The 400 at 40

A Retrospective

By Allison Perlik, Senior Editor -- Restaurants & Institutions, 7/1/2004

The first 40 editions of Restaurants & Institutions’ Top 400 read like a history book uncolored by the judgments of hindsight. Companies rise and fall amid the pages, while every can’t-miss new menu item, cutting-edge concept and executive shuffle is greeted with an open mind and optimism tempered only by the lessons of the past.

What has been learned over the last four decades? In a nutshell, one simple lesson: that the remarkable extent to which the foodservice industry continues to evolve is matched only by how much it remains the same. Opportunities and challenges that have driven foodservice for 40 years—the growing number of women working outside the home and the burgeoning baby-boomer population; an economic climate deflated by recessions and pumped up by recoveries; the ages-old quest to attract and retain the best staff; and efforts to match menus to the public’s health concerns du jour—will continue to propel the industry in an ongoing, spirited competition to keep up with consumers’ ever-increasing expectations of the restaurants that have become a mainstay of American life.

In the table below, join R&I in a look back at the highs, lows, facts and figures that comprise 40 years of foodservice success.* Here’s to many, many more.

McDonald’s goes public with an initial stock quote of $22.50 per share. Institutions magazine launches the 400 to rank the leading foodservice organizations, including restaurant chains, multiconcept operators, government agencies, lodging companies and noncommercial operations. The U.S. Army ranks No. 1 with $471.1 million in sales. A&W Root Beer tests french fries in powder form: when mixed with water, the powder becomes dough that is put in an extrusion cylinder that shapes fries and drops them in the fryer.	1965
	1966	The second edition of the 400 calls out the "Leaders in Lodging," with Holiday Inns of America Inc. ranked first with $250 million in sales and 140,000 beds.
Taco Bell joins the 400 at No. 138 with $18 million in sales and 130 units; President Glen Bell anticipates 1,500 more units operating by 1972 Tacos, tostadas and burritos are each 19 cents. Institutions editors speculate that McDonald's, "first with the fast hamburger concept, may have its eye on the donut."	1967
	1969	The 5th annual 400 posts a total sales volume of $15.6 billion with 167,200 units; R&I notes that, "Organizations that offer food and lodging services to the public no longer have to prove themselves to the business community." Meat pies will be the hot menu item this year, R&I predicts, following the previous year's roast beef sandwiches and the fish 'n' chips of six months ago.
$14.2 million in sales give Steak and Ale its first 400 appearance at No. 219. 100 largest chains account for 77.5% of 1971 Top total (vs. 85.9% in 2004). No. 57 Hardee's debuts the 50-cent Huskee Jr. burger, drops roast beef.	1971
	1973	With $1.16 billion in sales and 2,272 units, McDonald's bumps the Army out of the No. 1 spot; no one has dislodged it since then. Another McD first: Herb Peterson develops the Egg McMuffin. Individual restaurant chains record annual sales of more than $1 billion for first time.
The 10th annual 400 posts a total sales volume of $24.3 billion with 203,992 units. "Most of the trends peaking now were already apparent 10 years ago: growth of central prep and preprepared foods, interest of supermarkets in foodservice, growth of concept restaurants, international expansion, diversification," Institutions says. No. 42 Dunkin' Donuts "is keeping the eye on the hole as well as the donut" with new Munchkins product line. Record sales of $462.8 million at No. 9 Burger King Corp. are credited in part to the "Have It Your Way" campaign.	1974
	1975	The U.S. Department of Agriculture becomes the first institutional member to top $1 billion. No. 5 ARA Services Inc., now Aramark, announces plans for computerized hospital dietary planning.
Six chain companies open their 1,000th units: Long John Silver's, Sonic, Dunkin' Donuts, Sambo's, Jack in the Box and Big Boy. The 15th annual 400 posts a total sales volume of $49.1 billion with 233,334 units; R&I notes that in its history, the 400 has grown 470%. "The problems that beset the industry as it matures also remain much the same as those faced in infancy: food and labor costs, severe weather, high turnover, low productivity, return on capital." - Institutions For the first time, 400 rankings call out the Top 50 restaurant chains "in recognition of the chains' ever-growing importance in the foodservice industry"; sales total $21.4 billion.	1979
	1980	Sonic Industries Inc. signs "Happy Days" star Tom Bosley as a spokesman. Staff turnover averages 155% at full-service restaurants, 139% at fast-food outlets, 20.6% at colleges and 35.9% in healthcare. Wendy's founder Dave Thomas (left photo, l.) passes CEO title to Robert Barney; the chain's sales top $1 billion for the first time. KFC loses its founder and iconic spokesman with the death of Col. Harland Sanders (right photo, l.) at age 90. In 1999, an animated Colonel Sanders was used in a short-lived ad campaign.
