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If this year’s Growth 40 report is any indication, plenty of quick-service brands will soon be following in the footsteps of basketball superstar LeBron James and taking their talents to South Beach.
Miami tops QSR’s fourth annual Growth 40 report, claiming the first spot among the nation’s largest markets, while Austin, Texas, and Palm Springs, California, earn top honors among medium and small markets, respectively.
Conducted by Port Washington, New York–based foodservice research firm The NPD Group for the second consecutive year, the Growth 40 report investigates population projections, quick-service unit density, and traffic gains at quick-service eateries in hundreds of markets across the U.S. This year, the Growth 40 report embraced new demographic data pulled from the 2010 Census, fresh figures that sparked some compelling movement in the rankings.
Last year, for instance, Miami sat outside the top 10 among large markets, hampered by a paltry 1 percent projected jump in population between 2011 and 2016. The revised population forecasts, specifically the metro area’s projected 10 percent population gain by 2018, catapulted Miami to the top.
“With the current population updates, some growth rates turned out higher than expected,” says Greg Starzynski, director of foodservice project management with NPD Group. “With better data and newer information added to the model, changes resulted.”
In an effort to shine a spotlight on lesser-known markets across the U.S., this year’s Growth 40 also pinpoints 10 large markets instead of last year’s 15, while ranking 15 small markets instead of last year’s 10.
Population: 3,000,000 and more
With towering residential skyscrapers sitting vacant and with rising unemployment, Miami was, at a time, a poster child for the recession’s ills. Today, however, Miami has a different story to tell: a strengthening economy, an ever-expanding tourism clientele, and an influx of new residents. As a result, the NPD Group predicts Miami will see a 16 percent jump in quick-service traffic over the next five years.
“We were hit hard by the financial meltdown, but there’s fresh money in the city now,” says Ghazi Hajj, CEO of Miami-based GrilliT, which has three stores in the Miami market and looks to open as many as 20 additional Miami-area units over the next five years.
With its anticipated 10 percent jump in population, a rate bested only by Dallas among large markets, Miami’s post-recession resurrection is well underway. Strong job growth is driving Miami’s renaissance. From August 2012 to August 2013, Miami’s unemployment rate dropped from 8.9 to 7.3 percent, a tally that puts the area on par with the national average.
“When we see population increasing and unemployment heading down, those are very positive signs for a market,” says Lee Zimmerman, director of new store development for Stevi B’s Pizza, a concept targeting Miami-area expansion.
Miami has more to boast about—namely, a quick-service unit density number of 95 restaurants per 100,000 residents, which is also second among large markets.
With four Miami stores opened over the last two years and as many as 15 slated to open over the next four years, Corner Bakery Café is one of many brands bullish on the city. Corner Bakery president Gary Price is encouraged by Miami’s rebounding real estate market and an influx of upper-income residents.
“We believe Miami’s fully rebounded from the economic hit and has a lot of space to grow,” says Price, whose 160-unit concept is looking to double its national unit count over the next three years.
Room to grow is precisely what continues attracting Corner Bakery and others to the Growth 40’s large-market runner-up, Salt Lake City. Utah’s biggest metro market claims a quick-service density number of 93, the most favorable figure among the Growth 40’s top 10 large markets. By 2018, Salt Lake City’s population is expected to jump 9 percent, while the NPD Group forecasts a 12 percent rise in quick-service traffic.
The appeal in the growing population base, expanding jobs and housing market, and business-friendly environment in Salt Lake City is simply too good to ignore, Price says, adding that Corner Bakery will open three new Salt Lake City restaurants in 2014.
Behind Miami and Salt Lake City, the nation’s capital continues its run near the top of the Growth 40 rankings. Bolstered by a projected 10 percent population increase, Washington, D.C., follows its runner-up spot on last year’s list with a third-place finish this year.
While no market is recession-proof, the government’s presence in D.C. provides the metro area rare stability. D.C. also holds the fifth-highest per capita income in the U.S., according to the U.S. Bureau of Economic Analysis.
Last year’s large-market leader, Denver, placed fourth in 2013. Though Denver’s population continues to rise, so, too, does quick-service competition in the marketplace, a reality that curtails some brands’ entry into the Mile High market. According to NPD Group data, Denver’s quick-service unit density of 118 trails only Seattle as the worst among the top 10 large markets. Denver also holds the runner-up spot among all U.S. markets when it comes to the number of fast-casual chain units per resident. At 12.76 fast-casual chain restaurants per 100,000 residents, Denver is at more than two-and-a-half times the national average.