Consumer Trends: Gauging growthConsumer Trends: Gauging growth

Fern Glazer

"Fast growing” has not been a phrase uttered often in the last few years. And yet, despite the nation’s economic problems, many chains have managed to thrive.

With all the buzz about consumers flocking to the Panera Breads, Chipotle Mexican Grills, and Five Guys Burgers and Fries, it might seem that the chains enjoying the most growth were part of the fast-casual segment. In fact, nearly all of the front runners in the race to expand over the last three years have been quick-service chains, say officials at The NPD Group.

Of the top 10 fast-growing chains in the three-year period ended fall 2011, seven were quick-service brands, according to NPD’s ReCount census of restaurant locations.

“A lot of perception out there is that [fast casual] had been driving the unit growth,” said Greg Starzynski, NPD director of product development, foodservice. “Fast casual is a reality as far as being a segment people are talking about, but it’s not the driver.”

The fastest-growing chain was Subway, NPD found. The Milford, Conn.-based sandwich brand added 2,691 units in the three-year period, bringing the chain to a total of 24,427 units as of fall 2011. Yum! Brands’ WingStreet and Little Caesars Pizza rounded out the top three fastest-growing chains.

WingStreet placed second, adding 1,739 units for a total of 3,249, followed by Little Caesars with 826 units, for a total of 3,228.

Four other quick-service concepts also made the list. Coming in at No. 4 was Dunkin’ Donuts, adding 792 units for a total of 6,916. Taco Bell ranked sixth by adding 259 new stores for a total of 6,102. Papa John’s, which added 243 more pizza places for a total of 2,957, was No. 8. Tim Hortons rounded out the top 10, adding 203 units for a total of 610.

The only fast-casual chains to make the list were Chipotle and Panera. Chipotle ranked No. 5, adding 328 new units over the three-year period for a total of 1,127. Panera came in ninth, adding 204 stores for a total of 1,438.

While the absence of more fast-casual chains is notable in the top 10, the lack of casual-dining brands also is conspicuous. Buffalo Wild Wings, which ranked seventh, is the only full-service outlet to make the top 10. The Minneapolis-based chicken-wing chain added 248 units for a total of 790.

While many quick-service chains have added to their flock, others have been forced to shutter a significant number of units. Of the top 10 chains that reported a decreasing unit count over the last three years, all were quick service. Quiznos took the biggest hit industrywide, closing nearly 2,000 locations. Next-biggest declines came from Blimpie, which closed 343 stores, and Starbucks, which closed 323 coffee spots.

Other big unit losses came from KFC, Domino’s Pizza, Baskin-Robbins, Dairy Queen, Arby’s, Long John Silver’s and Pizza Hut.

“Historically, the largest chains have done better during challenging times,” said Starzynksi, explaining why growth is coming primarily from major quick-service outlets. “They have more leverage, … economies of scale, negotiated contracts.”

But for the top-growing chains, continued expansion is more than just having the funds and margins to negotiate great real estate deals.

“The Subway chain’s success can’t just be attributed to only one thing,” said Subway spokesman Les Winograd. “Much of the credit should go to the hard work and dedication of our franchisees, development agents and their staff members. Together they possess an entrepreneurial spirit that works throughout our entire company culture.

“The franchisees and their sandwich artists are on the front lines every day, from breakfast through dinner and into the night, interacting with customers and ensuring that they will come back again and again by providing the best service and food possible,” he said.

Subway says it will continue to build on its success, opening new stores around the country, sometimes where consumers least expect them. The sandwich chain plans to open another 2,500 locations by the end of 2012, Winograd said. Many of those locations will be in traditionally underserved markets such as Boston and Philadelphia.

Like Subway, Detroit-based Little Caesars attributes its continued growth to multiple factors.

“Little Caesars is growing because of the product quality, unmatched value and convenience we offer customers, as well as our simple business model and the strong relationship we have with our franchisees,” said Little Caesars president and chief executive Dave Scrivano.

Though the privately held company declined to reveal its expansion strategy, Scrivano confirmed that Little Caesars, which has locations in all 50 states, plans to continue adding units.

“Little Caesars Pizza has built hundreds of units per year for many years consecutively,” he said, “and we expect our growth to continue.”

Success for Buffalo Wild Wings is all about listening to customers and giving them what they want, the company said.

“Some of the keys behind it: … We’re serving wings, beer and sports,” said Jim Schmidt, Buffalo Wild Wings’ executive vice president and chief operating officer. “These elements are attractive when people are watching budgets, cutting back.”

When the wing-centric chain first launched back in 1982 — then called BW3 — it was a fast-casual spot where customers ordered at the counter. But based on customer feedback, the chain eventually transformed itself into a full-service operation.

Schmidt, however, says what drives guests to a restaurant isn’t about whether they order at the counter or receive table service.

“The focus on casual [and] fast casual is talking about a service style,” Schmidt said. “I don’t think it depends on service style. I think guests are looking for an experience. We focus more on an overall guest experience.”

He said it also helps that Buffalo Wild Wings’ average check is slightly below that of the average casual-dining check.

Currently with more than 800 units in 46 states, the chain plans to continue its growth throughout the United States. Schmidt said the chain is poised to reach 900 units by the end of 2012 and achieve its long-stated goal of hitting 1,000 units by the end of 2013.

Nation’s Restaurant News has an exclusive agreement to obtain the NPD Group data and research findings that appear on the Consumer Trends page.