Who is Winning the Restaurant Sales Market Share Battle?

market share

Past versus present

For four quarters now, Black Box Intelligence™ has reported that quick service is the best performing segment in the restaurant industry based on same-store sales growth. This is obviously a departure from the story we had been telling until about two years ago. At that time, fast casual was the clear winner of the same-store sales battle. This segment seemed as if it could do no wrong in the marketplace.

However, tough sales hurdles after years of aggressive growth have caught up with fast casual. This factor coupled with a slowdown in chain restaurant sales overall and the downturn of one of its biggest and most visible brands has contributed to the segment’s decline. Meanwhile, quick service brands have bolstered their value proposition and consumers seem to be responding favorably.

This just tells one side of the story. Yes, quick service is driving more sales growth out of its existing restaurants. But, what about its total sales growth? Once the effect of restaurant unit openings and closings is factored in, who is winning the sales market share battle? Black Box Intelligence sought out to answer this question through its “Market Share and Industry Growth Report.” This report includes a sample size of close to 150 restaurant brands and over 110,000 individual restaurant units.

Growth in 2016

Without having to look at their actual sales data, a quick inventory of brands in the quick service segment shows that it is the biggest in the industry. However, the sales data shows that not only is it the largest segment, it is also the one that is growing the most in 2016. During the first two quarters of 2016, quick service increased its share of total restaurant sales by slightly above 1.0 percent on average year-over-year. That increase might not seem like much, but given the sample size of almost $200 billion in annual sales, this is significant revenue being shifted towards quick service. On the other hand, the segment that lost the most share during this period was casual dining, followed by fast casual and family dining.

Besides their industry-leading advantage in same-store sales, quick service brands are also posting a strong gain in the number of restaurants. Fast casual is still growing its net number of restaurants faster than any other segment (at a ratio of about 6 to 1 compared with quick service during Q2 of this year). What is important for this market share analysis, though, is the wide base of existing quick service restaurants. Even a small positive growth in number of quick service restaurants means a big number of units being opened. This translates into huge gains in total sales for this segment.

So, who is winning the sales market share battle?

As long as quick service brands continue their trend of growing both same-store sales and number of restaurant units, the answer to this question will be the same.

For more information on these insights, contact Victor Fernandez at victor.fernandez@tdn2k.com.

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