The top 500 U.S. restaurant chains’ growth slowed for the second consecutive year, largely reflecting poor performance in the casual dining segment, according to Technomic’s 2018 Top 500 Chain Restaurant Advance Report.
Cumulative 2017 sales for the 500 rose 3.2%. That was down from 3.8% in 2016, which was in turn down from 5.2% in 2015.
Last year’s net unit growth, 1.1%, was also down from 2016 (1.8%) and 2015 (1.9%).
Restaurant chains “are facing increasingly challenging business conditions, with most publicly held chains seeing mixed same-store sales results in 2017," said Joe Pawlak, Technomic managing principal. The challenges include the rise of retail foodservice and other meal options, as well shrinking margins resulting from growing price competition, he noted.
Limited-service chains (fast casuals and quick-service restaurants/QSRs) drove most of 2017’s growth, with a combined sales gain of 4.1%. In contrast, sales growth within full-service segments slowed to 0.5%, from 1.4% in 2016.
Fast casuals continued to lead the industry, with 8.9% sales growth and unit growth of 5.4%. QSRs saw 3.1% sales growth and 0.6% unit growth.
Interestingly, fast casuals’ performance in part reflected a rebound at Chipotle. Last year’s 14.6% sales increase brought the chain back to 2015 levels — although the revenue gain resulted largely from unit growth in 2016 and 2017, according to Restaurant Business’s summary of the Technomic data.
The fine dining segment’s sales rose 3.8%, and units 2.6%, last year, while the midscale segment’s sales rose 1.4%, and its units 0.9%.
But casual dining restaurants were stagnant, with just 0.10% sales growth, and an actual decline in units (-1.4%). Technomic attributes casuals’ continuing slump in large part to consumers’ desire to have a unique experience in full-service environments, as they do at independents and small chains.
The largest casual brand, Applebee’s, saw sales decline by a significant 7.5%. Ruby Tuesday’s’ sales dropped 15.2%, TGI Fridays’s declined 5.1%, and Chili’s slipped 3%.
The advance report can be purchased on Technomic’s site prior to the full report's publication at the end of March.