Value

by David Klemt David Klemt No Comments

2024 Datassential 500: Guest Perception

2024 Datassential 500: Guest Perception

by David Klemt

An optical illusion consisting of black and white stripes that may be curving upward and outward

Last week we took a look at the data-driven findings that identify, organize, and rank chain restaurants in the US, forming the Datassential 500.

This annual report sorts the 500 top-performing chains by segment. Further, Datassential identifies the top chains by both number of units, and sales.

In doing so, the F&B intelligence agency uses hard numbers to determine numbers one through 500.

But what about guest perception? Unit and sales growth may appeal to board members, investors, executives, and other hospitality professionals, but what matters to the people their restaurants serve?

It’s doubtful that even the staunchest fans of a particular restaurant chain are aware of or, frankly, care about how many locations they operate. Nor are they likely all that concerned about their annual revenue, unless they’re an investor as well.

To get to the bottom of how the public perceives chain restaurants in the US, and what brands they rank at the top, Datassential looked at six key metrics.

Those metrics? Food quality, service, experience, affordability, value for dollar, and net promoter score.

While the results aren’t exactly shocking, they’re quite telling. A handful of US chains dominate the consumer-facing metrics. And for the most part, they’re not among the top ten of the 2024 Datassential 500.

Anyone interested in reading this year’s report can do so via this link. Alright, let’s check out how the public ranks US chain restaurants.

Perception Matters

To make the comparisons easier, the top 10 US restaurant chains by unit and by sales are below.

Top 10: Total Units

  1. Subway
  2. Starbucks
  3. McDonald’s
  4. Dunkin’
  5. Taco Bell
  6. Domino’s Pizza
  7. Burger King
  8. Pizza Hut
  9. Wendy’s
  10. Dairy Queen

Top 10: Total Sales

  1. McDonald’s
  2. Starbucks
  3. Chick-fil-A
  4. Taco Bell
  5. Wendy’s
  6. Dunkin’
  7. Burger King
  8. Chipotle
  9. Subway
  10. Domino’s Pizza

Guest Perception

Okay, so those are the top performers in the US, by the numbers. Units were counted, sales were analyzed.

Now, these are the brands that guests feel are at the very top, organized into six categories.

Food Quality

  1. Texas Roadhouse
  2. Chick-fil-A
  3. Longhorn Steakhouse
  4. Cheesecake Factory
  5. Ruth’s Chris Steak House

Service

  1. Chick-fil-A
  2. Texas Roadhouse
  3. Longhorn Steakhouse
  4. Cheesecake Factory
  5. In-N-Out Burger

Experience

  1. Chick-fil-A
  2. Ruth’s Chris Steak House
  3. Texas Roadhouse
  4. Maggiano’s Little Italy
  5. In-N-Out Burger

Affordability

  1. Little Caesars
  2. Freshii
  3. Papa Murphy’s
  4. Cici’s Pizza
  5. Pollo Tropical

Value for Dollar

  1. Papa Murphy’s
  2. Little Caesars
  3. Cici’s Pizza
  4. In-N-Out Burger
  5. Del Taco

Net Promoter Score

To determine this ranking, survey participants were asked “How likely would you be to recommend this chain to friends and family?”

  1. Chick-fil-A
  2. Texas Roadhouse
  3. In-N-Out Burger
  4. Longhorn Steakhouse
  5. Portillo’s Hot Dogs
  6. Cheesecake Factory
  7. The Capital Grille
  8. Ruth’s Chris Steak House
  9. Maggiano’s Little Italy
  10. Topgolf

Subway and McDonald’s may dominate the list in terms of number of units and annual sales, but Chick-fil-A dominates in one key area. Word-of-mouth marketing still matters, undeniably, and, according to Datassential, most consumers perceive Chick-fil-A as the restaurant chain to recommend.

