And the No. 1 brand in the 2013 QSR 50 is … Subway!
Just kidding. It's McDonald's. And unless McDonald's maybe-we-should-be-panicking-now growth funk picks up (quite a bit of) steam, this will continue to be the case for some time.
But there are reasons for new CEO Don Thompson and his leadership team to be worried. The slump the company skidded into late last year—one that cost U.S. president Jan Fields her job—doesn't seem to have an easy fix. Fast-casual brands continue to eat into market share. Premium products like the Angus burger and Fish McBites fell flat and were pulled from the menu. Healthier options like the new Chicken McWrap haven't taken off quite like the company expected. And even though McDonald's continued in the last year to up its commitment to health and nutrition—with extensive activity promotions surrounding the London Summer Olympics, its decision to post calorie counts to all domestic menuboards, and new packaging that is more transparent about nutrition, as examples—it still can't shake critique from outside groups who say the company should be doing more.
All of the negative mojo has Thompson talking about the potential of doing all-day breakfast and refocusing the menu on more burger and value products. It seems the Golden Arches might have, at least for the time being, lost a little bit of their shine.
Looking for a mindless game to play throughout a lazy week? Check in with Subway.com every now and then and watch as the global store counter ticks higher and higher. (Get your coworkers involved! Place bets!) OK, it's not as fun as it might sound. But the truth is that Subway adds restaurants like Justin Bieber adds Twitter followers, and as most chains only experienced modest growth in unit counts last year, Subway tacked on another 1,000 or so U.S. stores. And for the most part, it did so by doing more of the same; aside from continued investment in athlete spokespeople, the rollout of more sustainable packaging materials, and scoring the title of first restaurant to get involved with the American Heart Association's Heart Check program, Subway didn't make much of a blip on the news merry-go-round in the last year. Customer surveys, meanwhile, continue to play up Subway as the top-perceived brand in quality, health, and value.
The brand that made premium coffee a quick-service staple is diversifying its menu mix, wheeling and dealing in the last year and a half to invest in tea (it acquired Teavana for $620 million), juice (Evolution Fresh for $30 million), and baked goods (La Boulange for $100 million). Also making waves are recently added Starbucks originals, like the new oatmeal blend, the Refreshers caffeinated fruit beverages, the Blonde roast, new Frappuccino flavors, and the Verismo make-it-at-home machine. At the same time, Starbucks has continued to be the voice of Millennials, becoming the first major restaurant brand to get on board with tech tools like Square and Apple's Passbook.
As always, keeping up with the times has worked wonders for Starbucks; its second quarter of 2013 was a record setter, with total net revenues up 11 percent and global comparable store sales up 6 percent.
If you're looking for a brand that's ever-so-carefully walking the tightrope between its down-home tradition and a we-love-Millennials future, look no further than Wendy's. The Freckled Lady is moving forward with an updated company store prototype meant to compete with fast casuals, and it unveiled a new logo that favors a more modern script style. This year's new Flatbread Chicken Sandwiches and Waffle Cone Frosty offered the playful menu innovation so desired by that younger demographic. Wendy's even launched a Moonlight Meal Deal—a Double Stack hamburger, Chili Cheese Fries, and a large soft drink for $5 after 10 p.m.—that it very directly stated was meant to appeal to Millennials.
Still, Wendy's respected its comfort-food roots with a trio of new sides—Mac and Cheese, Chili Cheese Fries, and a Baked Sweet Potato—and looked again to the tried-and-true value meal. The new Right Price Right Size Menu offers up to 18 menu items ranging from 99 cents to $1.99.
At long last, Burger King finally settled down and stuck to its guns with … Hmm? What's that? A new line of premium coffee beverages? A Turkey Burger and a Veggie Burger? Another executive shakeup? Next you'll say they're trying out delivery service.
In Burger King's ongoing quest to better compete with McDonald's, the brand has indeed been endlessly tinkering with its menu mix. The last year saw a barbecue-inspired menu, a chicken-inspired menu, Chicken Nuggets, a Bacon Sundae … the list goes on. Still, the proof is not yet in the pudding, and the King only experienced modest sales gains over 2011.
