More drinks, snacks and chicken, less pizza and sandwiches
Tropical Smoothie has been the leading non-coffee beverage and snack chain with strong growth over the past five years. | Photo: Shutterstock.
Sandwiches and pizza are out. Smoothies and chicken tenders are in.
At least that’s what we see from a look at limited-service restaurant revenue over the past five years, based on data from the Technomic Top 500 Chain Restaurant Report.
Over the past five years, for example, sales of fast-casual chicken meals have increased nearly 87%, thanks in large part to the strength of brands like Raising Cane’s and Dave’s Hot Chicken.
At the other end of the spectrum: quick service sandwiches, whose sales increased by only 6% during this period.
Overall, the limited-service restaurants in the top 500 have increased their total revenue by 33% over the past five years. But the data shows that consumers have shifted spending from some traditional concepts to newer, hotter brands in other sectors. Or they have shifted spending from full meals to snacks and beverages.
Here’s a look at the sectors and their growth over the last five years:
We probably don’t appreciate Tropical Smoothie Café nearly enoughThe smoothie chain has more than doubled in size over the past five years, ultimately justifying its sale to Blackstone earlier this year for $2 billion – a rare sale of a restaurant chain at such a high price, at least for this year.
The chain was the growth engine in the “Other Beverages and Snacks” category of the quick service sector.
Cookie chains have seen a resurgence, led by ultra-fast-growing Crumbl, which has grown more than 1,800% in the past five years. But there are other, lesser-known concepts like Nothing Bundt Cakes, which has been growing steadily for years and is 72% larger than it was in 2019.
And consumers are also purchasing a wider range of beverages from a growing group of restaurant chains that are looking to offer them. The sector includes some of the fastest-growing chains of 2023 such as HTeaO (54%), Swig (39%) and Gong Cha (29%).
Breaking News: The chicken business is booming. Consumers clearly love chicken right now, and they especially love chicken in limited service formats.
The fast-casual chicken sector includes some extremely successful and fast-growing concepts. Average growth last year alone, for example, was 17%, thanks to chains like Dave’s Hot Chicken, which doubled in size and grew an incredible 6,800% over the past five years.
This also includes Raising Cane’s and Wingstop, two of the most successful large chains in the USA.
But fast-food chicken restaurants shouldn’t be forgotten either, even as chains like KFC and Church’s, which offer bone-in chicken, are struggling. Sales at these chains have increased 53 percent over the past five years, led by Chick-fil-A, which grew 78 percent.
On the other hand sandwiches. The fast-food sandwich sector continues to be completely dominated by Subway. The Miami-based giant has 20,000 stores and accounts for two-thirds of sales in the sector. Its sales fell 2% last year compared to five years ago.
The remaining competitors are simply not big enough to offset the loss in sales of over $200 million.
This is actually one of the challenges when analyzing industries: some of them are far too dependent on the big chains at the top.
Fast-casual sandwich chains have fared better, thanks to Jersey Mike’s (up 150 percent over the past five years) and chains like Paris Baguette (up 129 percent). But the sector’s 26 percent growth was still below the average for limited-service restaurants, whose sales have increased 33 percent over the past five years.
Where did all the pizza sales go? The only surprise in these data is the 18% growth of the quick service pizza sector.
You know that group that basically printed money in 2020 and 2021 when everyone was stuck at home and ordering pizza?
But the sector’s growth has been overstated. Most of the growth over those two years occurred at four chains: Domino’s, Little Caesars, Papa John’s and Marco’s. If you add another of the top five pizza chains, Pizza Hut – which closed stores and saw a 1% decline in sales between 2019 and 2021 – the average growth over that period was 21%.
The rest of the QSR pizza sector grew only 2% between 2019 and 2021.
Most pizza chains simply lost momentum after the pandemic. Average sales growth in the industry was just 3% last year.
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