Followed by Texas Roadhouse and In-N-Out Burger, smaller brands are delivering on important operational elements. Consumers at large appear to favor these brands when it comes to stretching their dollars, along with how they perceive the quality of food, the level of service, and the overall dining experience.

Operators interested in scaling their business need to set aside ego and desire, and look at their business objectively. They need to ensure they’re nailing the fundamentals and have the right systems in place first.

Image: BP Miller on Unsplash

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The 2024 Datassential 500

How Does the 2024 Datassential 500 Shake Out?

by David Klemt

Stainless steel address numbers spelling out the number 500

The annual Datassential 500 ranking is a valuable report that identifies industry leaders, the fastest growers, and segment performance.

Further, this yearly report shows the scale of restaurant business in the US. In a word, it’s gargantuan.

Looking at 2023 data, the top 500 chains in the US operated 238,152 units. And those 238,000-plus restaurants generated $417.13 billion in 2023.

For the former, that’s growth of 2.1 percent in comparison to 2022. And for the latter, the top 500 grew by 7.5 percent compared to last year.

Those numbers are from just 500 chains; the report doesn’t take into account other chains or independent operators. When we add all dining and drinking establishments in the US, the industry generated $1.09 trillion in 2023.

Again, the US restaurant business is a colossus.

Perhaps unsurprisingly, limited-service and quick-service restaurants are the top-performing segments by unit within the Datassential 500. In 2023, the LSR segment consisted of 212,469, and unit growth was up by 2.3 percent. The QSR segment reached 170,241, representing unit growth of 1.9 percent.

In fact, every segment but one saw unit growth in 2023. One may assume the segment that slipped was fine dining. That’s usually a safe bet, but the segment actually saw the most growth. It was midscale restaurants that suffered a bit of a blow, shrinking by 0.1 percent.

That means that LSRs, QSRs, full-service restaurants (FSRs), fast casual, casual dining, and fine dining all grew. Further, that growth ranged from 0.3 percent (FSR) to 4.6 percent (fine dining).

There are many more insights, so I encourage anyone interested to download the report for themselves.

Segment Shakedown

Before we jump into the top US chains, let’s take a look at how the categories break down.

Type of Cuisine

  • American: 88
  • Pizza: 70
  • Desserts & Snacks: 69
  • Sandwich: 47
  • Coffee: 47
  • Burger: 37
  • Mexican: 36
  • Salad & Healthy: 31
  • Southern: 24
  • Asian: 22
  • BBQ: 12
  • Steakhouse: 11
  • Italian: 9
  • Seafood: 9
  • Greek & Mediterranean: 9

Growth by Segment: Unit (LSR)

  • Salad/Healthy: +11.2%
  • Coffee: +5.9%
  • Other: +4.6%
  • Dessert/Snack: +4.3%
  • Mexican: +3.0%
  • Chicken: +2.9%
  • Pizza: +1.6%
  • Bakery-Cafe: +0.8%
  • Sandwich: -0.4%
  • Burger: -0.4%

As we can see, Salad/Healthy LSRs saw almost double the growth by unit than the next-largest segment, Coffee.

Further, Sandwich and Burger shrunk slightly.

Growth by Segment: Unit (FSR)

  • Regional/Ethnic: +7.6%
  • Sports Bar: +3.8%
  • Midscale: +0.3%
  • Seafood/Steak: +0.1%
  • Italian/Pizza: -0.9%
  • American: -2.0%

Regional and ethnic full-size restaurants saw the most growth. In fact, they grew by twice the amount of sports bars, and several times more than midscale FSRs.

Growth by Segment: Sales

  • Limited-Service Restaurant: $338.18 billion (+8.1%)
  • Quick-Service Restaurant: $263.48 billion (+8.0%)
  • Full-Service Restaurant: $78.95 billion (+5.0%)
  • Fast-Casual Restaurant: $74.70 billion (+8.6%)
  • Casual-Dining Restaurant: $55.57 billion (+4.8%)
  • Midscale Restaurant: $20.05 billion (+4.5%)
  • Fine-Dining Restaurant: $3.33 billion (+10.7%)

The good news is that every segment saw sales growth in 2022, with Fine Dining and Fast Casual experiencing the biggest increases.

