QSR August 2022

GROWTH

Well, it didn’t seem to matter much to quick-serve’s power brokers as COVID-19 accelerated existing trends and industry giants further entrenched themselves into American lives. Among the entire QSR 50, Jersey Mike’s, Domino’s, and Taco Bell all added at least 200 restaurants. Nine more tacked on at least 100 locations. In the five years before the pandemic, David Portalatin, the NPD Group’s foodservice industry adviser, says off-premises occasions were up, on-premises dining was falling, and quick serves and fast casuals were consistently gobbling up share from their full-service peers. The pandemic accelerated that pace as consumers flocked to quick serves—with their drive thrus, mobile apps, and bundle deals—for safe, convenient, value-driven offerings. “Quick serves were at the intersection of what the consumer needed at a disruptive time, offering the right mix of quality and value, so it shouldn’t surprise that we saw a significant increase in the flow of money into the segment,” Portalatin says. Already present, powerful forces on the American land scape, quick-service restaurants became even more present and more powerful, unlocking an energizing new era in the indus try that has many predicting, anticipating, and planning for an appetizing future. HAVE WE BEEN HERE BEFORE? The present day’s good vibes harken back to what many consider the golden age of fast food: the 1980s, when Baby Boomers, fueled by a massive expansion in disposable income and two-income households, began outsourcing meal preparation en masse to accommodate their busier lives. As a result, restaurant traffic surged year after year and quick-service chains expanded their footprint across the American landscape with new restaurants. McDonald’s, in fact, added 5,415 new restaurants throughout the decade—or one new restaurant every 16 hours. So, might we be in another golden age? It certainly seems the sector is headed there. After opening 55 new U.S locations in 2021, KFC sat on the positive side of unit growth for the first time since MySpace was the world’s largest social networking site. KFC chief devel opment officer Brian Cahoe told QSR earlier this year that the chain, which is also riding eight consecutive years of positive same-store sales, would repeat the positive store count feat in 2022 as well. Three years ago, KFC rival Popeyes grabbed national headlines and emerged a social media favorite when it debuted its chicken sandwich to loud fanfare and long lines. And the momentum hasn’t slowed. AUVs at Popeyes have grown from $1.4 million in 2019 to $1.8 million at the close of 2021, while the chain opened 208 locations in the U.S. and Canada in 2021. “And we’re on track to open another 200-plus this year,” Popeyes president Sami Siddiqui says. Chipotle, long a fast-casual darling, saw its total revenue jump 26 percent in 2021 to $7.5 billion while comparable restau rant sales increased 19 percent and the chain opened some 200 new restaurants to hit the doorstep of 3,000 domestic locations.

Last year, Wingstop recorded its 18th consecutive calendar of same-store sales growth and a record $2.3 billion in system wide sales. The chicken wing-peddling brand also saw its unit count surge 12.5 percent to 1,731 worldwide locations. Just two years ago, Potbelly was on the verge of bankruptcy and talk of closing upward of 100 restaurants swirled around the Chicago-based company. Those days have passed and the sandwich-slinging, milk shake-making brand is on the rebound, showing just how lively the quick-service category is these days for players with a focused plan. In 2022’s opening quarter, Potbelly recorded its fourth con secutive period of same-store sales gains and reported positive traffic across all three months of the quarter. The chain’s so called CBD (central business district) shops led the way with sales up 64 percent over the first quarter of 2021. Meanwhile, Potbelly’s AUVs, long hovering around $1 million, are now pacing at $1.1 million and leadership considers $1.3 million a reasonable AUV target in the coming years. “Whether it’s the suburbs, our drive-thrus, or other loca tions, we’re not seeing any lack of momentum,” Potbelly CEO Bob Wright says. QUICK SERVES CONTINUE THEIR WINNING WAYS Momentum. The quick-service industry holds it right now and it continues inspiring some bold, ambitious plans—and thoughts that contemporary times might indeed rival the 1980s as the golden era of fast food. Papa Johns has touted plans to add as many as 1,800 units over the next three years. Raising Cane’s entered 2022 with fewer than 600 units. The Louisiana-based chain expects to close the year with more than 700, including restaurants across 10 new markets. Wingstop president and CEO Michael Skipworth believes his Texas-based concept can become a top 10 global restaurant brand with 100 percent digital transactions, AUVs over $2 mil lion, and more than 7,000 worldwide restaurants. “With the momentum that we’re experiencing at Wing stop, I would agree that we’re in a golden era of fast food that isn’t slowing,” Skipworth says, adding his brand is “primed for long-term success” thanks to a proven model sitting alongside a strong digital and delivery strategy. Chipotle previously estimated it could operate about 6,000 North American restaurants. Now, the chain is projecting 7,000 units. “We are building a real estate pipeline that will allow us to accelerate new unit growth to be in the range of 8-10 per cent per year, with greater than 80 percent of new restaurants having a Chipotlane,” says Scott Boatwright, chief restaurant officer at Chipotle. Even Houston-based Shipley Do-Nuts, a well-respected-but not-yet-national-name, foresees doubling its unit count to 700 over the next five years. “Quick serves are winning with quality, value, conve nience, and store-level execution,” NPD CONTINUED ON PAGE 100

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AUGUST 2022 | QSR | www.qsrmagazine.com