News

Growth slows for restaurant chains in 2016

March 31, 2017

The Top 500 chain restaurants experienced a deceleration in 2016 with cumulative sales growth checking in at 3.6 percent, down from 5.2 percent the prior year, according to Technomic. Net unit growth stayed relatively stable at 1.7 percent, vs. 1.9 percent in 2015, pointing to declining customer traffic and weakening same-store sales as the key reasons for the slowdown.

The Technomic Top 500 Advanced Chain Restaurant Report will be released mid-April. It provides Technomic's one-year sales forecast by menu category, an expanded outlook and opportunities section, and key themes to help navigate the current industry landscape.

"Today's foodservice environment continues to create challenges for operators to build market share," said Darren Tristano, Technomic chief insights officer. "Innovative independent restaurants, emerging regional brands and expansion in the fast casual market have pushed operators to be more nimble, focused and convenient."

"Big chains continue to see challenges with younger Gen Z and millennial consumer patrons who expect greater social corporate responsibility," Tristano said. "Consumers will continue to look for quality and value in their foodservice experiences."

Full service chains within the top 500 took the biggest hit in 2016, seeing total sales growth slow from 4 percent to 1.4 percent, while unit growth fell from 1.1 percent to 0.5 percent.

While declines can mostly be attributed to the lagging performance of the top casual dining chains, there were still bright spots to be found: Sales grew 4.9 percent in fine dining chains and 4.3 percent in polished casual chains.

Relative to its full-service counterpart, limited service fared better in 2016, growing its sales at a cumulative rate of 4.4 percent with unit growth of 1.9 percent.

Propelling the segment forward was the continued success of fast casual, which saw annual sales growth of 8.1 percent. However, signs of segment maturity are starting to become visible as sales growth for fast casual chains dropped below double digits for the first time in recent history.

Quick service chains, which make up more than 60 percent of the Top 500 total sales volume, chipped in sales growth of 3.7 percent, down from 4.6 percent in 2015. Unit growth was unchanged over the past two years at 0.9 percent.

The full report is available for purchase from Technomic.