A fair share of the bankruptcy filings that hit restaurants this year have been of fast-casual chains, such as Tijuana Flats, Tender Greens and Rubio’s, that had once been considered hot concepts.
But well-established chains appear to be doing just fine, at least if you look at the list of publicly traded concepts, not to mention a few of the privately-held companies.
Last quarter, same-store sales among publicly traded chains averaged 6.3%, thanks almost entirely to the ultra-strong performance of Wingstop, Cava and Chipotle Mexican Grill. Three of the four best performances in the second calendar quarter, and four of the top six performances, were of fast-casual chains.
(Check out RB’s Same-Store Sales Tracker.)
The strong performance by fast-casual chains came during what was otherwise a difficult quarter for the restaurant business.
The publicly traded chains that have reported their sales numbers averaged 0.2% in the quarter. But they averaged a 1% decline without the fast-casual sector included.
The 0.2% was an improvement, however, over the 0.5% decline in the first three months of the year.
A few chains stuck out, including two casual dining brands: Chili’s and Texas Roadhouse.
Chili’s 14.8% same-store sales number was the industry’s biggest surprise, particularly considering that rivals Applebee’s (-1.8%) and Red Robin (-0.8%) were well below that. Yet maybe it should not be: Chili’s has not reported a negative number since 2020.
Chili’s has done well largely through marketing by comparing itself favorably to the fast-food sector. And consumers, who are willing to pay to get what they view as quality, have responded.
The other is not a surprise at all: Texas Roadhouse, where same-store sales rose 9.3%. It might be the most consistent chain in the U.S., at least when it comes to the top line. It has not reported a negative number since 2020, like Chili’s, but it has also not reported same-store sales growth below 7.8% over that period.
And Texas Roadhouse, much like Chili’s, is outdistancing its competitors—though the Darden-owned LongHorn Steakhouse did fine last quarter at 3.7%.
Most quick-service chains, struggling with weak traffic, reported flat or negative same-store sales. But a few really stood out, notably Taco Bell and its 5% growth, along with Domino’s (4.8%), El Pollo Loco, where same-store sales grew 4.5% and Dutch Bros (4.1%).
No other traditional fast-food chain was above 0.6% in the quarter.
Maybe more disconcerting is the challenge with high-end restaurants that have seen same-store sales plummet.
Darden’s upscale chains reported a 6% decline. But sales are plummeting at the One Group, which owns its flagship STK and Kona Grill. STK’s same-store sales fell 10.6%, while Kona’s declined 14%.
The higher-end restaurants are struggling at least in part because consumers are no longer releasing pent-up demand, which drove sales right after the pandemic. But some companies are also cutting corporate events, which has hurt other chains, notably the food-and-games sector and brands like Topgolf.
As for the fast-casual sector, that business has won at least in part because of the struggles of the other sectors.
Chains like Chipotle and Wingstop are seeing some casual-dining customers shift to them because of prices. But it’s also possible that some quick-service diners are opting for their offerings, given higher prices in that business.
And it’s not just the publicly traded chains. Same-store sales at Raising Cane’s, the chicken fingers concept, are up 17.5% so far this year and its average unit volumes now top $6 million.
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