Multi-Unit Franchisee Magazine Issue I, 2012 | Page 64

Focus on Food BY EDDY GOLDBERG Food: By the Numbers Food—fast, slow, casual, takeout, sit-down, delivery—is by far the largest single sector in franchising. One look at our Mega 99 list of the country’s largest franchisees (page 46) shows their choice of brands dominated by food, primarily QSR. Beyond the sheer size of this sector, changing consumer tastes are spurring the creation of new brands, even in a belt-tightening economy. We asked two well-respected market researchers—Technomic and FRANdata—for data that would provide a big picture overview of the franchised food segment—where it’s been and where it might be trending. FRANdata: Tracking Food Brand Growth locations) and Tim Hortons (close to 600). • Fast Food—As of 2010, Subway remains by far the largest system in the U.S. with more than 24,000 locations, followed by McDonald’s (close to 12,500), Burger King (6,351), and Pizza Hut (5,554). • Frozen Dessert—As of 2010, the largest franchised frozen dessert brand in the U.S. was Cold Stone Creamery with close to 1,200 franchised locations. Baskin-Robbins ranked second, just five units shy of 1,000. Rita’s Italian Ice and Dairy Queen Treat Center each operate more than 500 franchised units. These large brands hardly grew over the 2008 to 2010 period; in fact, Cold Stone and Dunkin’ Donuts shed some franchised units. As of 2011, there are about 1,200 franchised food brands operating in the U.S.; roughly two thirds began offering franchises in 2000 or later. By far, the largest segment in food is QSR, which accounts for 92 percent of franchised units in the sector. Sit-Down Restaurants The largest sit-down restaurant concepts include Applebee’s with more than 1,500 franchised locations in the U.S. Next are Denny’s with more than 1,300 and IHOP with more than 1,100 locations (both are owned by DineEquity). Between 2004 and 2010, the number of franchised food locations increased at a compound annual growth rate (CAGR) of 4% to almost 160,000. Brands selling baked goods grew the fastest at a CAGR of 8% over the period, followed by sit-down restaurants (4%), brands selling fast food (3%), and brands that offer frozen dessert products (1%). Technomic: Tracking Food Brand Sales The following are menu segments expected to exceed the industry’s overall growth rate in 2011 (which Technomic is currently forecasting at a nominal 2.5%). Limited-Service Segments QSR • Baked Goods—As of 2010, the largest baked goods franchise brand was Dunkin’ Donuts with 5,678 franchised units. Brands that act more like distributorships also have a large market share in the franchised baked goods space. One example is Sara Lee Distribution with more than 1,500 franchised businesses. Other big players include Panera Bread (more than 750 franchised 62 Multi-Unit Franchisee Is s ue I, 2012 • Asian—Granted we are starting from a very small base, but we see opportunity in Asian limited-service chains, particularly fast-casual. Panda Express (QSR) is the leader of the segment, and it’s been improving consistently. Many smaller chains are also succeeding, and they don’t s