NEW YORK CITY-There is no lack of expanding chain-restaurant concepts on the horizon and no reason to think that their unit counts won't continue to expand, said Ron Paul, president of research firm Technomic yesterday at SG Cowen & Co.'s Consumer Conference at the Westin New York at Times Square. "If you increase supply in this business, demand goes up."
Among the chains that could experience major growth in the near future are the 60-restaurant Daphne's Greek Café of San Diego; Wilmington, NC-based Port City Java, which operates 70 stores; and the 180-unit, Seattle-based Taco Del Mar. Popular themes are fresh ingredients, international foods, tableside preparation and other attractions, Paul says.
Attendees at the conference, which ends Wednesday, also got to hear the expansion plans of some retailers and restaurant operators from company executives themselves. Fast-food chain Jack In the Box is expanding from a regional company to a national player. In 2002, the restaurant operator had units in 17 states, but it now runs them in 41 states.
The San Diego-based outfit will get the biggest growth out of its Qdoba Mexican Grill, which it bought in 2002, and plans to open 85 to 95 of those stores next year on top of the 250 it currently operates. The namesake restaurants, with nearly 2,050 units, are adding 45 to 55 this year. Quick Stuff, a newer concept which mixes a convenience store with a Jack In the Box restaurant, now has 44 locations and will grow by 13 to 15 this year.
Jack In the Box is also accelerating a plan to sell namesake stores to franchise owners in efforts to increase cash flow. The company currently owns about 75% of its units and would like to lower that number of 65% by 2008.
Executives are predicting a 2% to 2.5% same-store sales rise for Jack In the Box this year and a 4% to 6% jump for Qdoba. Last year's company-wide same-store sales rose 2.5%.
Another eatery that is seeing growth is Oklahoma City-based Sonic Drive-In. The company, which opened its 3,000th unit last year, is planning 180 to 190 new restaurants this year.
Most of Sonic's stores are in the Midwest and South, but the company is looking to branch out, says Steve Vaughn, its chief financial officer. "There really is no area where we feel that Sonic has reached the point of saturation. We feel that we are now approaching a national brand."
Formalwear retailer Men's Wearhouse not only plans to expand its existing chains, but executives may launch two future concepts, MW Cleaners, a retail dry-cleaning chain, and Twin Hill, which would sell corporate uniforms. The Houston-based company has 527 units in its Men's Wearhouse chain and could bring that number to 600 stores. Executives are also planning to grow K&G, a concept with 77 stores that sells discounted formalwear, by 15 stores a year.
Pacific Sunwear will begin the rollout of One Thousand Steps, a footwear chain, this year. The first nine stores are planned for the first half of the year, and company officials see the potential for 600 to 800 units overall. The Anaheim, CA-based retailer is also testing a 4,000-sf to 9,000-sf concept for its PacSun chain, which targets teens with surf and skate wear. Typical stores in the 908-unit chain are 3,500 sf. Executives plan a total of 1,000 US locations for the brand. D.e.m.o., the company's hip-hop fashion chain currently has 198 stores and 400 are planned.
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