10 (Plus) Storylines That Defined A Decade In Fast Food

A press release from the National Restaurant Association issued in January 2010 noted that the industry “is expected to show gradual improvement in 2010 with the economic downturn easing.” Projected sales that year were $580 billion. 

In 2019, the industry’s projected sales are $863 billion.  

We’ve certainly come a long way in 10 years.  

Plenty of storylines have emerged in the restaurant space throughout the past decade, headlines that have thrust the industry forward by nearly $300 billion. Here are some of the most significant narratives within that time frame, in no particular order. 

Fast casual comes of age. The Great Recession forced consumers to chase more bang for their buck and redefine quality. As such, they began trading up from fast food to fast casual. Simultaneously, consumers started to become busier and sit-down meals became less practical, also to fast casual’s benefit. In 2010, the segment accounted for $23 billion in sales. In 2018, fast casual chains generated $42.2 billion. Fast casual sales are expected to continue this momentum, growing at a 7% clip throughout the next five years, according to research investment firm Morningstar. 

A sort of sub-narrative also surfaced during this time: the fast casual pizza category. Burgeoning concepts like Blaze, Mod, Pizza Rev, Pie Five and Pieology spent the early part of the decade establishing themselves as the “Chipotle of pizza,” bucking the traditional delivery model for customized, assembly-line pizza.

Taco Bell brings product innovation up a level. In 2012, Taco Bell created the buzziest of buzzy limited-time offers since the McRib with its Doritos Locos Taco, a traditional taco housed in a Dorito shell. Taco Bell sold a record 100 million of them in just 10 weeks, marking the brand’s most successful product launch in its history. The product pushed the envelope on product innovation and showed the potential of mashups with other CPG brands, perhaps inspiring other brands to kick creativity up a notch (think: KFC’s Cheetos Chicken Sandwich or Pizza Hut’s Stuffed Cheez-It pizza).

Battleground breakfast. Speaking of Taco Bell, the brand jumped into the breakfast space in 2014 (with a Waffle Taco, of course), generating a profit in year one and likely stealing some of McDonald’s daypart share in the process. The move created an entirely new battleground over breakfast supremacy with other heavyweights like Starbucks, Panera, Chick-fil-A, Burger King, Sonic and, soon, Wendy’s (again) jockeying for a piece of the $234 billion daypart. Breakfast visits have risen 7.7% in the last five years, while lunch and dinner have remained relatively stagnant. Further, consumer spending on breakfast has jumped 31% in that same time. 

Restaurants (finally) see the value in technology. The restaurant industry is a notoriously late technology adopter compared to its retail counterparts. Operators running their business on extremely thin margins just didn’t see much of a return on bells and whistles like digital menu boards and kiosks in the early days. Fast forward a few years and we’ve seen a complete 180-degree turn, however. Earlier this year, McDonald’s spent $300 million on the acquisition of Dynamic Yield, a digital data tool that increases personalized experiences, a la Amazon. Shortly after, the company purchased voice-technology startup, Apprente. Throw in Yum Brands’ $200 million investment in Grubhub, Pizza Hut’s acquisition of QuikOrder and Starbucks’ stake in Brightloom, and we’ve reached a point where restaurant companies are no longer sitting on the tech sidelines, but rather at the table. Further, with tech-forward (and investor-magnet) brands like Sweetgreen, CAVA and &pizza pushing the industry to be nimbler, it’s full speed ahead. 

Mobile takes over. Mobile has had the greatest single impact on restaurants’ tech strategies throughout the past decade. The number of Americans who now own a smartphone has increased three-fold since 2010, with adoption still growing. Starbucks and Pizza Hut got an early jump here, with the former introducing a standalone iPhone payment app that used QR codes in 2009, and the latter bringing mobile ordering to market that same year. For Starbucks, taking a chance on a relatively unknown platform paid off quickly. In its first full year in place, 2011, the chain’s mobile payment program generated more than 26 million transactions and the potential of mobile was seeded. When Subway adopted mobile payments in 2013, it was called “a market signaling event.” Taco Bell added mobile ordering in 2014, calling it “the biggest innovation since the drive-thru.” Starbucks’ Mobile Order and Pay feature accounted for 12% of transactions this year. Impressive, no doubt, but the runway remains quite long. 