Of course, that’s relative. Fine Dining generated just $3.33 billion in comparison to LSRs, which generated more than $338 billion.

Still, positive growth is always great to see.

Growth by Segment: Sales (LSR)

  • Salad/Healthy: +17.0%
  • Chicken: +11.9%
  • Dessert/Snack: +10.1%
  • Coffee: +9.8%
  • Other: +9.3%
  • Mexican: +9.1%
  • Burger: +7.5%
  • Sandwich: +7.2%
  • Bakery-Cafe: +1.8%
  • Pizza: +1.6%

Not only did Salad/Healthy lead the way in LSR unit growth in 2023, it’s the top performer in terms of sales.

Again, the good news is that the Datassential 500 saw LSR sales growth across the board.

Growth by Segment: Sales (FSR)

  • Regional/Ethnic: +10.2%
  • Seafood/Steak: +6.7%
  • Midscale: +5.2%
  • Italian/Pizza: +4.2%
  • American: +3.8%
  • Sports Bar: +3.2%

As far as FSR performance, every segment experienced growth, with Regional/Ethnic leading the charge.

The Top 5(00)

So, which US chains are at the top? Well, an accurate answer depends on segment, number of units, and sales.

Oh, and it also depends on whether we’re talking about which chains Datassential have identified as industry leaders, and which are the fastest growers.

Industry Leaders

According to Datassential, the top five US chains by number of stores are Subway (20,133), Starbucks (16,346), McDonald’s (13,449), Dunkin’ (9,580), and Taco Bell (7,405).

However, that ranking changes a bit when we look at through the lens of sales. In that case, the top five are McDonald’s ($52.91 billion), Starbucks ($29.98 billion), Chick-fil-A ($21.58 billion), Taco Bell ($13.95 billion), and Wendy’s ($12.29 billion).

Those are the industry stalwarts. How do the fastest-growing US chains stack up?

Fastest Growers

Looking at unit growth over the span of one year, the top performers in the US are 7 Brew (+373.7 percent), The Peach Cobbler Factory (+358.3 percent), Hangry Joe’s Hot Chicken (+281.8 percent), KPOT Korean BBQ & Hot Pot (+275.0 percent), and Foxtail Coffee Co (+176.2 percent).

Switching gears to sales growth over a single year, Hangry Joe’s Hot Chicken led the way, growing by more than 500 percent. Hangry Joe’s is followed by The Peach Cobbler Factory (+332.5% percent), Nick The Greek (+304.7 percent), 7 Brew (+267.3 percent), and Pizza King Inc (+264.7 percent).

However, Datassential gets more granular in their 2024 report, breaking down the top five across multiple segments.

Top Ranked By Unit (Overall)

Top 5: Quick Service

  1. Subway
  2. McDonald’s
  3. Dunkin’
  4. Taco Bell
  5. Domino’s Pizza

Top 5: Fast Casual

  1. Starbucks
  2. Chipotle
  3. Panera Bread
  4. Wingstop
  5. Tropical Smoothie Cafe

Top 5: Midscale

  1. Waffle House
  2. IHOP
  3. Denny’s
  4. Cracker Barrel
  5. First Watch

Top 5: Casual & Fine Dining

  1. Applebee’s
  2. Buffalo Wild Wings
  3. Chili’s
  4. Olive Garden
  5. Outback

Top Ranked By Unit (Growth)

Top 5: Quick Service

  1. 7 Brew
  2. The Peach Cobbler Factory
  3. Foxtail Coffee Co
  4. Cupbop
  5. Swig

Top 5: Fast Casual

  1. Hangry Joes Hot Chicken
  2. Just Love Coffee Cafe
  3. The Great Greek Mediterranean Grill
  4. Nautical Bowls
  5. Ellianos Coffee Co