A few years ago, fresh, premium, and gourmet may not have been words in the mix during a casual conversation about Taco Bell. And yet here we are, with the company riding high on the Cantina Bell menu, not to mention the uber-successful Doritos Locos Taco. Despite his claims to the contrary, CEO Greg Creed seems to be taking the hovering threat from Chipotle seriously. Click here to find out what exactly that means for the company.
Sure, Dunkin' Donuts appealed to more all-day customers with its Bakery Sandwiches and Chicken Salad and Tuna Salad Wraps. Yes, it did focus more intently on healthy options with its DDSmarts menu, which now includes Quaker Oatmeal and a Turkey Sausage Breakfast Sandwich. All of that is good and well. But really, the most important thing Dunkin' did all year came on January 16, 2013: The company announced that, having opened up several other Western markets for franchising, it would be moving into Southern California. The coffee wars, it seems, are only now heating up.
Pizza Hut has stirred up quite a bit of buzz with international product releases—we suggest you Google the Double Sensation pizza-within-a-pizza and the Crown Crust pizza with cheeseburgers and chicken nuggets—though the company turned a lot of heads state-side with its Crazy Cheesy Crust pizza, too (the crust doubles as tear-off Cheesy Bites). Novelty pies aside, Pizza Hut did dabble in real innovation, trying out Pizza Sliders, a crowdsourced Super Bowl ad, and the first-ever restaurant ordering app on Xbox. It's still the No. 1 pizza brand, so crazy pizzas or no crazy pizzas, customers are in for the ride.
Controversy? What controversy? Despite spending a few weeks last summer under intense national scrutiny due to comments made by president Dan Cathy, Chick-fil-A turned in another crazy-successful year, passing KFC as the No. 1 chicken brand for the first time (even with just a third or so of the units as KFC). A healthier kids' meal—now with Grilled Chicken Nuggets and applesauce options—encouraged the brand to jump on board with the National Restaurant Association's Kids LiveWell program, and new salads and wraps this year further solidified the company's commitment to nutrition. It also hasn't hurt that consumer survey after consumer survey puts Chick-fil-A toward the top of the quick-service heap when it comes to quality and service (including among the all-important Millennials).
The Colonel may have been kicked off the top of the roost by Chick-fil-A, but KFC hasn't tucked its wings in the menu-development department. Original Recipe Bites and Chunky Chicken Pot Pie joined the menu, as did Original Recipe Boneless chicken, which brand leaders suggested will be the major focus in the near future (and which has already succeeded on the back of the clever "I ate the bones" marketing campaign). The brand will have to scratch back to prominence in the U.S. if it hopes to maintain relevancy; its typically foolproof international sister, KFC China, is in a tailspin after food-safety problems and an avian flu scare.
It's coming, folks; as soon as next year, the fast-casual category will infiltrate the QSR 50's top 10. Panera Bread now sits on the brink, having inched a few spots closer after adding nearly $500 million and more than 100 stores in 2012. Like a few other brands on this list, Panera hasn't had to tweak a whole lot to succeed—mostly it continues to rely on loyal customers and its position as the market leader. It did, however, enter Manhattan for the first time in 2012, and recently rolled out a new "Live Consciously, Eat Deliciously" ad campaign that hypes its commitment to a value-based company culture. It should be a good platform for Ron Shaich—who once again became sole CEO after Bill Moreton moved to the position of chairman of the board—to guide the brand into the limited-service industry's elite.
Good news, truckers! Your years of hardship and toil at mealtime are over. Now you have your very own drive-in ordering station at Sonic, where you don't even have to exit the cab to gobble down a Coney, limeade, and tots. OK, so it's just at the Sonic in Valliant, Oklahoma. And maybe that won't really be "a thing" for the company moving into the future. But it serves as a good example of how Sonic so successfully keeps trucking along (pardon the pun) in a quick-serve industry eager to keep up with modern trends. Sonic's unique drive-in differentiation, combined with roadside burger-stand menu items, appeals to a giant swath of Middle America—Boomers, Millennials, and truckers alike.
