Fastest Growing Chain Restaurants

Tips to Help Investors Take a Big Bite Out of Tasty Profits

Fastest Growing Chain Restaurants
September 28, 2015

You've seen a hot new chain restaurant open in your area, looked over the lines going out the door, and wondered if getting yourself a slice of the ever-growing chain restaurants pie would be a sound investment. Perhaps you have decided that it is time to turn the tables on your fast food addiction and get a return on investment for all that cash that you’ve been handing over for years.

If you are looking to get into high-growth areas, a good place to start your research is the Nation's Restaurant News (NRN) and their 2015 top-hundred list. The list ranks chain restaurants for year-over-year sales growth. You can also get basic statistics there — total units, sales and sales growth, and rankings — and use that to cull your list down for further research into investment choices.

According to NRN, simple, healthy, and fast-casual dining is in for 2015, along with an emphasis on chicken. The top of the list, Jersey Mike's Subs, featured year-over-year sales growth of almost 30%. It is joined in the list by fellow limited service/sandwich chains Firehouse Subs and Jimmy John's. Chicken is the specialty of Raising Cane's, Zaxby's, Wingstop, and Buffalo Wild Wings.

The remaining three in the top ten are Yard House (known for its craft beer selection), Chipotle's Mexican Grill, and Casey's General Stores — a gas station/convenience store chain that has carved out a niche with its well-advertised pizza offerings, especially in smaller towns and rural areas.

What's out, according to NRN? Pizza, burger chains, and "varied-menu concepts," or those trying to maintain wide menu options or a more full-service approach, are having a more difficult time. NRN lists Five Guys, Little Caesars, and Cheddars as decent performers that have been surpassed by the more targeted and simple fast-casual brands.

Contrast the NRN list with a recent Forbes article ranking chain restaurants by same-store sales growth. They listed fourteen top restaurants with at least 5% growth in Q1 2015, and the only chain making both lists is Chipotle. The difference in the lists is that the Forbes list by nature includes more established chains, looks more at same-store growth instead of overall expansion of outlets, and covers a shorter timeframe.

Who tops the Forbes list? Domino's Pizza, which has rebranded itself extensively over the past few months — including a TV ad blowing up its iconic signs and dropping "pizza" in the replacement. Domino's is trying to establish itself with other Italian dishes instead of just pizza, and that effort seems to be working so far.

Shake Shack is also high on Forbes' list, but with caveats that the stock may be overvalued. Other chains in the Forbes list include well-established standbys such as Dave and Buster's, Jack in the Box, Popeye's, Sonic, Papa Murphy's, Bojangles, and Cracker Barrel.

Use these lists to choose companies that intrigue you and then do deeper research on your choices, especially expansion projections. Do they seem to be growing too fast or in random patterns, or are they following a sound strategy? Are new stores maintaining solid business after the grand opening?

Also, look at your investing goals. Are you trying to maximize growth with the hot new chain, or are you looking for steadier performance with more established chains and corporate ownership?

Finally, even though it technically should not matter, have a meal at a few different locations if possible. Are the stores clean and neat? Are you treated well by the staff? Is the food properly prepared? One bad experience shouldn’t turn you off, but several bad experiences could be a warning sign that growth will not last in the long term. Both diners and investors have plenty of great alternatives.

