Report Highlights

  • 10-year history for 56 $1B+ chains including: (1) total units; (2) company vs. franchisee ownership; (3) new units; (4) closures; (5) franchise transfers; (6) average units per franchisee by concept; (7) systemwide sales; and (8) system sales market share.

Conclusions

  • 2019 aggregate systemwide sales growth for the $1B+ Chains continued to improve (+4.9%) and exceeded the 10-year historical annual average of +4.2% as very weak net unit growth (+0.1%) was more than offset by solid same store sales growth (+3.6%) and the closure of low volume stores.
  • Consistently low aggregate annual gross unit development rate (+3.4% average from 2010 – 2019) for the $1B+ chains remains well below the +5.6% average from 2003 – 2007.
  • Actual 2019 new unit development was well below initial year projections and projected 2020 gross new unit development is based on initial year projections and actual development will be dramatically lower with most chains stopping new unit development and deferring new build requirements since March.
  • Closure rates continue to rise through 2019 (2.5%), exceeding the 17-year high (2.4% set in 2009) which reflects persistent unit level margin pressure over the last 4 years (with 2019 store-level EBITDAR margin representing the lowest level in at least 17 years).
  • Notably, Subway dramatically pressured the 2019 closure rate.
  • The 2019 franchise transfer rate (unit level M&A) exceeded the development rate for the 8th year in a row, which reflects: a continued move towards franchisee consolidation (in search of scale-based cost efficiencies); high construction costs (slowing development); and the difficulty in securing acceptable sites.

Unit & Sales Growth Analysis 2020 – Outline