R&I's Top 400 Chains

The Top 400 chains end a difficult year with a respectable 5.4% sales gain and with new determination.

By Scott Hume, Editor-in-Chief -- Restaurants and Institutions, 7/1/2008

R&I’s 44th annual ranking of the Top 400 chain-restaurant b

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Top 400 Segment Rankings

The motto for the popular television show “Survivor” is “Outwit, Outplay, Outlast,” and chain-restaurant operators could be excused if they often feel that they are fighting for their survival. It’s a jungle out there.

R&I’s 44th annual ranking of the Top 400 chain-restaurant brands based on 2007 sales shows just how tough last year was for many chains. Aggregate systemwide sales for this year’s 400 largest brands were $292.1 billion, up 5.4% from the previous year. That’s a decent showing, but not as robust as the 6.8% increase posted by last year’s Top 400. More telling is this year’s 1.9% increase in total foodservice units, which is less than half of last year’s 3.9% unit growth.

As 2007 progressed, same-store sales volumes began to dip for many chains, especially for midprice concepts; unit expansion plans were scaled back for several others; and all chains reassessed menu pricing as the cost of many basic foods soared. A year that began with modestly optimistic forecasts closed with disappointing results for many on the Top 400 list. The depressing news on consumer buying behavior and on overhead costs hasn’t improved in 2008.

R&I’s 44th annual ranking of the Top 400 chain-restaurant b But what makes the R&I Top 400 ranking so valuable a benchmarking tool is that it captures the peaks as well as the valleys of the chain business’s year. Slow- or negative-growth chains fall off the list and are replaced by concepts that are mastering “Outwit, Outplay, Outlast” tactics. For example, the Glenview, Ill.-based Bar Louie chain, which barely made it onto last year’s list at No. 398, is No. 236 this year, having refused to slow its aggressive expansion strategy and having found a blend of food, service, price and ambience compelling enough to attract diners no matter how weak the overall economy. Lorton, Va.-based Five Guys Burgers and Fries doubled its unit count and its sales in a year; systemwide sales for Gordon Biersch Brewery Restaurant rose 83%.

This year’s ranking distills one year, more than $292 billion in sales and many millions of customer transactions into 400 small stories, each its own blend of strategies and tactics, successes and failures in the never-ending battle for survival. VIEW THE RANKING

Rules of the Ranking

Restaurants & Institutions’ 44th annual Top 400 ranks systemwide food-and-beverage sales (global, company-owned, franchised and licensed) for the largest U.S.-based restaurant chains. It ranks strength of brands, not companies.

Chains, as defined for this report, are foodservice concepts with five or more units operating under a single brand name, such as Burger King. Exceptions have been made where a concept operates under different brands depending on the market (Souplantation/Sweet Tomatoes, for example) or where a concept operates two or more names but with a single management team (such as HomeTown Buffet and Old Country Buffet).
Because it no longer is majority-owned by a U.S.-based company, Tim Hortons is not included in this year’s ranking. R&I estimates that Tim Hortons’ 2007 systemwide food-and-beverage sales were approximately US$4.659 billion (based on the Canadian dollar exchange rate on May 29, 2008). The chain operated 3,221 units (398 in the United States) on Dec. 31, 2007.
Sales and unit numbers listed encompass all food-and-beverage outlets, worldwide, for each chain unless otherwise indicated.
Multiconcept operators are excluded, although individual brands they own may qualify. For example, Seattle-based Restaurants Unlimited is not eligible, but its Kincaid’s Fish, Chop & Steak House concept has sales large enough for it to be ranked individually among the Top 400 brands.
Our primary sources of information in compiling the Top 400 ranking are the chains themselves. Survey forms are sent to more than 600 companies in March; sales information for most chains comes from those surveys or from filings with the Securities and Exchange Commission. Some companies, however, choose not to disclose financial information about chains they operate or are unable to provide systemwide (franchised as well as company-owned) sales data. In such cases, R&I uses all available resources to estimate sales, units, average-unit sales or average check as accurately as possible.
Sales figures used in the Top 400 are for calendar year 2007 or for fiscal years ending between July 1, 2007, and April 1, 2008, unless otherwise indicated.
When two or more chains have the same reported or estimated sales, chains with company-supplied sales are given precedence in ranking over those with estimated sales. After that, ties are resolved alphabetically.
Chains that believe they should be considered for the 2009 Top 400 ranking should send information to Top 400, Restaurants & Institutions, 2000 Clearwater Drive, Oak Brook, IL 60523.