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Ranking the top 200 franchised restaurant owners in the U.S.


It’s getting harder and harder to get on the coveted Restaurant 200 list— these A-list operators generated $37.5 billion in revenue last year and operated just under 27,000 restaurants.

When the Restaurant Finance Monitor first calculated the list of the top restaurant operators back in 1989, there were just 13 companies that topped $100 million in revenue. And 10 years later the Wall Street Journal referred to the list in an article about “mega-franchisees.” Back then, that meant an operator with 50 locations picking up a second brand.

Compared to the average today of $187.5 million in annual sales and 135 restaurants, it’s plain to see the term “mega” was a little premature—and at the rate the strongest operators keep growing, it may be still. This year eight companies added $100 million or more to their revenue. Altogether, the top 200 operators by revenue added $2.9 billion in top line revenue with the addition of 1,817 restaurants.

Franchise Times' Restaurant 200

Download the 2017 Franchise Times' Restaurant 200 here

Three groups reported more than $1 billion in top line revenue in 2016. Flynn Restaurant Group reported $1.8 billion from 485 Applebee’s, 232 Taco Bells and 97 Panera Bread restaurants. NPC International hit $1.2 billion with 1,236 Pizza Huts and 184 Wendy’s (it’s already added 202 Wendy’s in 2017 as well). And at No. 3 on the list, Dhanani group added $229 million to eke into the billion-dollar club. It reported $1.1 billion in sales from 501 Burger Kings and 240 Popeyes.

The Restaurant 200 is roughly 5 percent of the overall restaurant industry revenue. While that seems a small sliver, the group is beating the industry in growth. Revenue among the 200 operators has grown at a compound annual rate of 8 percent since 2009, compared to 4 percent for the overall industry.

What has propelled these massive operations to such astonishing heights? There have been four key things: Refranchising, capital, technology and culture.

Few, if any, operators are on the Restaurant 200 today that built all their restaurants. The largest operators took advantage of a massive refranchising push that became the norm during the recession. Certainly there were refranchising programs and restaurant sales before, but when interest rates plummeted and Wall Street put a premium on royalty income, brands played along.

Historically low interest rates also meant ample capital to buy all those refranchised restaurants. Banks enjoy lending to operators buying companies with a track record especially, fueling both refranchising and a current flurry of M&A activity. Private equity is pouring into franchise operations as well and the groups need acquisitions to keep growth on the right track for funds and investors.

“Since the recession, restaurant franchisees have had greater access to capital than at any point I’ve seen in in my 37 years in the restaurant business,” wrote John Hamburger, president of Franchise Times and the Restaurant Finance Monitor.

To keep tabs on everything, the most sophisticated operators turn to technology. Since the list began, the internet has transformed restaurant operations. End-to-end digital infrastructure and sophisticated point of sale systems have made it easy to track sales, ticket times, labor and food costs in nearly real time from anywhere with a cell signal.

Having access to capital and a cutting edge technology, however, don’t automatically make for a successful restaurant operator. To keep from getting “too big,” the best create a culture that ensures each location is run like it’s the only restaurant.

“That’s where the challenge lies: How do you maintain operating discipline that is critically important to the small and midsize franchisee—how do you avoid losing that culture to a bureaucratic monster you need to run 600 stores,” said Chris Kelleher, managing director at Auspex Capital.

An owner-operator mentality

Operators like Tom Garrett at GPS Hospitality (No. 28) have all but proven the model works for brands and investors. This year, the top 200 added 7.2 percent in total units but added 8.4 percent in revenue, showing that with the right system, efficiencies emerge. The key to a strong culture is keeping it like it was when it was small, but with systems. To get big, huge franchise systems need to maintain an owner-operator mentality in each unit.

“Our approach and our culture has been pushing decision-making as far down as you can. Make sure you have a culture that rewards decision-making and leadership,” said Garrett. “If you don’t have a good system or good people and then you try to centralize everything, all you do is get farther and farther away from the business, farther and farther away from the customer.”

Now, as all but two of the top 15 operators run multiple brands, getting that culture in place is all the more important. While synergies emerge, each brand still has to operate like its own entity.

“Operations have to be separated as much as possible. Different concepts have different expectations,” said Greg Hamer of B&G Food Enterprises (No. 85). “Dedicated teams have to be assigned to each. Some functions like safety and accounting functions can be combined but operations has to be specific to the particular concept.”

Where the Restaurant 200 will go next is pretty clear: upward and onward with more capital, stronger cultures and more sophisticated technology. This year has already seen an uptick in deal activity. Operators across the list keep buying restaurants and becoming more and more efficient. Watch for a few more billion-dollar operations next year.

— John Hamburger, David Farkas and Dennis Monroe also contributed to this report

Wells Fargo

About this Project

Our annual Restaurant 200 franchisee research includes questionnaires, phone surveys, and in some cases, a review of public documents such as annual reports, 10Ks and FDDs. We sincerely thank the companies that responded to our surveys, as most of the top 200 companies in this year’s ranking provided us with their complete data.

Our report consists of ranking companies according to revenue generated by the company’s franchised restaurants. If the company happens to operate a restaurant concept that is not franchised, or is the franchisor of another concept, we will not include that number in the overall revenue or unit count. In some cases where an acquisition took place during the year, we derive pro-forma revenue in calculating the company’s ranking.

For companies that did not respond to our survey, we confirmed the number of units operated by their company, and then estimated the revenue. In the case of a tie in the amount of total revenue, we settled the tie in favor of the company with the most units.

If you believe your company might make the Restaurant 200 list or we’ve missed you (or you know of another company that should be listed), please contact Liz Olson at (612) 767-3200 or lolson@franchisetimes.com.

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