Admittedly, some of Domino's moves in the last year and a half land somewhere on the perplexing scale between "huh?" and "uh … OK?" There was the announcement that stores would be slowing down service on pan pizzas to give them extra attention. Then there was the assertion that any customer who asked to swap ingredients on its Artisan pies would be told "no." And who can forget when the company said it would install cameras in restaurants so customers could watch the staff at work, Big Brother–style? Regardless, Domino's continued its push to be a more premium brand, an effort that began with its new pizza recipe in 2010. The Handmade Pan Pizza, Parmesan Bread Bites, and gluten-free crust option gave the menu a little bit more diversity, while a new logo and "Pizza Theater" store prototype signaled that Domino's is ready to turn its brand into a more modern experience.
Jack in the Box
Jack in the Box's menu has always thrived on the "something for everybody" mantra, and recent development follows in the same path. Its most recent spate of new menu options includes both permanent and limited-time offerings, like the Sourdough Cheesesteak Melt, Breakfast Waffle Sandwich, Blueberry Muffin Oatmeal, Chili Cheese Curly Fries, Chipotle Chicken Club Sandwich, and Mini Corn Dogs. Jack in the Box also added four new items to its Value Menu, including Chicken Nuggets. Indeed, something for everybody.
Poor Arby's. Here we were a year ago, ready to say the brand had broken from its sales funk. It had finally escaped the shadow of former sister brand Wendy's and was ready to take on the world with its "Good Mood Food." But it was not to be so. The roast beef specialist saw sales dip below $3 billion in 2012, despite a brand "refresh," blueprints for a store redesign, and the new "Slicing Up the Truth About Freshness" ad campaign. Turkey Roaster sandwiches also joined the menuboard, which president Hala Moddelmog says the brand is working to simplify. So far, though, nothing's really sticking. That may be why several executives—including CMO Russ Klein—have bolted for other pastures, even as new CEO Paul Brown takes the reins.
Chipotle Mexican Grill
Care to guess the new favorite catchphrase permeating the quick-service and fast-casual industries? Our money is on "The Chipotle of" (yes, that is an incomplete phrase). As fast casuals spring up like calories in a Heart Attack Grill burger, most are applying the "Chipotle model" to their business plan, wherein they let customers build their own menu options, picking from among premium ingredients in an upscale environment. So these days we have the Chipotle of pizza, the Chipotle of Mediterranean, the Chipotle of Indian food … and so on and so forth.
There is, of course, a good reason for this: Chipotle, in many ways, ushered in the new era of premium fast food, and is wildly successful at it. In 2012, that trend continued: The company added another $500 million in sales and nearly 200 stores to its domestic unit count. Chipotle also continued to push boundaries; it launched a new margarita recipe in most stores, is testing tofu Sofritas, and debuted catering in its home Colorado market. Over the course of the year, it even used more than 10 million pounds of locally sourced foods. So yeah, there's a reason everyone is following the Chipotle model.
Outside of limited-time offers like the Buffalo Chicken and the Chicken Parmesan pizzas, Papa John's pretty much stuck to its guns in the last year, which seems to have served it just fine: Both sales and unit count are up. Speaking of guns, Papa John's brought on NFL superstar quarterback and all-around good guy Peyton Manning as a franchisee, which will probably benefit the brand even outside of Denver.
Like other ice cream brands, Dairy Queen is mixing things up a bit in the innovation department to keep up with frozen-yogurt chains (even though Dairy Queen still accounts for about 47 percent of the frozen dessert category's sales). Recently, that has included a line of light smoothies and a national rollout of Orange Julius beverages. The company also doubled down on its food efforts, offering a $5 Buck Lunch deal between 11 a.m. and 4 p.m. that includes a choice of one of three entrées, along with fries, a beverage, and a sundae. Its new "Fan Food" promotional campaign hopes to redirect customer perception of the brand as a simple fast-food purveyor.
Popeyes Louisiana Kitchen
All of that time spent rebranding Popeyes into its Louisiana Kitchen concept has paid off. In 2012—its 40th year in business—the brand enjoyed its fourth consecutive year of same-store sales and traffic increases. LTOs like its Crawfish, Rip 'n Chick 'n, and Cajun Surf & Turf give Popeyes a unique down-on-the-bayou niche, and its partnership with spice company Zatarain's (for Popeyes' Zatarain's Butterfly Shrimp) helps solidify its authenticity. Breakfast, which Popeyes is testing in North Carolina, could be the next frontier to keep the same-store sales streak alive.
