The New Order of The QSR 50 in the 21st Century

    While the quick-service restaurant segment is robust and as stable a place as any within the restaurant industry, it is at the same time intensely competitive.

    Outside Insights | August 12, 2022 | Don Fox
    Don Fox.
    Firehouse Subs
    "Change is inevitable," Firehouse Subs CEO Don Fox says. But so is the strength of quick service.

    When the restaurant industry was rocked by the pandemic in 2020, quick-service restaurant brands demonstrated their resiliency. That isn’t to say that all brands within the 2020 QSR 50 emerged without losses. In fact, 23 of the QSR 50 brands declined in units compared to 2019.

    Over the course of 2021, the QSR 50 shook off the remaining ill effects of the pandemic and went back into unit growth mode. There were 15 brands that experienced some degree of contraction, but their losses were more than offset by the growth of other chains. For example, a dozen brands had a net gain of at least 100 locations each, resulting in a net increase of 993 units for the QSR 50.

    I’d like to say that my analysis of the QSR 50 in 2021 compared to the year prior led to thought-provoking insights … but I can’t. As mundane as it is to say, the consistency of the standings is the story. The quick-service segment is in pretty solid shape.  

    If we flash back to 2010, the picture for the QSR 50 is a bit more interesting. Back then, there were 14 burger brands that accounted for a combined 41,946 units. (Dairy Queen (DQ) was categorized as a burger concept in the ranking that year, but as “snack” in 2021; for comparison purposes throughout this article, I’ll keep DQ in the snack category). At the close of 2021, there were a total of 44,698 units (an increase of 6.5 percent since 2010).

    MORE:

    CHECK OUT THE FULL QSR 50 RANKINGS

    DOWNLOAD OUR FREE REPORT FOR A BRAND-BY-BRAND BREAKDOWN

    MEET THE CONTENDERS

    Pizza brands within the QSR 50 have seen greater growth since 2010 (especially when benchmarking against population growth). At that point there were 20,465 units distributed amongst seven pizza/pasta brands. Today, the number of brands has fallen by one. Sbarro and Cicis Pizza no longer make the list, while Marco’s Pizza has joined. Despite one less pizza brand making the QSR 50, units have increased 8 percent to 22,098.

    The number of sandwich locations within the QSR 50 is now less than what it was in 2010, having dropped from 33,853 to 33,038 (–2.4 percent). This modest drop doesn't reflect the volatility within the category. In 2010, there were seven sandwich brands on the list, just as there are in 2021. What changed is that Quiznos, Jason’s Deli, and Einstein Bros. Bagels exited, while Jersey Mike’s, Firehouse Subs, and McAlister’s Deli joined. It’s worth noting that in addition to Subway dropping 1,887 units compared to its 2010 tally, Quiznos had 4,203 at the end of 2010; by virtue of dropping out of the QSR 50, their entire count has been scrubbed from the roster. Still, the substantial growth achieved by several of the other sandwich brands hasn’t been enough to fill the void left by the reduction in locations for both Subway and Quiznos.     

    Is there a category within the QSR 50 that grew disproportionately when compared to population growth? Yes, and one might say that chicken rules the roost! In 2010, eight chicken brands contributed 11,366 units to the QSR 50 compared to nine brands with 14,572 in 2021 (growth of 28.2 percent). Chick-fil-A’s nearly 85 percent growth in units and their ascension to the leadership position in the category is well-known, but also of note are the gains made by Popeyes and Bojangles. Additionally, chicken brands Raising Cane’s and Wingstop climbed into the top 50 since 2010. 

    The “global” category (a 2021 consolidation of what was, in 2010, the Mexican and Asian segments) now consists of six brands and 14,174 units compared to five brands and 8,877 units in 2010 (an increase of 59.7 percent). The order of appearance within the category hasn’t changed since 2010, but the individual placement within the QSR 50 has seen two brands move up considerably in rank: Chipotle now ranks No. 10 compared to its No. 21 position in 2010 and Panda Express rose from No. 23 to No. 18. What remains unchanged is Taco Bell’s leadership position in the category. However, Taco Bell’s rate of growth in units is dwarfed by Chipotle, which more than tripled in size. Additionally, Panda Express’ 81 percent increase in units may seem modest when compared to Chipotle, but by any other standard, they excelled, especially when considering that they more than doubled their average annual sales.