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Steffanie | 09.28.15 @ 17:01
I love that there are always new restaurants popping up.
Kelley | 09.28.15 @ 17:01
We had like three Sonics open in my neighborhood. I think they've all closed now... I haven't heard of a lot of these mentioned.
Erin | 09.28.15 @ 17:02
Great information to have. I think I'd rather invest in local restaurants run by people who are just trying to make a decent living.
Sara | 09.28.15 @ 17:03
I love trying new places. I have heard of a few of these and been to them as well.
Daniel | 09.28.15 @ 17:04
Getting a dinner establishment started is not an easy thing to do let alone grow like these have .. But glad they have for sure
Nancy | 09.28.15 @ 17:05
Interesting group of restaurants. I'm a little surprised by Jersey Mikes topping the list. It's like all of the other sandwich places to me.
Chrisitna | 09.28.15 @ 17:07
We just had two Shake Shacks open here in Austin - can't wait to go try it! Love Jersey Mike's, too!
Angie | 09.28.15 @ 17:07
We seem to have a revolving door of restaurants opening up here and then leaving to be replaced with something else. It surprises me that folks would opt for the restaurants that have limited choices, compared to being given more choice.
Heather | 09.28.15 @ 17:10
It's great that these businesses are doing great but I also like to support local establishments to keep money in our small local businesses.
Kamie | 09.28.15 @ 17:13
I am not surprised to see Dave and Buster's in this article.
Elaine | 09.28.15 @ 17:15
New restaurants coming in our area makes this family really happy. We just got a Chipotle.
Bobbie | 09.28.15 @ 17:18
I would be too afraid to invest in restaurants. So many well known ones have opened and closed in the past few years in my area.
Beverly | 09.28.15 @ 17:21
Investing in restaurants is always a little tricky as some it seems are just a "flash in the pan". I am surprised that sub shops top the list.
STOKES | 09.28.15 @ 17:22
I wish I lived in a place that had more options. Here, it's mostly fast food burger joints and pizza. Ither places just don't stick around.
trish | 09.28.15 @ 17:24
Restaurant business is a tough job...owning one even tougher...props to all those start ups that made it to this list. Its not easy to maintain business, let alone keep building it.
Clarissa | 09.28.15 @ 17:32
The city I live in has unlimited options for foodies. Chains, region specific restaurants and local eateries. I like to support local businesses, but I really enjoy food. If any restaurant has good quality, delicious and healthy food, I will support it!
Tina | 09.28.15 @ 17:37
I'd love for Jersey Mikes to come to my area. I agree that pizza and burgers seem to be out as far as popularity.
gracie | 09.28.15 @ 17:47
I have not heard of many of these or even seen them around? I am anxious to check out some of the new one's as they settle near me!
Rychana | 09.28.15 @ 17:50
I love Raising Cane's. I love having a new variety of restaurants.
Carla | 09.28.15 @ 17:52
We have a few pizza and hamburger joints in our small town. There are also some local mom n pop restaurants to get home cooked meals but we have to travel a bit to eat at an upscale steakhouse or seafood place. I would love to see more opening local.
Meredith L | 09.28.15 @ 17:56
Unfortunately, with the growth of these chains, the small mom & pop operations can't compete. It's a rare sight to see a family owned restaurant anymore.
Leslie | 09.28.15 @ 18:00
The food service industry is so fickle, I wouldn't consider investing in any of these restaurants. The way I see it, you're one food poisoning outbreak from financial disaster.
Ambar | 09.28.15 @ 18:24
Wonderful piece of advice, and good to see people are leaning for healthier options.
Jo Ann | 09.28.15 @ 18:24
I am really afraid of investing in restaurants especially ones without a proven track record. I am sure there are plenty of options to invest in, but the restaurant business is rough, and competition is great. I would never invest in a new chain, I want one with a proven track record.
Jill | 09.28.15 @ 18:33
Interesting read! Some of my favorite restaurants are on this list!
Christina | 09.28.15 @ 18:34
I love trying some of the new restaurants. Glad to see them doing good.
Jennifer Sears | 09.28.15 @ 18:35
I haven't heard of a lot of these.
Donnie | 09.28.15 @ 18:38
So glad new restaurants are opening up. Time for a change.
Selena | 09.28.15 @ 18:39
Very interesting information concerning restaurants.
George | 09.28.15 @ 18:40
Good to see them doing well. We need a change sometimes.
Jonathan | 09.28.15 @ 20:16
I'd love a Chipotle to move in near me!
$commenter.renderDisplayableName() | 11.24.20 @ 06:06