Hardee's and Carl's Jr. parent CKE Inc. pulled out of the IPO it was preparing last summer after investors balked at the company's shaky financials. Investors might have been concerned about the brands' domestic sales, but it turns out they needn't be worried; Hardee's added nearly $100 million in sales over 2011, while Carl's Jr. padded its count by more than $50 million. Once again the company zeroed in mostly on young hungry men, rolling out a Super Bacon Cheeseburger, a Jim Beam Bourbon Burger, and a Memphis BBQ Burger, while swapping out one commercial eye candy supermodel (Kate Upton) for another (Heidi Klum).
This profile previously stated that Hardee's and Carl's Jr. each dropped in domestic sales, an inaccurate statement based on the fact that last year's QSR 50 erroneously included CKE's international sales numbers. QSR regrets the error.
The QSR 50's lone Asian concept celebrated its 1,500th unit in 2012 by unveiling a new store prototype that nudged the brand more toward the fast-casual category. It may have been a push back against the growing crop of upstart fast-casual Asian brands, but if the company is losing market share to those brands, it isn't showing; both sales and unit counts were up over 2011.
Like its pizza compadre Papa John's, Little Caesars mostly focused on more of the same to account for its $200 million in additional sales over 2011 and its increase of 200 net units. This year, though, Little Caesars unveiled its DEEP! DEEP! Dish Pizza, adding a little variety to its trusty menu of $5 Hot 'n Ready pies.
Whataburger may be 70 years old, but the ol' stalwart has some youth left in it yet. Lately, social media has helped the regional brand collect even more passionate fans, and a recent deal to put its popular condiments on the shelves at H-E-B grocery stores should earn even more exposure among both American and Mexican consumers. Click here to find out more about how Whataburger thrives on its cult following in the South.
To know what exactly Jimmy John's has been up to in the last year, take a spin on its "News" page online. The last update? That was in the summer … of 2010. And yet the brand crossed the $1 billion sales threshold for the first time, having added nearly $400 million in sales over 2011 and more than 200 units. You keep being you, Jimmy John's.
Five Guys Burgers & Fries
Well, it had to happen some time. After three years of rocketing up the QSR 50—where it debuted in 2010—Five Guys finally took a step back, ceding the last spot in the top half of the QSR 50 to Jimmy John's. It's not to say the brand performed poorly in 2012—it added $100 million in sales to become a billion-dollar brand for the first time and tacked on 200 units to its store count—but rather that it may have finally found its place among the quick-service pack.
KFC and Chick-fil-A may be duking it out for chicken supremacy, but how many chains can say they are the "Official Chicken of College Sports" at 25 prominent higher-education institutions, including the University of Kentucky, the University of North Carolina at Chapel Hill, and Indiana University? That would be one: Zaxby's, the fast-casual chicken joint of the South, which passed Church's to become the fourth-largest chicken purveyor while having a presence in only 13 U.S. states. Tempting LTOs like the Banana Pudding Milkshake and new meal deals like Boneless Wings spiced up the menu, and the company is testing breakfast in its Athens, Georgia, hometown that includes Southern favorites like a chicken biscuit, grits, and bacon Benedict. These menu moves—along with promotional campaigns starring B-list celebrities like David Allen Grier and Lee Ann Womack, as well as a new store prototype in development—should help Zaxby's as the fast-casual chicken category becomes a hot new target for brands like KFC.
Sales and unit counts may have been flat over 2011 at Church's Chicken, but it wasn't for lack of trying new things. LTOs like the Texas Chicken, Big Tex Tender Sandwich, and Ultimate Value Trio of three chicken sandwiches all found their way to the menu in the last year, while the bigger Honey Butter Biscuit further enticed fans of its biscuit staple. New ad agency ESW Partners cooked up this year's "Almost Free" campaign, which used a very tongue-in-cheek manner to promote the value behind Church's offer of two pieces of chicken and a biscuit for $1.99.
