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Monday
Jul012019

Unit & Sales Growth

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
  • 2018 aggregate systemwide sales growth improved to +3.4%, although this was still below the +3.8% 10-year historical average due to the lowest net unit growth in at least 17 years and only modest same store sales growth.
  • Consistently low aggregate annual gross unit development rate (+3.5% average from 2009 – 2018) for the $1B+ chains remains well below pre-recession levels (+5.6% average from 2003 – 2007).
  • Actual 2018 new unit development was slightly below initial year projections.
  • Up-tick in chicken segment growth reflects more aggressive Popeyes development.
  • Closure rates continue to rise and 2018 matched the 16-year high (set in 2009) which reflects persistent unit level margin pressure over the last 3 years (with 2018 store-level EBITDAR margin for the $1B+ chains the lowest in at least 16 years).
  • 2018 closures were notably pressured by sub-sandwich weakness which was mostly due to Subway.
  • The 2018 franchise transfer rate (unit level M&A) exceeded the development rate for the 7th 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.

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