Quick Service Restaurants

This article was published in the August 2016 issue of STORES Magazine.

The fast food industry is projected to grow only about 2 percent annually over the next five years, according to IBIS World. A major challenge is presenting menu offerings for price-sensitive diners who want healthy options.

Price competition was evident in the fast food world last year, with promotions that offered consumers menu items at $1 each if bought in combinations of, say, two for $2. “It’s price wars,” says Warren Solochek, head of NPD Group’s food service practice. “If your key competitor does something that you think will give them an advantage, either you follow with something similar to help retain your customer, or you risk losing customers.”

For the better part of five years Burger King was controlled by Brazilian private equity firm 3G Capital Partners; in December 2014, it became part of Ontario-based Restaurant Brands International.

After testing and abandoning such innovations as apple cranberry salad and low-calorie “satisfries,” Burger King management, still working out of Miami, hit its stride with such menu items as chicken fries — chicken tenders shaped like french fries — a Sriracha cheeseburger and the Halloween Whopper. As a result of those offerings and new “two for $5” promotions, Burger King’s comparable sales increased 5.4 percent for the year.

“We couldn’t have asked for a better first year as RBI,” says CEO Daniel Schwartz; average earnings for Burger King’s U.S. franchisees rose 30 percent before interest, taxes, depreciation and amortization in the final quarter of 2015. This year, Burger King kept the ball rolling with the introduction of flame-grilled hot dogs and the “angry” Whopper. In the first quarter, the chain delivered comparable sales growth of 4.6 percent and system-wide growth of 10 percent in the United States and Canada.

Standing out among the perennial burger, pizza and chicken chains are sandwich purveyors. Jimmy John’s returns to the top of the restaurant segment chart of the Hot 100 Retailers with the highest gain in basis points — 29 — of the group. Joining Jimmy John’s are Jersey Mike’s and Firehouse Subs.

Starbucks continues to reinvent itself. Its latest variation is the high-end Starbucks Reserve Roastery and Tasting Room, “celebrating coffee and craft in a unique and differentiated way,” says CEO Howard Schultz. The first Roastery, a 15,000-square-foot space, opened in the Capitol Hill section of Seattle.