How the 2020 Restaurant Business Future 50 are Surviving and Thriving

Small, emerging restaurant chains have marshalled their strengths in creativity and adaptability to survive. In some cases, small chains are thriving during the Covid-19 pandemic.

Earlier today, Restaurant Business, in partnership with Bush’s Beans, presented the webinar “How Emerging Chains are Surviving (and Thriving) Amid Covid-19.” Hosts Patricia Cobe and Heather Lalley, senior editor and editor of Restaurant Business, respectively, used several concepts on the publication’s Future 50 list to show how some small chains are succeeding during these incredibly difficult times.

The Future 50, comprised of the fastest-growing restaurant concepts that have between $20-50 million, generated $1.71 billion in total revenue in 2019. Collectively, the concepts operated 1,735 units and enjoyed 30 percent year-over-year growth. The top 10 of the Future 50 are listed below (a link to the full list is included at the bottom of this article):

1. Evergreens
2. Clean Juice
3. Slapfish
4. Clean Eatz
5. Pokeworks
6. Playa Bowls
7. The Simple Greek
8. Melt Shop
9. Creamistry
10. Joella’s Hot Chicken

Like their big chain and independent counterparts, the Future 50 shut their doors in March and April. Many experienced double-digit losses durint those two months. But these emerging chains have re-emerged as states, counties and cities have permitted restaurants to offer delivery, takeout and (sometimes restricted) in-person dining.

For example, Dos Toros Taqueria (number 29 on the list) currently operates 22 units in New York, New Jersey and Chicago. The youth-oriented concept closed all but five locations, largely serving Manhattan. Part of their pivot included offering meal kits, a menu item that has proven popular for restaurants in general. According to Cobe and Lalley, the chain is now planning to open more locations in the suburbs around NYC and Chicago.

Evergreens, which holds the top slot of the Future 50, is also re-emerging, albeit slowly. According to the webinar’s hosts, the chain isn’t planning to have every unit reopened until October. One element of their survival has been delivery. Evergreens didn’t have much of a delivery program in place prior to March of this year. However, they adapted quickly and have been developing delivery, understanding its importance during the current pandemic.

Slapfish, ranked third among the Future 50, had plans to incorporate a bar element into their restaurants. They wisely chose to put those plans on hold. Instead, the concept focused—as so many have done over the past few months—on delivery and takeout. Where permitted, Slapfish has offered to-go alcohol, an adaptation of their bar plans. According to Cobe and Lalley, the concept is considering downsizing their footprint and further developing its delivery and takeout program. And like Dos Toros, Slapfish has seen success with meal kits; their family-style brunch takeout kit is performing very well.

Meal kits are proving to be important to chains and independent operations. Number 10 of the Future 50, Joella’s Hot Chicken, is selling at least 1,000 “picnic packs” per week. Duck Donuts, number 22, has been offering DIY decorating kits ever since a franchisee came up with the idea. (There will be more on franchising later.)

Small restaurant chains have an advantage over their bigger counterparts: they’re nimble. The successful concepts, anyway. It’s much simpler for a handful of locations in one or two regions to pivot quickly than it is for hundreds (or thousands) of stores located all across the country to change direction in an impactful way. Restaurant Business has identified several trends among the Future 50 that may have helped the concepts adapt, survive and thrive.

Wellness has been proven to be a profitable consumer trend with staying power. While some in the restaurant industry interpret “wellness” to largely mean “plant-based,” that’s not the only way to approach the trend. Clean, healthy options that include but aren’t limited to plant-based items are appealing to today’s consumer. Several Future 50 concepts have healthy menu options, and not all are plant-based.

However, indulgence is alive and well. People are stuck at home, they’re being fed a steady diet of bleak news, and they’re stressed out. Comfort food items like fried chicken, mac and cheese, and French fries are among the most-ordered delivery and takeout items, according to Cobe and Lalley (and multiple studies). Slapfish, for example, has identified their Chowder Fries—French fries smothered in the concept’s chowder and topped with bacon—as “soaring” in popularity.

All-day snacking is a logical evolution of delivery, with people utilizing the ease and convenience of third-party services to fulfill on-demand cravings. These days, just about any craving can be served—menu diversity is another common trend among the Future 50. Interestingly, location-based trends seem to be picking up steam. Twenty percent of Future 50 concepts are located in California, a lifestyle and culture that Cobe and Lalley referred to as “health-obsessed.” California was credited by the webinar hosts as starting the poke bowl trend. New York City was identified as second to California for located-based dining trends.

Cobe and Lalley noted that only one burger concept made the Future 50 list. This may point to diminishing interest in burgers. The hosts pointed out that sandwiches, on the other hand, are experiencing a rise in popularity. A tenth of the Future 50 specialize in sandwiches. It’s important to note that a perceived waning of interest in burgers doesn’t mean they’re disappearing from menus; several Future 50 concepts still menu them.

Of all the trends, franchising may be the most noteworthy. The majority of the Future 50—29 concepts—offer franchising. Of the top ten, franchising is an option for eight concepts. Unfortunately, the closing of some concepts has proven to be an avenue of growth others. Cobe and Lalley explained that some Future 50 operators have noted that now is a particularly good time to build out new locations. In turn, those that offer franchising can present entrepreneurial opportunities for those looking to enter the industry.

Innovation in the way of creative menu offerings like DIY meal kits and holiday-themed items, quickly adopting technology that likely would have taken several more years to become commonplace (QR codes and kitchen robots among them), and pivoting to develop robust delivery and takeout programs have helped emerging restaurant chains survive the ravages of coronavirus. Operations of all sizes and categories, according to Restaurant Business, are investing to either implement or further develop loyalty programs in a bid to capture more business.

Chain and independent operators also know that understanding the concerns of restaurant guests can help improve their odds of survival. Several studies have shown that consumers are largely in favor of wearing masks and respecting social distancing guidelines in restaurants and bars. They also want to know and see that restaurants, bars and other businesses are regularly sanitizing their spaces.

According to Cobe and Lalley, some bigger chains have designated designated specific team members to monitor and execute sanitation to make guests feel more comfortable. While some publications have dismissed overt sanitizing as “cleaning theater,” it appears to be easing consumer fears about dining out (where permitted) and placing orders.

The webinar hosts made a few predictions regarding what’s next for emerging chains. First, they believe concepts will continue to pursue franchising to expand and grow revenue. Creativity will remain a key to surviving and thriving, for obvious reasons. The most notable prediction, at least in my opinion, is that ghost kitchens will play an increasingly crucial role. Small chains aren’t the only concepts emerging in the industry—several major ghost kitchen players are growing. For example, Dog Haus, number 12 on the Future 50 list, partnered with United Kitchens back in 2019. As reported by Restaurant Business, both companies saw an opportunity to grow with one another.

Chain and independent restaurant operators have long known that the ability to pivot is crucial to their success. We don’t yet have a full picture of what the industry will look like post-Covid-19, but the survival of Restaurant Business’ Future 50 can help others plan how to best adapt their concepts.

For the full list of the Future 50 including concept details, click here.

Photo by Karolina Grabowska from Pexels