Industry News | January 19, 2009

Growth Out Paces Full-Service in '08

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Quick-serve unit growth dropped by more than 50 percent last year from 2007, according to a new study out today by marketing research company NPD Group.

Based on the company’s ReCount survey, unit growth for the quick-service segment last year measured 0.6 percent, down from 1.7 percent in 2007. Expansion hit an eight-year high in 2005 when the industry experienced a 3 percent growth rate.

In the last year, larger brands fared better than small and independent brands. Chains with at least 100 units grew by 1 percent while those with fewer than 100 units experienced 0 percent growth.

“When the economy weakens, major chains grow their share of the market faster than during healthy economic times,” says Greg Starzynski, director of product development for foodservice at NPD. “They maintain those share gains and continue to grow when the economy turns more positive.” The weak numbers experienced by quick-service paled in comparison to the negative growth posted by the family-dining and fine-dining segments. Overall, family dining experienced -3 percent growth while specifically brands with 55-99 units suffered the worst fate with -9 percent growth.

Segment wide, fine-dining experienced similar defeat with a -8 percent growth rate and a -11 percent growth rate for independent fine-dining establishments.

Starzynski attributes only some of the blame on the weakening economy. “There was softening in some restaurant segments prior to the economic downturn,” he says, “the full-service segment had been performing poorly, and fine dining had been adversely affected by a decline in the supper daypart.”

But not all areas of the country were affected equally. In terms of quick-serve units, the South and West both posted positive growth numbers higher than the national average with 1.2 percent and 1.4 percent respectively.

The Northeast performed the worst in 2008 ending with a -0.9 percent growth rate for quick-serves.

The ReCount is a census of commercial restaurant locations in the U.S. conducted in the spring and fall each year.

--Blair Chancey

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