Initial Technomic study findings show slowing restaurant sales and unit growth in 2016
Technomic’s 2017 Top 500 Report suggests leading operators are experiencing challenges to build market share
Chicago, March 30, 2017–Coming off a strong performance in 2015, Technomic’s Top 500 chain restaurants experienced a deceleration in 2016 with cumulative sales growth checking in at 3.6%, down from 5.2% the prior year. Net unit growth stayed relatively stable at 1.7%, compared to 1.9% in 2015, pointing to declining customer traffic and weakening same-store-sales as the key reasons for the slowdown.
TheTechnomic Top 500 Advanced Chain Restaurant Report, now available for purchase prior to the full report’s publication in mid-April, provides Technomic’s exclusive one-year sales forecast by menu category, an expanded outlook and opportunities section, as well as key themes to help navigate the current industry landscape.
“Today’s foodservice environment continues to create challenges for operators to build market share,” states Darren Tristano, Winsight Chief Insights Officer. “Innovative independent restaurants, emerging regional brands and expansion in the Fast-Casual market have pushed operators to be more nimble, focused and convenient. Big chains continue to see challenges with younger GenZ and Millennial consumer patrons who expect greater social corporate responsibility. Consumers will continue to look for quality and value in their foodservice experiences.”
Full service chains within the Top 500 ranking took the biggest hit in 2016, seeing their total sales growth slow from 4% to 1.4% while unit growth also fell from 1.1% to 0.5%. While these declines can mostly be attributed to the lagging performance of the top casual dining chains, there were still bright spots to be found, with sales increases in fine dining chains by 4.9% and polished casual chains by 4.3%.
Relative to its full service counterpart, limited service fared better in 2016, growing its sales at a cumulative rate of 4.4% with unit growth of 1.9%. Propelling the segment forward was the continued success of fast casual which saw annual sales growth of 8.1%. However, signs of segment maturity are starting to become visible as sales growth for fast casual chains dropped under double digits for the first time in recent history. Quick service chains, who make up over 60% of the Top 500’s total sales volume, chipped in sales growth of 3.7%, down from 4.6% in 2015 while unit growth was unchanged over the past two years at 0.9%.
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Note: The results reported here are preliminary and subject to revision.
Only Technomic, a Winsight company, delivers a 360-degree view of the food industry. We impact growth and profitability for our clients by providing consumer-grounded vision and channel-relevant strategic insights. Our services range from major research studies and management consulting solutions to online databases and simple fact-finding assignments. Our clients include food manufacturers and distributors, restaurants and retailers, other foodservice organizations, and various institutions aligned with the food industry. Visit us at technomic.com.
About Winsight, LLCWinsight LLC is a business-to-business media, event, data and information company specializing in the convenience-retailing, restaurant and noncommercial foodservice industries. Winsight has an extensive media portfolio with leading publications, including CSP, Convenience Store Products, Restaurant Business, FoodService Director, and now Grocery Headquarters as of June 2017. Winsight Media offers a suite of digital products, including websites, e-newsletters, webinars, video, apps and custom marketing solutions. The Winsight Events group produces exclusive large-scale executive-level conferences, including Restaurant Leadership, Global Restaurant Leadership, FARE Conference, Outlook Leadership, Convenience Retailing University, FSTEC, Restaurant Trends & Directions and MenuDirections. Winsight also owns Technomic Inc., the leading provider of market information and advisory services for the food industry. For more information on Winsight and its brands, go to www.winsightmedia.com or www.technomic.com.