The U.S. restaurant industry has long been marked by its diversity. Unlike, say, auto makers or even food retailers, there is no single dominant company that accounts for an outsized share of the business.
But that’s clearly changing, and the pandemic and its aftermath only made that clearer.
In 2022, according to data from Restaurant Business sister company Technomic, just 10 restaurant chains accounted for nearly 26% of all industry sales: McDonald’s, Starbucks, Chick-fil-A, Taco Bell, Wendy’s, Dunkin’, Burger King, Subway, Domino’s and Chipotle Mexican Grill.
That’s up from 22% just three years earlier, based on information from the Technomic Top 500 Chain Restaurant Report. In short: The restaurant industry has shifted dramatically toward a relatively small number of businesses, most of which feature delivery or drive-thru windows or both.
That dominance is particularly notable if you consider that two of those chains have been struggling during that period, Subway and Burger King. The other eight still account for 23% of total industry sales, up from 19% three years ago.
The growing dominance of the largest chains in the U.S. is unsurprising given industry trends in recent years. Consumers have been gravitating rapidly toward convenience-focused options and away from full-service restaurants. That means they’re more likely to get their food from chains rather than independents, and they’re far more likely to use convenience-focused options.
This gives a distinct advantage not just to fast-food chain restaurants but the biggest chain restaurants.
Limited-service restaurants have increased their sales as a percentage of all sales generated by the Top 500 restaurants to 79% last year, from 75% before the pandemic.
And chain restaurants, meanwhile, account for 59% of all industry sales, up from 53% in 2019. That’s substantial growth in just three years.
The very largest chains, those aforementioned 10, have been growing in their dominance, even with brands like Burger King and Subway struggling.
While their sales increased 8.3% last year, barely above overall inflation, they performed far better during the pandemic and they emerged more quickly coming out of the pandemic.
The largest chains, outside of Subway and Burger King, had the unit volumes and the overall performance to better withstand some of the challenges coming out of the pandemic, notably supply chain headaches and labor concerns. They’ve also broadly adopted technology, notably mobile ordering and loyalty programs, that have proven popular with consumers. And they have the marketing muscle to remind themselves repeatedly about their existence.
They are also convenience. These large chains are everywhere. They are more likely to have drive-thrus. Or they (Domino’s) have a substantial delivery business. That makes them popular among a U.S. consumer that loves convenience.
It remains to be seen how long this continues, and whether an independent restaurant renaissance re-emerges in the coming years. For now, however, these handful of chains appear to be winning the battle.