CHICAGO — The 400 largest franchise companies in the U.S. are growing even larger, striking while the restaurant acquisition market is hot and adding locations to their portfolios at three times the rate of unit growth for the chain restaurant industry as a whole.
According to Technomic Inc.’s Top 400 Restaurant Franchise Report, the nation’s largest franchisee operators increased their collective count of restaurant locations approximately 6.5 per cent in 2014, compared with growth of about 2.1 per cent for all units of the brands listed in Technomic’s Top 500 Chain Restaurant Report. While many of these companies are leveraging their operations excellence to open new stores organically, much of the growth has come via acquisition, as the operators in the Top 400 have attracted favourable financing and often private-equity backing to go on a major buying spree.
“The companies tracked in the Top 400 Restaurant Franchise Report are taking advantage of a seismic shift in the restaurant industry toward franchise-led expansion and investment, and many of them are getting big enough to wield the purchasing power and territorial reach of a super-regional restaurant brand,” says Darren Tristano, EVP, Technomic.
Technomic expects acquisition-led growth to continue for this group during the next several years, as major franchisors have indicated plans to continue the industry’s pace of refranchising in favour of the investor-friendly “asset-light” business model.
“Industry players can benefit greatly from knowing who these major franchisees are, where they are expanding and which restaurant brands could round out their portfolios,” says Tristano.
Data for the 200 largest franchisees in the study, compiled in partnership with Franchise Times Corp., reveal that those companies collectively grew 2014 sales 8.2 per cent, which is twice as fast as the four-per-cent growth recorded in the Top 500 Chain Restaurant Report, Technomic’s annual census of the industry’s biggest brands. The top franchisees’ sales increase was more than three times the collective rate of sales growth among the nearly 100 brands represented across their holdings.