    Last but not least, the snack category saw significant change since 2010. Comprised of coffee, donuts, and frozen confection brands, units increased from 22,053 locations to 29,045.

    What conclusions might we draw when looking back over the past eleven years? The QSR 50 accounted for 158,730 locations at the end of 2021, compared to 142,693 in 2010. The 11.2 percent increase in locations outpaced population growth, which speaks to the overall strength of the quick-service segment.      

    What if we look back further in time? With the benefit of having in hand the QSR 50 from 1998, some interesting facts emerge. However, I need to preface my commentary by pointing out that when the 1998 report was prepared, brands from today’s snack category (e.g., Starbucks, Dunkin’ and Tim Hortons) were not considered to be part of the quick-service segment. The addition of the category in later years limits the comparison of today’s QSR 50 to that of 23 years ago.     

    For context, since 1998, the population of the USA has grown by 20.7 percent. Quick-service restaurant brands, in general, have gotten stronger as the nation has grown. Yet the overall growth among the top 50 brands has not necessarily meant that the segment has been without volatility. Of the 50 brands in 1998, only 27 remain on the current QSR 50. Over the long term, the shakeup in the segment has been considerable, though the addition of the snack category is responsible at least in part for the displacement of five of the brands that exited the list.    

    In 1998, there were 14 burger brands in the QSR 50 with a combined unit count of 40,665. In 2021, the count is 9 percent higher. In contrast, chicken brands on the QSR 50 list accounted for 9,879 in 1998 compared to today’s 14,572. The increase of 47.5 percent serves as testimony to the ascension of chicken as the most consumed protein in the nation.

    Near the opposite end of the spectrum is pizza/pasta, which accounted for 22,612 units in 1998 and only grew by 83 locations by the end of 2021. Among the top pizza players, it has been a battle for market share and the deck has been reshuffled as a result. Compared to 13 brands on the list in 1998, there are now only six. The category within the QSR 50 that has grown the most since 1998 is “global.” The rise of Chipotle, which was not on the list in 1998, and Panda Express have helped grow the category significantly by 79 percent.

    Perhaps the most interesting storyline when comparing 1998 to today is found in the sandwich category. Back then, there were 18,495 sandwich units divided amongst seven brands. Fast forward to today, and the seven brands on today’s QSR 50 list account for 33,038 locations. The category growth of 78.6 percent is just a thin line of mustard shy of the global category. But then, the complexion of the sandwich category has changed dramatically in terms of the players. From today’s QSR 50, only Subway and Arby’s appeared on the list in 1998. Lost between the lines of the 1998 and 2021 QSR 50 reports is the rise and fall of Quiznos.

    What does all this mean? While the quick-service restaurant segment is robust and as stable a place as any within the restaurant industry, it is at the same time intensely competitive. I’ve heard more than once in my professional life the point of view that some brands are “too big to fail,” but by studying the history of quick service and the broader restaurant industry, we can dismiss that as a myth. If anything, such a belief is fertilizer for complacency. Looking back at the past 23 years, we can also see how the preferences of diners change over time, and well within the lifetime of our investments. It is a reminder that change is inevitable. The brands that embrace change may be more likely to occupy a spot on the QSR 50 another 23 years from now.   

    Don Fox is Chief Executive Officer of Firehouse Subs, in which he leads the strategic growth of Firehouse Subs, one of the world’s leading restaurant brands. Under his leadership, the brand has grown to more than 1,200 restaurants in 45 states, Puerto Rico, Canada, and non-traditional locations. Don sits on various boards of influence in the business and non-profit communities, and is a respected speaker, commentator and published author. He was recognized by Nation’s Restaurant News as 2011’s Operator of the Year. In 2013, he received the prestigious Silver Plate Award from the International Food Manufacturers Association (IFMA).