Celebrating its 35th year in business, Bojangles' enjoyed a $100 million sales bump in 2012 over 2011 and added another 30 stores as it continued its slow growth outward from its home base in the Carolinas. A new premium medium roast coffee, BoJo, gave Southerners more reason to come in for the signature chicken biscuit, but the brand's first major new product in more than five years, Homestyle Tenders, might be a play for transplant Yankees; the mild Tenders dial back the spicy level just a touch.
Steak 'n Shake
CEO Sardar Biglari will have to try a little harder if he wants to blow people away with his success at Steak 'n Shake. The investment banker probably isn't thrilled with the fact that sales and store counts were essentially flat in 2012, even after the company committed to more franchising and debuted its snazzy new Signature store prototype. The company did announce its first international franchise agreement, for the United Arab Emirates, but more domestic excitement might be necessary to bring the Midwest burger favorite back to prominence.
Having committed much of 2011 to developing healthful menu options and promoting its down-home authenticity, Culver's used 2012 to reimage several stores and lay the groundwork for growth into the Southeast U.S., including in South Carolina and Florida. The Wisconsin-based burger joint is also doubling down on its operational excellence, launching the "Culver's Crew Challenge" in 2013 that will reward the top restaurants in quality, service, cleanliness, hospitality, community outreach, and team-member training and development.
Remember that time we said Quiznos was turning things around? That a new executive team and menu offerings would stanch all of the losses that had sent Quiznos plummeting down the QSR 50? You know, in these same pages a year ago? Yeah, about that … Turns out, Quiznos still has some work left to do. The company watched as system-wide sales fell another $100 million or so in 2012—good enough to send it six more spots down the 50—and unit counts dropped by 150. Meanwhile, the executive suite is once again full of new faces, having ushered in a new CEO, CMO, CFO, COO, and executive chef. The brand does have some good news to bank on as it considers possible growth strategies; a study from Restaurant DemandTracker found this year that Quiznos ranks high among quick-serve brands in terms of where customers believe they can get healthier options for kids. The brand's international business is also in good shape. New Quiznos International president Ken Cutshaw is busy signing new franchise deals all over the world as global consumers clamor for American brands.
The take-and-bake movement keeps on rolling, as Papa Murphy's experienced 25 record sales weeks in 2012 en route to system-wide sales and unit count gains. Now the brand is flush with its third straight Zagat recognition for Americans' favorite pizza; a new ad agency, WDCW, that helped created the "Love at 425 Degrees" promotional campaign; and the gourmet Primo pizza line that offers three pies with premium ingredients, including fennel sausage, goat cheese, and prosciutto.
Long John Silver's
The seafood leader may have turned its ship around at last. After drifting out of favor for the last few years and being marooned by former parent company Yum! Brands, Long John Silver's finally posted systemwide sales gains in 2012 (despite its unit count dropping).
The double drive thru put Checkers/Rally's on the map, but a lower-cost store prototype that launched in 2011 with only one drive thru and an expanded patio area delivered higher sales and traffic than expected. The prototype's potential to grow in less traditional real estate has the company thinking expansion.
It's business as usual at White Castle, where sales were slightly down and store counts slightly up in 2012. The company continues to use unique promotions like burger-scented candles and candlelight Valentine's dinners to stay on the quirky side, though it did start thinking green earlier this year when it launched a program at select stores that tested composting all food and paper scraps.
Del Taco launched a two-part brand refresh in 2012 that entered its final phase earlier this year. Having upgraded much of the system's branding and store design last year, the concept launched the new "UnFreshing Believable" campaign that highlighted the brand's fresh-food offerings at value price points. It also debuted two new menus, Buck & Under and New Tastes, that further drive home the good-eats-for-less-cash message.
Qdoba Mexican Grill
The No. 2 player in the Mexican fast-casual category made sales and unit-count gains this year to inch four spots closer to industry giant Chipotle. While that brand sticks to a simple build-your-own format, Qdoba has been rolling out innovative prepared menu options thanks to head of R&D Ted Stoner. The last year saw Qdoba making strides in the health department, as the brand launched a more nutritious brown rice offering and also won the National Restaurant Association's Kids Recipe Challenge for a multiunit chain with its Lil' Pulled Pork Naked Burrito. Parent company Jack in the Box is banking on new Qdoba president Tim Casey—who has years of industry experience with brands like Starbucks and TCBY—to guide the chain into the next growth phase, although things got off to a rocky start this year, when it was announced that 67 company-owned stores would close by the end of the fiscal year.