At commercial 400 companies, food costs average 35.7% and labor costs average 26%. No. 22 Jack in the Box introduces "Frings," a combination of french fries and onion rings. The 20th annual 400 comprises a total sales volume of $80.4 billion, posting growth of 824% since the rankings' inception. "Fresh and light, in fact, are the food [terms] of the year-a natural extension, perhaps, of the salad-bar trend. 'Healthy' food concepts are being tried by everyone . ." -R&I Emphasis on markets outside the U.S. continues to grow: For the first time, an American company, McDonald's, generated more than $1 billion in system sales overseas; Kentucky Fried Chicken, Burger King, Wendy's, International Dairy Queen and Pizza Hut also post "significant overseas sales."	1981
	1982	For the first time, the 400 chains ring up the majority of foodservice sales at 53.4% of the industry total. McDonald's unveils the McRib and drops the McSteak sandwich; Wendy's completes its introductions of salad bars and chicken sandwiches. Themes in 1982, R&I says, included, "diversification (testing), freshness (healthy foods) and regional (ethnic) offerings: Rare now is the specialty house menuing only pizza or steak; fewer are those who abide with just fried, as freshness reigns supreme."
R&I: "Nutrition is not just something to be foisted on captive audiences. Commercial-foodservice operators are discovering that money can be made by appealing to patrons who watch what they eat."	1983
	1984	Longtime 400 player Sambo's Restaurants Inc. ends its run as VICORP purchases the company for $62.5 million. The company plans to convert some Sambo's units to other concepts; the others will be disposed of by the court. No. 10 ARA Services Inc. feeds more than 12,000 athletes, coaches and staff during the 1984 Summer Games in Los Angeles. No. 7 Wendy's launches the "Where's the Beef" campaign starring the feisty Clara Peller and boosts its market share by 11.6% (by its own measure). R&I: "Perhaps the history of the '400' (and the entire foodservice industry as we know it today) should be written in terms of that now famous baby-boom generation. Its sheer size-and lifestyle revolution-has determined everything from diapers to drive-ins, from high fashion to haute cuisine."
R&I: "The only sour notes of the year . were the continued shrinkage of the teen-age labor pool . and the increasing battles for good locations."	1985
	1986	The Television Bureau of Advertising reports that for the first time, restaurant companies combined spent more than $1 billion on TV advertising time. Menu "ins" include Cajun flavors, shared foods, "blackened anything," upscale pastas, seafood salads, "dough-wrapped things" and on-premises baking. Dick Clark comes on board as International Dairy Queen spokesperson; the company aims to penetrate the breakfast daypart with a joint venture with Mr. Donut.
Michael Quinlan succeeds Fred Turner to become McDonald's third CEO; senior VP Jim Cantalupo (r.) is named president. Five salads are rolled out to all U.S. stores after nearly a decade of testing: "Because of the careful consideration McDonald's bestows on each menu possibility, the chain never will set fast-food trends," says R&I. The 400 tops the $100 billion mark in total sales volume for the first time. The rankings now include short profiles of select companies. Jack in the Box parent Foodmaker Inc. scraps the idea of changing the concept's name to Monterey Jack's in its bid to appeal to 18- to 45-year- old consumers.	1987	Jim Cantalupo
Joe Lee Harris Cooper	1988	R&I: "In 1987, nutrition was a major selling point, and a number of chains, most notably McDonald's, played up the nutrient value of specific menu items." The July 15, 1988, issue features General Mills Restaurants President Joe Lee (far left), R&I's first Executive of the Year. The "Lodging 100" no longer is published as part of the 400 coverage; the rankings move to November. The 400 delves into executive salaries for the first time: C. Jeffrey Rogers, president and director of USACafes, ranks first with a combined salary and bonus of $970,886. McDonald's President and CEO Michael Quinlan ranks third at $719,948, and International Dairy Queen President and CEO Harris Cooper (near left) ranks fifth at $654,193.
No. 163 Brown's Chicken leads fast-food chains in the 400 with a check average of $9; No. 321 Ruth's Chris Steak House leads full-service restaurants at $36. Wendy's founder Dave Thomas (r.) makes his first appearance in TV commercials for the chain, offering a money-back guarantee on hamburgers. Wendy rolls out its Super Value menu. Subway launches its first national TV campaign with the tagline, "Subway-It's My Way"; Burger King uses Bart Simpson in its ad campaign.	1989
Phil Romano	1990	Family-dining segment leads the industry in sales growth with a more than 10% increase; the chicken and sweets segments posted sales declines. Baskin-Robbins parent Allied Lyons PLC acquires Dunkin' Donuts and Mister Donut, giving the company 65% of the domestic donut market. 257 companies-65% of the Top 400-posted higher systemwide sales than the previous year; 21% reported lower sales and 14% reported no change. General Mills opens its second China Coast restaurant with "hopes the full-service Chinese concept will grow to be its next monster chain"; a joint venture between Brinker and Phil Romano (l.) produces Nachomama, a casual upscale Mexican restaurant.
