Fast Casual Brands Represent 50%+ Of Burger Chains

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Fast casual restaurant brands now make up more than half of the country's top 75 limited-service burger chains, according to a report on these chains from foodservice research/consultancy firm Technomic.

"This is an interesting time in the burger segment," says Technomic EVP Darren Tristano. "We are seeing very high growth rates from smaller brands and a steady stream of new 'better burger' entries making their presence felt, while at the same time some of the larger brands are struggling to maintain their footholds."

Despite their growth, fast casuals still account for just 2.6% of total sales among the top 75 limited-service burger chains, because the 75 include McDonald's, Wendy's and Burger King. Together, those three chains own 75% of U.S. limited-service burger sales.

Sales of the top 75 limited-service burger chains grew 1.6% last year, to $65 billion.

Some of the fastest-growing fast casual, limited-service burger chains, in terms of percentage growth in units last year, included Shake Shack (units up 133%, to seven); Smashburger (up 116%, to 93); Mooyah Burgers & Fries (up 55%, to 17); Five Guys Burgers and Fries (up 35%, to 737) and Freddy's Frozen Custard & Steakburgers (up 28%, to 46). The top 10 fastest-growing limited service chains saw combined growth of 49%, adding 1,078 locations.

"Better burger" concepts are benefiting from focused menus, as many quick-service chains in the segment are expanding their menus to include breakfast, specialty coffee and broader entrees. At the same time, fast-casual burger chains that offer adult beverages are competing successfully against casual-dining chains, at a lower price point.

Despite the unit openings last year, limited-service burger chains' expansion actually slowed. Unit counts overall grew 0.2%, versus the past three years' rates of 0.5%, 0.7% and 09%.

Still, this restaurant segment's expansion has continued to outpace those of the broader limited-service restaurant business, and the industry as a whole.

Not surprisingly, McDonald's is the dominant sales-growth driver within the limited service burger category -- offsetting declines by other large burger chains -- while unit growth is coming primarily from the emerging brands, which continue to take share from both limited-and-full-service restaurants.

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