Study: Big restaurant chains do well overall, but some slip

Chicago – Bigger is often said to be better, but some big restaurant chains may not agree. The 500 largest restaurant chains in the U.S. accelerated their cumulative sales growth in 2014 to a 4% increase, totaling an estimated $274.4 billion, according to data released by Technomic Inc.



But some of the biggest brands among them, namely Subway and McDonald's, lost ground to focused-menu competitors and emerging fast-casual chains and reported overall sales decreases for the year.



The nation's 500 biggest chains improved their sales growth from a 3.4% increase in 2013, when they collectively reported $264.4 billion in sales. Technomic also found that the industry's 500 biggest brands grew their overall unit count 2.2% in 2014, to more than 220,000 locations.



However, four of the five largest brands in overall sales, McDonald's, Subway, Burger King and Wendy's, struggled in 2014, including estimated declines of 3.3% for Subway and 1.1% for McDonald's. Taken together with Starbucks, which leveraged an 8.2% increase in sales to $12.7 billion and leapt over Subway into the number two ranking behind McDonald's, the top five brands eked out just a 0.3% increase in annual sales.



Limited service overall registered a 4.2% gain in sales in 2014, and fast-casual dominated that expansion with a 12.8% sales surge. Within fast casual, brands with a customizable menu that allows guests to build their own entrées grew even faster than chains with standard made-to-order menu items.



Fast-casual success stories also powered growth in several other limited-service sectors. The Mexican and Asian/noodle categories led the way with sales gains of 10.4% and 10.2%, respectively.



Furthermore, the full-service segment recorded a 3.5% increase in annual sales in 2014. The steak category led the way with a 5.5% gain in sales, paced by chains like Texas Roadhouse, LongHorn Steakhouse and Fogo de Chao.



The "varied menu" segment also showed healthy growth, with a 4.7% uptick in annual sales. Within this all-encompassing category, wing houses fared particularly well, from mainstream casual-dining chains Buffalo Wild Wings (16.7%) to brands focused on entertaining a mostly male clientele, like Twin Peaks (44.7%) and The Tilted Kilt (19.1%).