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The pandemic has changed the restaurant industry forever, causing seismic shifts in nearly every industry segment and changing the winning strategies for those that survived.
For many, a focus on core markets and unit growth, rather than just sales, was the way to come out of the last two years ahead — both in terms of the competitive landscape and on their own balance sheets.
Those are just some of the findings in Datassential’s Firefly 500+, the data and insight firm’s fourth annual ranking of the largest restaurant chains and the biggest themes across the restaurant landscape.
In this fourth edition of Datassential’s Firefly 500+, here are a few of the report’s key insights:
Sales growth, rather than new locations, is driving recovery for restaurant chains
As the US made headway against the COVID pandemic in 2021, that definition of success changed in favor of restaurants and their guests, and increases to average unit volumes contributed to systemwide sales growth more broadly than did unit expansion.
In all, the biggest chains produced combined sales of $340.22 billion in 2021, up 11.4% from 2020. Collective unit sales rose 0.5% from the year before.
Concentrating on core markets helped some chains accelerate unit growth
Two-fifths of the brands in the Firefly 500+ have built at least half of their total locations in one state. Taken collectively, chains that concentrate most of their systems in one state had a unit growth benefit in 2021, growing locations at a rate of 1.9%, nearly four times the unit rate of the entire Firefly 500+.
Ghost kitchens proliferated in 2021
The segment, virtually non-existent before the pandemic, now includes more than 36,000 locations in the U.S.
Chains unlocked winning combinations
Last year was a year for big companies to get even bigger to accelerate growth. 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 an outsized collective sales increase, showing that strategic focus can also benefit growth-minded businesses.
Full-service restaurants bounced back
Each of the six full-service restaurant segments in the Firefly 500+ recorded double-digit percentages of sales growth in 2021. The seafood and steak sector recovered particularly well from the prior year, when broad restrictions and pullbacks on indoor dining and business travel put the brakes on occasions that drove visits to fine-dining restaurants and steakhouses.
Chicken chains continued to innovate beyond the sandwich and the bucket
Last year, the limited-service chicken segment recorded a collective unit growth increase of 4.2%. The segment’s three biggest chains are among the 20 largest brands in the Firefly 500+ and all notched unit growth in 2021, including KFC, showing healthy demand for the chicken sandwiches and fried chicken on the bone that make up the bulk of their menus.
Consumers looked to chains for small bites of joy and indulgence in a year of stress
Last year, American consumers were just as interested in plant-based or healthful cuisine as they were in decadent, colorful, and indulgent foods. The latter manifested itself vividly in both the Firefly 500+ and the chain restaurant universe at large. For example, 2021 was an incredible year for chains specializing in bubble tea. Kung Fu Tea grew its unit count and annual sales by more than 10%. Broadly, four out of the top 10 fastest growing chains specialized in desserts or other sweet treats.
A look ahead
As the industry recovered from the depths of the COVID pandemic in 2021, the largest foodservice brands jockeyed for position and made moves that could reverberate over the long term.
By Datassential’s sales estimates, Chick-fil-A leapt over Taco Bell into the No. 3 spot, while Dunkin’ passed both Burger King and Subway for the No. 6 sales rank.
Unit count rankings are also poised to get interesting this decade. If development pace holds for the largest chains, Domino’s Pizza is expected to overtake Pizza Hut for the segment lead in locations next year.
This could also be the year that Tropical Smoothie Café moves past Smoothie King for the largest number of units in the limited service salad segment. And Texas Roadhouse is gaining on Outback and could have more locations than the segment leader by 2024.
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Samantha Des Jardins is a writer for Datassential, a food industry market research and insights firm.
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