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Retail Trends

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Restaurant operators are spending a lot of time fencing with regulators: They have become targets of immigration officials and the Labor Department’s decision to dictate how restaurants must pay employees who receive tips.

On a positive note, the industry has gained allies in state legislatures who have passed bills prohibiting local governments from adopting restrictions and regulations purporting to promote public health, whether it’s salt content, calories per serving or such “consumer incentives” as toys with kids’ meals. Ohio, Florida, Alabama and Utah are among the states adopting measures to preclude a patchwork of local regulations.

Against this backdrop, there were still some restaurants able to significantly boost system-wide sales. Topping the list is Five Guys, the Virginia-based hamburger chain that sported a 38 percent year-over-year increase. Like No. 2 Jimmy John’s and No. 5 Wingstop Restaurants, Five Guys’ growth has been powered by the rapid addition of franchised locations.

Burgers in general are enjoying a resurgence with the dining public: Nearly half of all consumers eat at least one a week, up from 38 percent two years ago, according to Chicago-based research firm Technomic.

“The value menu is certainly a big part of this increase in burger consumption,” says Sara Monnette, director of consumer research at Technomic. “There are other factors at work, however, as the specialty burger craze has driven growth in a way that is almost defiantly separate from pricing. The better burger restaurants in the fast-casual segment have put the burger top-of-the-mind for consumers, and even the quick-service chains have begun to respond and focus portions of their menus specifically on quality perceptions.”

Jimmy John’s is making a repeat appearance near the top of the chart. The sandwich chain is noted for baking bread on premises every day and for the vegetables and meats it slices fresh in house.

Wingstop — where chicken wings prepared nine different ways are the main attraction — was acquired by Roark Capital Group from another private equity firm last year.

Roark is represented on the list twice — first as the owner of Wingstop and sister chain McAlister’s Deli, and again as the owner of Focus Brands, which operates such chains as Auntie Anne’s Pretzels, Carvel ice cream shops, Cinnabon, Moe’s Southwest Grill and Schlotzsky’s.

Both Chipotle Mexican Grill and BJ’s Restaurant and Brewhouse own and operate their own locations, and both are making repeat appearances here as they continue to open new stores despite tough economic conditions. Chipotle has been among the most high-profile businesses visited by Immigration and Customs Enforcement agents as the Obama administration shifts away from singling out illegal aliens for deportation in favor of penalizing the companies that employ them.

Known for its fresh food served in a fast-casual environment, Chipotle expects to double the amount of locally sourced produce at its 1,000-plus restaurants this year. Growth (20.9 percent) slowed a bit last year relative to its annual average of more than 30 percent between 2006 and 2009.
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