The Race
Major QSR brands are at the forefront of the expansion race to 1,000 sites, including McDonald’s (who have already achieved this), KFC, Hungry Jacks, Red Rooster, Oporto, Grill’d and Nandos. Guzmen Y Gomez has an enormous growth target of reaching 1,000 stores in two decades from 210. To put that into perspective, McDonald’s has taken 53 years to reach 1,000 sites.
The QSR industry is witnessing an unprecedented race among major chains to expand their footprint to 1,000 locations nationwide. This milestone is not just symbolic but signifies market dominance and operational excellence. The race is being led by increasing consumer discretionary income which is projected to grow by 5.5% in the coming years, mass immigration and evolving dining habits moving towards drive thru convenience, particularly in outer suburban high-density areas where families often look to “value” meals for the family.
Market Dynamics and Challenges
The race to 1,000 sites can be influenced by a myriad of market dynamics. One of the most important factors in reaching this remarkable milestone is finding the right locations that drive demand for food offerings. This in turn places intense competition on prime locations and thus increases rents. The big eight food franchises are now competing for the same real estate locations with high population density and passing traffic as consumers seek convenient access to fast food options. Competition for better locations has driven up rental costs over the past five years, accounting for 8.8% of revenue in 2022-23.
As prime locations become scarce and catchment areas are flooded with food offerings, other factors will begin to inhibit these lofty store opening targets. Competition and cannibalization become far greater driving factors as brands fight for a slice of the QSR sales pie, which is estimated at $23.2bn up 1.6%, making the 1,000 store milestone challenging to achieve and an even greater challenge to maintain.
Using Data Science to make better property planning decisions
Large QSR drive thru brands benefit from being located in high-volume traffic areas on busy arterial roads however there is a tipping point on roads that are too busy, congestion can have a negative effect on performance. A good location can maximise a brands exposure to impulse customers and the broader consumer pool, however, mistakes are still being made. Some QSR brands are not considering other key sales driving factors and the different contribution they make to driving greater sales. These include local demographics, precinct and generator activity, site characteristics and competition. Using Data Science to identify greater opportunities in an ever-competitive market is providing Geotech customers an advantage over others, helping brands accelerate their race to 1,000 stores. With the imminent arrival of brands such as Wendy’s, Wing Stop and Popeyes from America, the race to QSR 1,000 is tipped to heat up even more.