Big restaurants aren’t seeing the kind of growth they’re accustomed to lately. The reason may be because consumers are more interested in their smaller, more nimble brethren. But, as usual, pinpointing the exact reasons is complicated.
Three out of the five biggest restaurant chains saw lower sales last year. Burger King, another top player, had just 1.6 percent growth. These chains aren’t adding many units, either. Wendy’s and Burger King’s unit numbers went down in 2014, and McDonald’s grew by just 0.5 percent.
Darren Tristano, executive vice president of restaurant consulting group Technomic said,
“When brands like McDonald’s and Wendy’s and Subway and Burger King, four of the top five restaurant chains, continue to struggle, it’s hard to be optimistic about the growth rate for the industry.”
Interestingly, big chains in certain sectors are performing well. For example, Domino’s and Papa John’s have seen excellent growth over the last few years, partially thanks to their focus on technology. Other high performers include Starbucks and Chipotle. Chipotle in particular is poised to become one of the top 10 restaurant chains in the U.S. in the next year or so.
Why has Chipotle done so well? In part because they have figured out how to offer consumers a wide range of choices without complicating the production process. They’ve also been able to market to consumers in a way that resounds with modern sensibilities, focusing on things like sustainability and local-grown foods.
For ideas on how to appeal to consumers in the “foodie” age, check out our blog post here.
Subway saw marked decline, on the order of 3.3 percent, as competitors like Firehouse and Jimmy John’s ate away at their marketshare. McDonald’s sales were down 1.1 percent. As we’ve written before, the chain is struggling for a variety of reasons.
In general, smaller chains are benefiting from the ability to make changes fast and keep up with shifting consumer demands. They’re focusing on technology like adaptive digital menu boards, mobile payments and order-ahead apps. And they’re paying attention to what consumers want: healthier, fresher options.
If big chains want to keep up, they’ll need to find a way to get nimble, fast.
Full story: Are Consumers Rejecting Giant Restaurant Chains?