The future of the restaurant industry is fast.
At least, that’s the future according to this year’s Future 50, the annual ranking of 50 up-and-coming restaurant chains published by Restaurant Business and its sister company Technomic.
Nearly half of the 50 chains on this year’s ranking are considered a quick-service restaurant brand. Another 14 are fast-casual brands. Only a dozen chains offer full-service dining, either in a family-dining format or casual dining.
That’s a marked departure from last year, when 20 of the Future 50 chains were full-service restaurants.
There is also more diversity among menu types. Beverages, snacks and desserts are popular among the fast-growing chains, reflecting strong results among chains on the Technomic Top 500 Chain Restaurant Report. Eighteen chains offer either beverages, including coffee, snacks or frozen desserts.
On balance, however, a lot of segments are represented, including Asian, sandwich chains, burger concepts and chicken.
Fast growth, but sustainable?
The Future 50 is a ranking of the fastest-growing chains with $65 million in system sales or less. Most of these companies are too small for the Top 500. Chains are ranked based on last year’s sales growth.
Over the years, the ranking has included some chains that have gone on to thrive nationally. A decade ago, for instance, the Future 50 included chains such as Nothing Bundt Cakes, Shake Shack and Jollibee.
Then again, many others grow quickly only to flame out and struggle. That same list back in 2013 also included names like Lime Fresh Mexican Grill, Crumbs Bake Shop and Muscle Maker Grill.
In other words, take the ranking with at least some grain of salt. It’s one thing to grow fast for one year or even two or three years. It’s another to sustain that growth over time.
Faster than ever
Future 50 chains have been growing aggressively coming out of the pandemic. On average, such chains have grown more than 40% each of the past three years.
That said, more of this growth is coming from new units. Future 50 chains’ sales grew nearly 43% on average last year, a moderate decline from the 47% average in 2022.
But the chains added more restaurants: The typical Future 50 concept added 11 new units, growing unit count by nearly 40%, compared with nine new locations in 2022, or 38%.
The chains at the top of this ranking tended to be the most aggressive.
Three of the four chains at the top of the Future 50 at least doubled unit count and the fourth (Parlor Doughnuts) grew unit count by 90%.
Peach Cobbler Factory, the fastest-growing chain on the Future 50, added 47 new locations last year, tripling its location count in just one year.
Unsurprisingly, the peach cobbler chain’s system sales grew 251%, to $34.4 million. A couple of strong years of growth put that chain on the cusp of the Top 500.
A future of limited service?
The dominance of limited-service concepts on this year’s ranking is no surprise. Consumers have been shifting away from full-service chain concepts for years, opting to take more of their business to fast-food and fast-casual brands.
If anything, the surprise was in how popular casual dining was last year, when 11 such chains were on the ranking.
But the Future 50 in some respects is a lagging indicator of industry trends. The pandemic hit nearly five years ago. Consumers shifted dramatically toward limited-service chains, and full-service brands for the most part have underperformed since then.
In that sense, the Future 50 is simply catching up with an existing trend. The chains on the ranking are only now starting to reveal their presence on a list like this one.
The growth in quick-service brands on the Future 50 this year was particularly notable. The 24 fast-food brands on this year’s ranking was nine more than were on the list last year.
Beverages, snacks and desserts
That said, relatively few of these quick-service chains are what we would think of as a traditional fast-food brand serving cheap burgers in a drive-thru format. They are far more likely to be similar to Peach Cobbler Factory and instead serve something that isn’t what one would normally consider to be a meal.
Snacks and desserts are increasingly popular. This year’s ranking includes plenty of such chains, such as the aforementioned Parlor Doughnuts (sales up 97%) and another doughnut chain, Mochinut (51%).
We included the two frozen dessert chains in that category, Van Leeuwen Ice Cream (47.8%) and Jeremiah’s Italian Ice (37%).
Beverages are popular, too, which also reflects the results of the Top 500. The Future 50 includes chains like the drive-thru “dirty soda” chain Swig (39%), Fitz Drinks (32%), Happy Lemon (23%) and Sharetea (17.6%).
Nine coffee chains are on the ranking, including Summer Moon Coffee (59%), Just Love Coffee Café (50%) and Marman (49%), among others.
Coffee chains are thriving as companies introduce drive-thru and other options into a sector once known for keeping people in the shops for hours on end.
Chicken, burgers and everything else
If there is one surprise on this ranking it’s the lack of Asian chains, which are thriving generally in the U.S.
Only one concept, the casual-dining chain Kyuramen (57%), is on this year’s ranking.
For the most part, however, the 2024 Future 50 is a sign of the industry’s diversity. All kinds of brands, from sports bars to salad chains, Mexican, seafood, chicken and burgers are represented.
That includes Hangry Joe’s Hot Chicken, No. 2 on the ranking thanks to its 207% sales growth, to $35 million.
Another notable name is Jaggers, the fast-casual brand started by Texas Roadhouse. Its sales grew 80% last year, to $25.5 million. The brand has just 10 locations, making it one of the smallest chains on this ranking based purely on location count. But that number doubled from five the previous year.
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