restaurant chains

How is restaurant chains’ recovery manifesting?

You’ll have heard this before by now, but the pandemic has changed the restaurant industry forever. Datassential’s fourth annual Firefly 500+ restaurant report highlights many of these core shifts, such as restaurant chains focusing on key markets and unit growth rather than simply sales.

The food industry market research and insights company’s Samantha Des Jardins recently broke down some of the report’s key insights for Smartbrief:

Sales growth driving recovery for chains

As the US made headway against the pandemic in 2021, the definition of success changed and increases in average unit volumes contributed to systemwide sales growth more broadly than unit expansion, writes Des Jardins.

In all, the biggest chains in the US produced combined sales of US$340.22 billion last year, up 11.4 per cent from 2020.

Core markets focus helped chains accelerate growth

Holding a narrow regional focus has proven profitable for many restaurant chains, the report found. Two-fifths of the brands in the Firefly 500+ have built at least half of their total locations in one single state, and those chains collectively grew locations at a rate of 1.9 per cent, nearly four times the unit rate of the entire Firefly 500+.

Ghost kitchens proliferated in 2021

The virtual kitchen segment, which was barely registering on the big-picture scale prior to the pandemic, now includes more than 36,000 locations in the U.S. alone. Even aside from the numbers themselves, the influence of that industry sector is unrecognizable from where it stood three years ago.

Chains unlocked winning combinations

Multi-concept operators and groups that grew through acquisition showed slightly stronger sales growth relative to the full Firefly 500+. A selection of publicly traded companies operating a single brand also recorded a disproportionate collective sales increase, showing that strategic focus can reap rewards.

Full-service restaurants bounced back

Each of the six full-service restaurant segments in the Firefly 500+ recorded double-digit percentage sales growth in 2021. In particular, the seafood and steak sector recovered well from 2020, when widespread restrictions decimated the business travel and fine-dining demographics.

Consumers looked to chains for comfort

Last year, consumers still wanted comfort as much as they wanted plant-based or healthful cuisine. Four out of the top 10 fastest-growing chains in the report specialized in desserts or other sweet treats. One example of a boom was bubble tea; Kung Fu Tea grew its unit count and annual sales by more than 10 per cent.

A look ahead

As the industry recovered from the depths of the pandemic, the largest brands made big moves. It reaped reward for some more than others; by Datassential’s sales estimates, Chick-fil-A leapfrogged Taco Bell into the No. 3 spot while Dunkin’ passed both Burger King and Subway for the No. 6 sales rank.

The firm predicts that similar interesting movement could be on the horizon for 2022. For instance, if the current development pace holds for the largest chains, Domino’s Pizza is expected to overtake Pizza Hut for the segment lead in some locations next year. 

Image: Chik-Fil-A Canada

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