Technomic Top 500 Annual Report Details Slowdown in Chain Restaurant Growth Rates

CHICAGO--(Business Wire)--
The 500 largest U.S. restaurant chains registered slower growth rates, posting
3.4 percent annual sales growth in 2008. According to data released today by
Technomic Inc., in its annual reporting on the top U.S. restaurant chains, the
leading foodservice consultancy found that U.S. systemwide sales for the Top 500
rose to an estimated $230.2 billion in 2008, up $7.6 billion over 2007.

"As the U.S. economy slid into recession last year, restaurant operators faced a
host of challenges, including cost pressures followed by declines in consumer
dining demand. The data in this report clearly supports what we've been hearing
in our consumer research surveys over the past year. Sales growth among the Top
500 restaurant chains slipped to 3.4 percent in 2008, versus 5.0 percent in
2007," said Ron Paul, President of Technomic. "Many chains scaled back their
U.S. unit expansion efforts, growing units by just 1.8 percent compared with 2.6
percent a year ago."

Growth continued to come from the limited-service Bakery Cafe, Coffee and Other
Beverage, and Hamburger categories with Panera Bread, Starbucks and Burger King
posting estimated 2008 sales growth of 16.2, 6.9 and 6.6 percent, respectively.
McDonald's, the largest U.S. restaurant chain grew an estimated 4.4 percent with
sales exceeding $30 billion. Subway continued to dominate the growing Other
Sandwich segment with 17.1 percent sales growth and total sales of $9.6 billion,
considerably better than the 9.1 percent growth posted by the Other Sandwich
chains collectively. It is now the second-largest restaurant chain in the U.S.
followed by Burger King, Starbucks and Wendy's Old Fashioned Hamburgers ranked
third, fourth and fifth, respectively.

Limited-service chains within the Technomic Top 500 accounted for over 80
percent of all U.S. "fast food" restaurants. As a whole, this group grew at a
rate of 4.5 percent. Asian, which grew at 12 percent, was another
limited-service sub-segment with sales growth above their segment average.
Within this group, Panda Express, a California-based chain grew 14.6 percent
with estimated sales of $1.18 billion.

Growth continued to be driven by fast-casual chains. The Mexican category was
led once again by Chipotle Mexican Grill and Qdoba Mexican Grill, posting
estimated U.S. systemwide sales growth of 20.7 and 17.8 percent, respectively.
Standouts in the chicken segment included Wingstop and Zaxby's with estimated
sales growth of 23.6 and 17.9 percent, respectively.

Full-service chains within the Technomic Top 500 accounted for only 39 percent
of all U.S. restaurants within this segment. As a whole, this group grew at a
rate of 0.9 percent. Asian, which grew at 9.3 percent, was the only full-service
sub-segment with sales growth well above their segment average. Within this
group, P.F. Changs China Bistro, an Arizona-based chain grew 8.7 percent with
reported sales of $928 million.

Within Top 500 full-service restaurants, the real story was in the Varied Menu
category which posted sales growth of only 1.5 percent compared to 5.4 percent
sales growth in the prior year. This category was affected by slowing unit
expansion and closures, pressures from fast-casual chains at lunch time and
retailers going after dinner business. The Italian segment posted
better-than-average sales growth of 3.4 percent. Mexican, Steak and Seafood
categories posted below-average results with sales decline of 1.8, 0.7 and 0.4
percent, respectively. The Family-style restaurants showed only modest growth of
0.5 percent.

The Ten Fastest-Growing Chains with Sales Over $200 Million
Ranked by Percentage Increase in Sales in 2008 vs. 2007

Rank Chain 2008 U.S. % Sales Change % Unit Change
Sales($millions)
1 Five Guys Burgers and Fries $302(a) 59% 49%
2 Jimmy John's Gourmet Sandwich Shop 497 29 28
3 Potbelly Sandwich Works 225(a) 27 18
4 Noodles & Company 200 25 19
5 Wingstop 255 24 19
6 Peet`s Coffee & Tea 230 23 11
7 Buffalo Wild Wings 1,229 21 14
8 Chipotle 1,275 21 19
9 Pei Wei Asian Diner 278 19 19
10 BJ`s Restaurant & Brewery 377 18 20
Total $ 4,869 24% 22%
(a)Technomic estimate

In total, the top 10 fastest-growing chains' sales accounted for $4.9 billion, a
24 percent increase over 2007. Unit counts grew 22 percent.

Impressively, 4 chains with estimated sales over $2 billion achieved estimated
double-digit growth in 2007 including Subway (17.1 percent), Panera Bread (16.2
percent), Chick-fil-A, (12.2 percent) and Olive Garden (10.2 percent). Three of
the four chains are limited-service concepts, with Olive Garden as the only
full-service chain.

While the Top 500 chains posted strong growth in the aggregate, individual
results varied dramatically with sales ranging from Buffalo Wings & Rings' 89
percent estimated growth to Bennigan`s Grill and Tavern`s 33 percent estimated
sales decline. Only 56 percent of the Top 500 restaurant chains posted at least
nominal sales increases; 213 of these chains suffered sales declines in 2008
compared to only 129 in 2007. Both winners and losers appeared in each segment
and menu category. These widely-mixed results demonstrate the overall
competitiveness of the industry and the need for suppliers and operators to
carefully identify and focus upon the winners.

International performance by the Top 500 restaurant chains significantly
outperformed their domestic counterpart growth in 2008. International sales (up
13.4 percent) outpaced U.S. sales (up 3.4 percent); international unit growth
was also up 9.9 percent versus 1.8 percent for U.S. units.

The 2009 Technomic Top 500 Chain Restaurant Report provides Technomic's
exclusive 5-year sales forecast by menu category, update on fast casual, 5-, 10-
and 20-year trend analyses, outlook for the future, market share by menu
category, and much more.

To purchase or learn more about this and other industry reports from Technomic,
please visit www.technomic.com or contact one of the individuals listed below.

Contacts

Press Inquiries: Darren Tristano, 312-506-3850, or dtristano@technomic.com

Purchasing Details: Patrick Noone, 312-506-3852, or pnoone@technomic.com

Report Details: Naomi Van Til, 312-506-3844 or nvantil@technomic.com

About Technomic

Technomic provides clients with the facts, insights and consulting support they
need to enhance their business strategies, decisions and results. Its services
include numerous publications and digital products, as well as proprietary
studies and ongoing research on all aspects of the food industry.

Technomic, Inc.
Press Contact: Chris Urban, 312-876-0004, or curban@technomic.com

Copyright Business Wire 2009