Rent is high. Labor is expensive and hard to come by. Competition for traffic is increasing. And as a result, many operators took the “focus on what you’ve got” approach in 2018, developing modest unit growth but really relying on improving results at existing locations—and often closing or moving those that underperform. Operators are turning to different tactics, investing in technology, deploying new marketing, improving menu quality and more in an effort to win traffic and boost sales. It’s helped chains in the Top 500 grow sales 3.3%, and will continue to help them move in a positive direction this year.
Here are the trends that impacted sales in 2018, as well as the chains that saw the largest sales increases and declines.
Off-premise
Nearly half of the top 100 chains have said they are testing or have committed to developing delivery, and many have moved beyond that initial phase to take a closer look at understanding the challenges and economics of the off-premise market.
National brand relevance
Casual-dining chains are struggling to stay relevant, especially with millennials and Gen Z customers less likely to visit those concepts. While Joe Pawlak of Technomic predicts that there will be some reprieve for the segment, “They will need to reinvent themselves. They will need to look at technology,” he says.
Beyond the dayparts
Four out of 5 consumers say they snack between meals once a day, and their definition of a snack expands beyond a granola bar or bag of chips. Operators are adjusting to capture between-meal dollars with options such as shareable happy hour snacks and protein-rich, on-the-go boxes.
Restaurants get smarter
To attract consumers who want to feel a personal connection to the restaurants they frequent, marketing continues to shift from broad, national campaigns to hyperpersonalized, targeted efforts. Operators are collecting customer data through apps, geotracking and more to better understand their audience.
The cost of a new look
The trend of reducing kitchen floor space to allow more room for revenue-generating tables and seats has been flipped on its head: Restaurants are adding space for delivery drivers to wait and for guests to pick up online orders. But more production is needed to meet the demand for off-premise orders, which now account for 63% of total industry transactions, according to the National Restaurant Association. This shift can change the cost-to-sales ratio of a restaurant.
Top 10 Sales Increases (Top 250 chains)
| Chain name | 2018 Sales Change % | 2018 US Sales ($000,000) | 2018 AUV ($000) | Rank |
|---|---|---|---|---|
| Metro Diner | 71.2% | $125.5 | $2,433 | 246 |
| MOD Pizza | 44.8% | 397.7 | 1,340* | 105 |
| First Watch | 31.9% | 413 | 1,535* | 100 |
| Shake Shack | 28.0% | 459.3 | 4,390 | 90 |
| Lazy Dog Restaurant | 26.8% | 175.9 | 6,395 | 190 |
| Sweetgreen | 23.8% | 158.2 | 1,840* | 211 |
| Habit Burger Grill | 23.1% | 436.6 | 1,873 | 94 |
| Raising Cane's Chicken Fingers | 22.5% | 1,183.5 | 3,264 | 46 |
| True Food Kitchen | 22.3% | 167 | 7,100 | 203 |
| Blaze Pizza | 20.3% | 326.6 | 1,350* | 125 |
| Tropical Smoothie | 20.3% | 472.6 | 700 | 88 |
Top 10 Sales Increases (Next 250 chains)
| Chain Name | 2018 Sales Change % | 2018 US Sales ($000,000) | 2018 AUV ($000) | Rank |
|---|---|---|---|---|
| CoreLife Eatery | 133.8% | $52.6 | $1,500 | 479 |
| 110 Grill | 77.3% | 49 | 3,265 | 499 |
| Cava Grill | 67.9% | 85.3* | 1,445* | 331 |
| Halal Guys | 63.7% | 58.6* | 955 | 445 |
| Walk-On's Bistro | 56.6% | 102.8 | 4,980 | 294 |
| Poke Bar | 47.5% | 53.7* | 910 | 471 |
| Chicken Salad Chick | 43.8% | 109.9 | 1,153 | 278 |
| Nekter Juice Bar | 42.9% | 70.3* | 660 | 375 |
| Vitality Bowls | 42.4% | 50.4* | 900 | 493 |
| Mission BBQ | 40.0% | 113.1* | 1,740 | 268 |
Largest Sales Declines (Top 250 chains)
| Chain Name | 2018 Sales Change % | 2018 US Sales ($000,000) | 2018 AUV ($000) | Rank |
|---|---|---|---|---|
| Joe's Crab Shack | -34.5% | $180* | $3,100* | 186 |
| Quiznos | -18.4% | 139.5* | 400* | 229 |
| Bertucci's | -17.5% | 137* | 2,075* | 233 |
| Old Country Buffet/HomeTown Buffet | -15.0% | 175.5* | 2,600* | 191 |
| McCormick & Schmick's | -13.6% | 179.7* | 4,040* | 187 |
Largest Sales Declines (Next 250 chains)
| Chain Name | 2018 Sales Change % | 2018 US Sales ($000,000) | 2018 AUV ($000) | Rank |
|---|---|---|---|---|
| Tilted Kilt Pub & Grill | -37.8% | $89* | $2,225 | 323 |
| Ryan's | -33.3% | 56.8* | 2,320 | 462 |
| Max & Emma's | -30.9% | 60.1* | 2,125 | 434 |
| The Egg & I Breakfast & Lunch | -29.2% | 62.1* | 1,090 | 421 |
| Papa Gino's Pizza | -21.1% | 98.5* | 850 | 304 |
Source: Technomic Top 500 Chain Restaurant Report; *estimate
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