Every time a new year gets under way, there’s a combination of promise and anxiety, a very real hope that better days are ahead mixed with uneasiness about what issues or problems may be lying in wait.
That’s why predictions seem to be as much a part of a New Year’s celebration as champagne and the ball drop in New York’s Times Square. For the restaurant industry, getting a peek into likely trends for 2015 provides some insight into the type of menu items that could give them smash successes in the year ahead—or a glimpse of the staggering challenges they’re left to overcome.
The evolution of the limited-service restaurant industry continued in 2014, as traditional powerhouses faltered while fast casuals and other rising concepts asserted themselves as forces to be reckoned with. For the first time in the history of the QSR 50, a fast casual entered the top 10, as Panera Bread leapfrogged KFC to land a spot in the industry elite. Meanwhile, Subway ceded the No. 2 spot to Starbucks after an $800 million sales tumble, Chick-fil-A grew by $700 million to become larger than every pizza brand in the country, and Wingstop claimed the biggest jump of the year, with an 11-spot leap.
Today’s franchisees want a company that is responsive to its franchise partners and acts in the brand’s best interests, embracing the fact that franchising needs to be a mutually beneficial relationship. Many are favoring operational simplicity, which eases training and management burdens, and scrutinizing the franchisor’s leadership team, evolution, and scalability.
Unit economics remain critical, as many prospective franchisees investigate bottom-line earning potential, as well as items like cost of goods, labor efficiency, and supply chain management. Margins, ROI, and payback time stand at the forefront.
Though some franchising candidates favor established concepts with proven track records, and others want to ride a brand’s ascent from regional player to national name, the quick-service landscape features compelling franchise deals. Here are a dozen that we think are worth your attention.
McDonald’s has long served as a de facto leader of the limited-service restaurant space. Far and away the largest quick-service company in the U.S. by system-wide sales, the Golden Arches has for generations been the model for fast-food stability and achievement, the benchmark against which all other quick serves are measured.
But while it may be decades before any company overtakes McDonald’s in sales, the company might be losing its stronghold as chief industry influencer. Stuck in a tailspin that has seen declines in domestic sales and traffic, McDonald’s is struggling to resonate with a consumer base that is increasingly demanding a higher-quality product.
While breakfast may not be the quick-service industry’s biggest daypart, there could be enough demand for breakfast foods to become a daylong staple.
According to the National Restaurant Association’s (NRA) 2015 Restaurant Industry Forecast, seven out of 10 consumers say they want restaurants to serve breakfast throughout the day. Millennials are more interested in breakfast for dinner than any other age group before them.
In a world of imitations, original ideas shine all the brighter. And after a decade of measuring success against the Chipotle model, we’ve arrived at the cusp of the next great wave of innovation in limited-service restaurants. A bevy of foodservice entrepreneurs are refining Chipotle’s model and rolling out premium concepts that are chef-driven, designed around a high-quality experience and long-term relationships with their vendors, employees, and communities.
It’s a new era for fast casual, a step above the phenomenal things Chipotle has accomplished. Say hello to Fast Casual 2.0.
In May, McDonald's president and CEO Steve Easterbrook announced the initial steps of the company's turnaround plan, including a restructuring of McDonald's worldwide business and financial updates.
"Today we are announcing the initial steps to reset and turn around our business," Easterbrook said. "As we look to shape McDonald's future as a modern, progressive burger company, our priorities are threefold: driving operational growth, returning excitement to our brand, and unlocking financial value.”
In compiling the Growth 40, The NPD Group analyzed a host of variables. This year, the Growth 40 is ranked according to a proprietary “Score” that takes into account the quick-service restaurant density in a market, as well as the difference between the traffic growth and population growth. The results spotlight the South’s massive opportunities for quick-service brands, as well as scattered promise in the nation’s Central, West, and Northeast regions.
As dayparts blur and customers increase their demand for more convenient and higher-quality food, the drive thru represents both a great opportunity and a potential pitfall for many restaurant operators.
Mobile payment and ordering have started to creep into the drive thru, with brands like Starbucks and Wendy’s piloting their own models. At the same time, chains are reengineering the basics—namely, operations and customer service—to not only increase speed and accuracy, but also to improve the customer experience.
Tim Hortons is determined to become a major player in the U.S. Its most recent annual report called the U.S. a “must-win” market and outlined a top-line, five-year growth strategy that focused on extending dayparts, increasing check averages, expanding the rollout of its bakery-café model, and seeding new markets. And that was before the brand was purchased by Burger King, which moved its headquarters to Canada, christened the new company Restaurant Brands International, and promised to invest in Tim Hortons to set it up for U.S.—and worldwide—success.