Wendy's intros Fresh Salads To Go, with in five varieties priced from $0.99 to $2.99. A group lead by Frank Belatti (r.) wrests the helm of Popeyes and Church's from founder Al Copeland. Friday's introduces the "Friday's Lite" menu with low-fat, low-cal options such as a stir-fry vegetable baguette with cilantro pesto and charbroiled chicken with steamed vegetables. The 400 rankings eliminate the blurbs that had historically been included in the listing for each company.	1992	Frank Bellati
	1993	Little Caesars taps George Burns to promote the Big! Big! Cheese pizza deal, with 24 slices of pan pizza for $8.88; Big Boy features "L.A. Law" star Susan Ruttan in commercials for the "It's Gotta Be Big Boy" campaign. KFC removes its Skinfree Crispy chicken from the menu after slow sales. Fast-casual pioneer Boston Chicken debuts on the 400 at No. 356 with $42.7 million in sales and 83 units. The company falls into the fast-food chicken segment in the absence of the yet-to-be-named fast casual.
R&I: "The single largest shift in [the past] three decades is from dominance by institutional feeders to market-driven, commercial chain operations." The 30th annual Top 400 posts sales of $156.3 billion with 208,391 units. The 400 separates Italian and pizza chains into two distinct menu categories and for the first time calls out Asian as its own segment. R&I names rotisserie chicken the Food of the Year.	1994
	1995	The 400 includes the Billion Dollar Club, featuring thumbnail reports on the 32 companies whose sales exceed $1 billion. No. 8 ARA Services changes its name to Aramark. By state, Illinois (home of McDonald's) leads in 400 company sales volume with $27.9 billion. California ranks second with $17.7 billion; Florida is third at $15.3 billion.
No. 22 Applebee's overtakes No. 25 Chili's Grill & Bar for the top spot in dinnerhouse segment. 32nd annual 400 shifts to all-commercial format; Institutional Giants moves to its own special issue. The change brings 113 new members into the 400 club. Saint Louis Bread Co. debuts on the 400 at No. 255 with $51 million in sales and 58 units. The company falls into the full-service sandwich segment as "fast casual" remains absent from the foodservice lexicon.	1996
	1997	1997's edition of the 400 is the first in the magazine's redesigned format. PepsiCo sheds its foodservice businesses to create Tricon Global Restaurants, forming the industry's largest company in terms of units and the second-largest in terms of sales. David Novak is on board as vice chairman and president. Leaders in average unit volume include Rainforest Cafe at $12 million, Cheesecake Factory at $9.3 million and Maggiano's at $9.2 million.
R&I: "It wasn't too long ago that there were bakeries and there were cafes, and rarely the twain did meet. These days, the two are forming a marriage made in heaven for several growing chains." That included Corner Bakery, Au Bon Pain and Saint Louis Bread Co. (which changed name to Panera that year). R&I: "The competitive environment of the $330.51 billion industry is feeding unprecedented merger and acquisition activity"; last year, deals totaling $11.85 were completed.	1998
	1999	In the 35th annual 400 sales volume totals $181.6 billion with 216,184 units; the cutoff for inclusion rises to $29 million. Top sales growth segments include Asian with 14.5% and sandwiches at 8%. R&I: "Robust performances by many companies have powered a surge of acquisitions that replaced the past reliance on new-unit development as the leading growth fuel. As a result, ownership of the Top 400 restaurant concepts is in the hands of a dwindling number of corporate parents." Coverage mentions the "emerging 'fast casual' segment for the first time in a discussion of Back Yard Burgers and McAlister's Gourmet Deli.
Multiconcept operators and lodging companies are struck from the 400 rankings for the first time, allowing four dozen new names to join the listing. Labor costs for 400 companies average 28.2%; food costs average 29.7%.	2000
	2001	Growth leaders: P.F. Chang's leaps from No. 229 to No. 147, Buca (l.) moves from No. 358 to No. 238. In 2001, just 29 names remain from the original 400 listing of 1965. The 400 accounts for 77% of food and beverage sales by full- and quick-service restaurants and convenience stores. 25 chains are new to the 400 in 2001, including Cosi (then known as Xando Cosi), Darden's Bahama Breeze, Del Frisco's Double Eagle Steakhouse and BD's Mongolian Barbecue.
Tricon Global changes its corporate name to Yum! Brands Inc. and acquires A&W and Long John Silver's; Wendy's acquires Baja Fresh. R&I: "Even as industry forecasts were revised down and then down again as the economy shuddered and terrorism threatened to change the rhythms of daily life, sales of the Top 400 chains rose a respectable 3.4%." The sales volume for the top 10 chains approaches $100 billion, almost one-quarter of total foodservice industry sales.	2002
	2003	With total sales of $207.6 billion, the 400 tops $200 billion for the first time.
Salad days: Demand from health-conscious consumers makes higher-end salads a must-have menu item for QSRs including McDonald's, Burger King, Subway, Quiznos Sub, Arby's, Long John Silver's and Jack in the Box. Ruby Tuesday becomes the first casual-dining chain to offer on-menu, comprehensive nutritional information for every menu item.	2004

*Because R&I's Top 400 typically has been published annually in July since 1965, events attributed to each listed year most likely would have occurred between July of the noted year and that of the previous year.