Top 5: Midscale

  1. Snooze Restaurant
  2. Eggs Up Grill
  3. Kura Sushi Bar
  4. Another Broken Egg Cafe
  5. Maple Street Biscuit Co.

Top 5: Casual & Fine Dining

  1. KPOT Korean BBQ & Hot Pot
  2. Topgolf
  3. The Juicy Crab
  4. Jinya Ramen Bar
  5. Hopdoddy Burger Bar

There are many more insights to be had, so please consider downloading your own copy of the 2024 Datassential 500 report here.

Image: Thiago Giardini via Pexels

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Operators & Guests Respond to Rising Costs

Operators & Guests Respond to Rising Costs

by David Klemt

Canadian dollar bills

Everything is more expensive these days and both operators and consumers have their own ideas for addressing rising costs.

To gather and share insight into people’s mindsets, Restaurants Canada conducted and commissioned two surveys.

For one, the industry research and advocacy organization surveyed operators. The focus was on how much operators anticipated increasing their prices.

On the other side, Restaurants Canada commissioned Angus Reid for a survey focusing on consumers. This survey revealed potential traffic slowdowns and perceived value for money.

For your own copy of Restaurant Canada’s 2022 Foodservice Facts report, click here.

QSR vs. FSR: Consumers

As an operator, converting first-time visitors into repeat guests is paramount. Equally as important: increasing visit frequency per guest.

Of course, an immediate byproduct of rising costs is consumers pulling back and reevaluating their spending. Oftentimes, dining out is one of the first costs consumers slash in order to save money.

Therefore, operators always face the risk of reduced traffic and even losing some guests permanently when they raise prices. However, this is often a necessary risk to take to combat rising costs.

So, how dire is the situation among Canadian consumers currently? Or at least, how did they feel in Q2 of this year? Angus Reid conducted a survey of consumers to find out, and the results can be found within the 2022 Foodservice Facts report.

First, let’s look at visit frequency for QSRs and FSRs. Before we begin, 12 percent of survey respondents answer that they “don’t know for sure” if rising prices will affect their visit frequency for either QSRs or FSRs. Not helpful.

For QSRs, 19 percent of respondents say an increase in prices won’t impact their visit frequency. Thirty-six percent anticipate visiting “a little less often,” while 32 percent will visit much frequently.

As for FSRs, 16 percent of survey respondents won’t change their visit frequency. However, 37 percent anticipate visiting FSRs much less often. Nearly as many, 36 percent, will visit a bit less frequently.

Interestingly, however, is perceived value. More FSR guests believe they receive excellent or good value for their money than they do from QSRs. More QSR guests believe they receive fair, poor, or very poor value for their money.

Overall, though, 90 percent of Canadian consumers feel positive toward the value they receive from QSRs and FSRs.

QSR vs. FSR: Operators

Clearly, it’s good news that the vast majority of Canadians believe they receive good value for their money when dining out.

Nobody enjoys paying more but it appears that both QSRs and FSRs in Canada can increase their prices. At least, they can do so for now while consumers are mostly understanding about inflation.

Restaurants Canada asked QSR and FSR operators a simple but revealing question for their 2022 Foodservice Facts report. The question? How much higher do operators expect to increase their prices by the end of Q4 of this year in comparison to last year?

The majority of operators in both categories anticipate they’ll increase menu prices by more than seven percent. Twenty-seven percent of QSR operators have that expectation. That number rises to 35 percent for FSR operators.

Twenty-two percent of QSR operators anticipate raising prices five to seven percent before the end of 2022. In comparison, 32 percent of FSR operators expect to raise prices in the same range.

At the moment, Canadian consumers appear to be willing to endure these increases. However, it’s likely they expect prices to drop back to “normal” (pre-pandemic prices) or close to it sometime in 2023. That is, unless Canada slides into recession.

Image: PiggyBank on Unsplash

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