Hot 100 Retailers: Restaurants

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Restaurants have been offering delivery and engaging in price wars to build business and drive traffic, but they are battling some strong headwinds. Lunchtime traffic at restaurants dropped 2 percent last year, according to NPD Group, translating into 433 million fewer midday visits and $3.2 billion in lower sales.

“We fundamentally believe food at home is our number one competitor,” says Kurt Kane, chief concept and marketing officer at Wendy’s.

“Restaurant delivery is a $100 billion market and it’s exploding,” says Lucy Brady, head of corporate strategy and business development for McDonald’s, which now offers delivery from more than 2,000 U.S. locations.

Only three companies appear on this year’s Hot 100 restaurant chart, the fewest ever: Starbucks, Domino’s and Panda Express, the largest Asian food chain in America.

When Howard Schultz announced he was stepping aside as chief executive and turning the reins over to Kevin Johnson, he pledged that growth would return to historic levels. For more than six years, Starbucks’ quarterly same-store sales increased 5 percent or more; when the transition was announced, common stock shares tumbled dramatically.

After a few technology issues, Johnson says the company is ready to focus on expansion. “Over the next five years, we’ve projected building 12,000 additional stores globally, taking us to 37,000 stores,” he says; more than half will be in the United States and China.

Domino’s has delivered six consecutive years of growth and appears headed for another with a 10.2 percent sales increase in the first quarter of the current fiscal year. The company changed the pizza recipe after the lean years following the 2008 financial crisis, adding bolder spices to the sauce, flavoring the crust with garlic and herbs, introducing new cheese combinations and improving the quality of toppings ingredients.

CEO J. Patrick Doyle also oversaw technology developments that have resulted in more than 60 percent of the company’s orders coming via digital platforms.

“We fundamentally believe that voice is a far more effective and efficient way for people to interact with technology,” Doyle says of the company’s voice-ordering app. “What we do with it is going to be refined over time, but we need to get into this and start learning.”

Source: Kantar Retail

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