Monday Morning Scoop - Smaller Chains Dominate in Unit Growth

Smaller chains dominate in unit growth

Restaurants like Dave’s Hot Chicken, 7 Brew, and HteaO show that sometimes smaller is better

You might expect the largest chains, with marketing power, purchasing power, and momentum behind them, to have an advantage when it comes to opening new locations, but with a few notable exceptions (Jersey Mike’s, Wingstop, Tropical Smoothie Cafe, Chipotle, and Chick-fil-A), the 40 chains with 1,000 units or more either had modest growth or, in the case of 11 of them, shrank in unit count.

On the opposite end of the Top 500, unit growth was robust. Obviously, simple math dictates that percentage growth looks more impressive if you start with a smaller number. The Hampton Social can boast a 21% unit growth because it opened two restaurants in 2023, giving it a total of 11.

But other small chains truly saw massive expansion, possibly because consumers root for underdogs these days, or maybe because they’re giving their customers exactly what they want. Most notable among small but fast growers are 7 Brew, which grew from 40 to 180 locations last year, KPOT, a Korean barbecue concept that went from 16 to 55 units, and Dave’s Hot Chicken, whose unit count grew by 76% from 96 to 169.

Drive-thru salad concept Salad and Go saw a 67.5% growth, ending the year with 136 locations, and iced tea concept HteaO grew by 53.6%, opening 33 units to give it a total of 103.

Crumbl closed out the year with 970 locations, up by nearly 41%, but that growth has stalled, causing some industry watchers to wonder if another concept will ever crack the thousand-unit mark.

Other smaller chains with big growth include Jeremiah’s Italian Ice, which blew past the 100-unit mark and closed out the year with 136 locations, an increase of just over 40%, and soda concept Swig, which grew from 45 to 60 units.

The Toasted Yolk Cafe, part of the hot breakfast-and-brunch segment, opened nine restaurants and now operates 37 locations — that’s growth of 32% — and bakery concept Paris Baguette opened 37 locations, growing from 118 units to 155, up by more than 31%.

By: Bret Thorn
Source: Nation’s Restaurant News