a quicker pace. Lemonade was founded in 2008 by Alan Jackson.
Fishbowl’s sentiment study gave high marks for a cafeteria-style setup and menu items like mango chicken, truffle mac and cheese, poke and chicken bowls, pineapple chicken, and green beans. Not to forget the lemonade choices—watermelon rosemary, blood orange, and cucumber mint flavors stood out.
8. The Little Beet
Fishbowl Social Score: 9.1
The Little Beet named Becky Mulligan its CEO in November. Mulligan joined the company after nearly 16 years with Starbucks, where she held a variety of roles. Most recently, she served as regional director of the company’s Seattle, Washington market, and led several key initiatives for 95 Starbucks stores throughout the region. In addition to her localized work, Mulligan was instrumental in the development and ongoing innovation behind Starbucks’ mobile order app.
“The Little Beet has certainly made a name for itself throughout New York City, as well as the D.C. area, and is poised for explosive growth as consumers become more health conscious and attracted to plant-based meal options,” she said at the time.
On April 1, the brand will open its first Florida location and plans to debut 15 more restaurants by the end of 2020.
Little Beet features a gluten-free menu it describes as “guiltin’ free.” Founded by Andy Duddleston in 2018, Fishbowl signaled it out for its wide variety of options, including Brussels sprouts, sweet potatoes, turmeric tahini, pickled onions, beet falafel, cauliflower steak, butternut squash soup, and kale salad
9. Bibibop Asian Grill
Fishbowl Social Score: 9
The brand was created six years ago by Charley Shin, the entrepreneur behind 600-unit Charleys Philly Steaks. The build-you-own brand, inspired by the traditional Korean dish “bibimbap” has spread to five states—Ohio (where it originated), Washington, D.C., Maryland, Illinois, and California. Fishbowl’s sentiment summary showed guests order the miso soup, rice noodles, spicy chicken, purple, and red rice bowls. They also enjoy the flexibility of the “Chipotle style” entree service and sauces, and come back for the bubble tea and flavors like cucumber wasabi.
10. Punch Bowl Social
Fishbowl Social Score: 8.9
The lone “eatertainment” brand on the list, Robert Thompson’s unique chain is on the verge of blowing up. It expects to open another eight stores by the end of the year, growing in Dallas, Miami, and Washington, D.C. In June 2017, the brand received a significant growth investment from L Catterton to fuel expansion. Terms of the deal were not disclosed.
Founded in 2012 in Denver, Punch Bowl Social provides a fresh, interactive experience, pairing games such as shuffleboard, Ping-Pong, bowling, pinball, and skee-ball with a scratch kitchen and craft beverages. It also separates from the eatertainment pack with a Southern-influenced, seasonally inspired menu created by culinary partner, award-winning restaurateur, Top Chef judge, and celebrity chef Hugh Acheson.
Some past L Catterton investments include: Hopdoddy, P.F. Chang's, Anthony's Coal Fired Pizza, Chopt Creative Salad Company, PIADA, First Watch, and Velvet Taco.
By Fishbowl’s score, “reviewers come to this fun place for more than the good food—they are also in it for the bowling lanes, ping pong, board games and arcade. Fans come to eat while they play, especially loving the chicken waffles, lobster fries, fried chicken and chicken sandwiches.”
The rest of the list
Here’s a look at 11-30.
11. Hattie B’s Chicken
13, The Simple Greek
14. East Hampton Sandwich Co.
16. The Halal Guys
17. Homegrown Sandwiches
19. Kura Revolving Sushi Bar
20. Super Duper Burgers
21. Alamo Drafthouse Cinema
22. Belcampo Meat Co.
23. Keke’s Breakfast Café
24. Hook Burger
25. Mi Cocina Tex Mex
26. Tupelo Honey
27. Burger Boss
28. Dish Society
29. Village Tavern
30. Rock and Brews
Count the cities
Interesting to see where the restaurants slotted:
California: 10 brands, 94 locations
Texas: 11 brands, 78 locations
Florida: Six brands, 49 locations
North Carolina: Five brands, 13 locations
Virginia: Five brands, 13 locations
Arizona: Five brands, 11 locations
Tennessee: Four brands, 10 locations
New York: Four brands, 10 locations
Maryland: Two brands, two locations
Ohio: One brand, one location