Slow and steady wins the race. Or so thinks Jason's Deli, a company that enjoys one of the highest average unit volumes in the industry and continued system-wide sales and unit count gains while growing only by a handful of units every year. Last year was no different, as the company grew its unit count by 10 stores and added about $40 million in sales.
Looking for Twitter retweets? Here's a surefire way to score a few: Tweet about one of Krispy Kreme's plentiful promotions and limited-time offers, like its Key Lime doughnuts or Talk Like a Pirate giveaway. Social media fans obsessively follow Krispy Kreme's promotions (trust us), which is good news for the company as it continues its climb back from near-bankruptcy and oblivion. In fact, Krispy Kreme just hit its highest stock price in eight years thanks to its ongoing momentum.
El Pollo Loco
It's been a slow burn for El Pollo Loco the last few years as the company faces a steady crop of chicken competitors, including Chick-fil-A, which is quietly building its presence on El Pollo Loco's California home turf. But it's certainly not for lack of menu innovation; the last year has included new Pork Carnitas, Baja Shrimp, Fish Taco, and Chicken Tamale LTOs, as well as Grilled Chicken Burritos.
Though its year-over-year results might not show huge gains, Boston Market is in the midst of a sustained growth that began in 2010, when it launched an operational overhaul. As of April, the company had posted 30 consecutive months of positive comp sales and was preparing to open its first new restaurants in six years. A St. Louis Ribs LTO this year gave the brand a unique menu offering, while a pledge to remove salt shakers from tables last year proved its commitment to better nutrition.
Canada's favorite quick serve scored some big gains in the U.S. with 90 additional net stores and $60 million or so more in system-wide sales over 2011. The company is making a push for more military veteran franchisees, while on the menu side of things, new breakfast paninis and a Thick Cut Hickory Smoked Bacon were on-trend successes.
Nothing much to report out of the famously tight-lipped and strategically slow grower In-N-Out, although a fair amount of intrigue circled the brand this year as the world got to know company heiress Lynsi Torres, a 30-year-old race car driver who is one of the world's youngest female billionaires.
The LTO-happy Baskin-Robbins managed to hold steady at No. 45 on the QSR 50, a year after plunging down the list. It may be a sign that the Dunkin' brand has finally figured out how to coexist with the growing crop of frozen-yogurt concepts.
One year after CEO Mike Shumsky said CiCi's was "at the start of something big" with its "Build the Brand" initiative, the company actually finds itself a few steps back. CiCi's saw both its unit count and systemwide sales drop in 2012.
A 2011 brand initiative that led Captain D's to roll out an upgraded prototype, tweak its core batter-dipped fish, introduce new menu items, improve its company culture, and market more to moms and kids is now paying off. In 2012, Captain D's had an all-time high in same-store sales growth—9.2 percent for company stores and 7.5 percent for franchised units—and set the record for highest AUV in brand history. Further, Captain D's has experienced 23 consecutive months of compounding sales growth to date. The company is in the process of rolling out a new broiler program to its stores, a program that lets the brand invest in its new fire-grilled menu that features items like grilled salmon.
Moe's Southwest Grill
Moe's spent the last few years knocking on the QSR 50's door, and after a 2012 that saw it score big unit-count and system-wide sales gains, the Mexican fast casual finally earned its due. The FOCUS brand has no plans to slow down growth, and with hundreds of franchise development agreements in place, it's growing by about 20 percent each year.
Another newbie to the QSR 50, Wingstop is thriving on a low-cost store model, high customer demand for wings, and ample opportunity to saturate new markets. The brand is so hot, even rapper Rick Ross signed on as franchisee.
The demand for more nutritious menu offerings has served Jamba Juice well, as the California-based brand continues to grow with lighter smoothie, juice, and food options. A new store design, kids' meal menu, and consistent focus on the company's "Team Up for a Healthy America" initiative, which promotes a healthy, active lifestyle among customers and especially kids, have the company prepped to make waves on the QSR 50 for years to come.