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    The Growth 40

  • Our third-annual report singles out the top large, medium, and small markets in the U.S.

    Denver is the best large market for quick-service growth potential.

    Medium Markets

    While eight Texas DMAs inhabit the Growth 40 list, the Waco/Temple/Bryan DMA is the Lone Star State’s only chart-topper. Located between Dallas and Austin, the Waco DMA leads the crop of 15 medium-sized markets—and, in fact, the entire 2013 Growth 40—with a projected 21 percent growth in quick-service traffic between 2011 and 2016.

    Over the last decade, the Waco DMA’s population has surged above 1 million. AGS forecasts a 13 percent population jump between 2011 and 2016; only fellow Texas DMAs Austin, Harlingen/Weslaco/Brownsville/McAllen, and Laredo match that rate among Growth 40 markets.

    The growing presence of white-collar business communities—many pushing north from Austin—have complemented Waco's entrenched institutions, such as Baylor University and Texas A&M University, as well as Fort Hood, one of the world’s largest and most active military bases, to stimulate the area’s quick-service potential.

    Dunkin’ Brands vice president of development Grant Benson says the Waco DMA has long been underserved, often playing little brother to the likes of Austin, Houston, and Dallas. That, he says, will change as Dunkin’ looks to open five Waco-area units by 2017. Dallas-based sandwich concept Which Wich has three locations in the Waco area, including a shop inside Baylor’s student union. Kevin Warden, Which Wich’s area director for Texas, calls expansion in the Waco area “a natural fit” because the concept thrives in family-friendly college towns.

    “[The Waco/Temple/Bryan areas] are untapped markets for our brand and part of our overall growth strategy,” Warden says.

    With a projected 18 percent jump in quick-service traffic, Las Vegas comes in at No. 2 among medium-sized markets. While the recession slowed Sin City’s explosive population growth, and area unemployment remains well above the national average, people continue venturing to Las Vegas to live and play. The 2011–2016 population outlook projects a 12 percent jump, while upward of 40 million visitors travel to Vegas each year—numbers that are convincing concepts like Wingstop and Togo’s to move to town.

    Though Juice It Up! closed its two Las Vegas–area stores during the recession, senior director of business development Carol Skinner says the time is right to return to the market. The Irvine, California–based juice-bar concept looks to capitalize on real estate availability in high-traffic shopping centers, as well as on sharp declines in rental rates, to add two to three area stores within the next five years.

    “It’s a whole new ballgame [in Las Vegas], and we plan on finding the right partners and the right locations to grow the Juice It Up! brand,” Skinner says.

    Small Markets

    Sometimes the biggest opportunities come in small packages.

    That's the argument for growth in the Yuma, Arizona/El Centro, California, DMA. Among this year’s Growth 40 markets, none claim a lower quick-service density than the area tucked near the Arizona-California-Mexico border.

    Kneaders Bakery & Café has a pair of units in Yuma and has considered adding a third.

    Kneaders managing director James Worthington says the bakery concept benefits from local customers and a small-town feel that breeds a personal connection with customers. Worthington also touts the area's high “snowbird” population, or people who move to town for the winter.

    “These wonderful people love to eat out and we love having them,” he says.

    Worthington adds that Kneaders’ bakery model is a perfect fit for smaller markets, since each store is self-sufficient and doesn’t require a large number of stores or a commissary.

    “We can enter into areas where other larger brands may not,” Worthington says in a nod to the area’s competitive opportunity.

    Prospects in small-market runner-up Midland/Odessa, Texas, are fueled by oil, which has driven workers into the area and local unemployment below 4 percent. Located in the less dense area of west Texas, the Midland/Odessa DMA is also the regional shopping center for residents in nearby counties.

    “When you get into west Texas, there’s a lot of miles in between places, which makes spots like Midland and Odessa frequent destinations,” says Texas Restaurant Association CEO Richie Jackson.

    Like the other Texas markets on the Growth 40, Midland/Odessa benefits from the state’s hard-charging economy, business-friendly legislative environment, and a surging 25–64-year-old demographic, elements that favor quick-service spending.

    “There are economies of scale restaurants pick up by coming into Texas … and an economic engine that’s running well throughout the state,” Jackson says.

    A hidden gem in the eyes of many, Fargo, North Dakota, comes in at No. 3 among small markets. Fargo resident and North Dakota Hospitality Association executive director Rudie Martinson says there's been quick-service growth in the Fargo area from both regional and national players, including Five Guys, Jimmy John’s, Pita Pit, and Erbert & Gerbert’s. He says the area’s strong economy and low unemployment continue to pull in quick serves.

    “This leaves room in people’s budgets to do things like eat out more often,” Martinson says. He adds that Fargo also hosts two universities, a four-year college, and numerous technical and two-year schools, all positives for quick serves in terms of the labor pool and customer base.

    Moreover, Fargo’s national profile continues to rise. In recent years, Fargo has been named one of the nation’s “top places to retire” by Forbes, and one of the best places to live by both Men’s Journal and Money Magazine.

    “That kind of reputation attracts the attention of both potential franchisees and franchisors,” Martinson says.

    About The NPD Group Foodservice Division

    The NPD Group is the foodservice industry's leading source for trends and performance indicators such as traffic, consumer spending, same-store sales, check size, and consumer demographics. NPD’s rigorous foodservice market research includes CREST®, which continually tracks more than 400,000 consumer visits at commercial and non-commercial foodservice establishments a year; SalesTrack® Weekly, which monitors the same-store sales of 100,000 leading restaurants; SalesTrack® Market, which, like SalesTrack® Weekly, monitors same-store sales but on a market basis; QSR Market Monitor, a syndicated awareness, trial, and usage tracker; and CREST® Local Market, which tracks consumers’ local preferences, demographics, and restaurant visits across the country’s top media markets. For more information, visit