Delivery becomes the rule versus the exception. If you don’t count pizza, Chinese cuisine or Jimmy John’s, mobile’s influence has facilitated an entirely new category in the industry: Delivery. The first third-party restaurant meal was delivered at some point in the past few years, and we’ve since reached a point of no return. Although there are pain points associated with third-party delivery (high commission fees), there doesn’t seem to be an and end in sight for consumers’ willingness to pay for the convenience. This year, in fact, DoorDash (founded in 2013) was named the fastest-growing brand in America, while Postmates was No. 3, Uber Eats was No. 12 and Grubhub was No. 13. According to a report from CBRE Group, third-party sales are expected to comprise 58% of all delivery this year, and will increase to 70% by 2022, up from 37% in 2016. 

Operators navigate labor pressures. The Fight For $15 movement started in 2012, shining a spotlight on a stagnant minimum wage and dangerous work conditions in the industry, and leading to employee strikes around the globe. In the past few years, however, the pendulum of public opinion has swung in favor of raising the minimum wage. A Hill-HarrisX poll found that 82% of Americans support increasing the federal minimum wage. Operators have had to contend with additional labor headwinds, accordingly. Further, the tightest labor market in nearly 50 years means restaurants are adding more benefits to compete–another costly expense.

International: The next frontier. Late last year, Restaurant Business declared, “the U.S. restaurant business is full.” As such, there’s been a bit of a retrenchment in the domestic industry (Subway closed more than 900 locations in 2017 alone), which has been a boon to international expansion. The global fast food market is expected to generate more than $690 billion in 2022 with a CAGR of 4.2% from 2017 to 2022. Brands across the board, from Taco Bell and Starbucks to Popeyes and KFC continue to enter new markets, ambitious to fill the abundance of white space available.    

Plant-based meat is developed. Beyond Meat was founded in 2009. Impossible Foods, its biggest competition in the fledgling “plant-based meat” space, came about two years later. White Castle was the first major restaurant chain to adopt the product, introducing its Impossible Slider in September 2018. Carl’s Jr. followed close behind with a Beyond Famous Star burger, while Burger King’s Impossible Whopper went nationwide in August 2019, bringing this new-ish protein option to the masses. Results from Impossible Whopper (an 18% lift in traffic, for starters) proved this plant-based category is more than just a gimmick. KFC added further proof with its plant-based chicken test, which sold out in a mere five hours. UBS forecasts the plant-based meat market will grow by 28% a year and reach $85 billion by 2030–good news for restaurants willing to add the category.  

M&A becomes the rule versus the exception. In 2014, Burger King and Tim Hortons merged to form Restaurant Brands International. In 2017, the company added Popeyes to the mix. Another multi-brand company formed in 2018 when Arby’s added Buffalo Wild Wings, Sonic and, later, Jimmy John’s to its portfolio. Such multi-brand companies aren’t new to the industry. Yum formed in 1997, while Focus Brands, Brinker International, Darden Restaurant Group and Global Franchise Group also come to mind. But the mergers and acquisitions market is certainly heating up. Aaron Allen & Associates predicts this activity to continue to pick up throughout the next five years, citing the increasingly saturated U.S. market and more access to capital. These giant, diversified holding companies will likely pressure smaller chains with their advantages of scale, infrastructure and shared resources.  

Other headlines of note 

Of course, this just scratches the surface of big news in the restaurant space. Ten years, after all, is a long time. Some additional takeaways:  

• In 2010, Chick-fil-A was the No. 12 brand in the QSR 50. This year, the company catapulted to No. 3 by sales, despite operating just six days a week. Imitation, long recognized as the sincerest form of flattery, has prompted Popeyes’ launch of its staggeringly successful chicken sandwich, while McDonald’s franchisees are also pining for a chicken sandwich answer. 
• Yum Brands spun off its China business in 2016, establishing two powerhouse companies and enabling a sharpened focus on Yum’s KFC, Pizza Hut and Taco Bell businesses. This proved just how big the Yum business was to begin with and also that the China market is strong enough to stand on its own and thrive.
• One of those Yum Brands, KFC, started a massive brand transformation in 2016, yielding consecutive years of same-store sales increases, and proving there is, indeed, a correlation between marketing stunts and customer affinity–if it makes sense for the brand. In the case of The Colonel, it undoubtedly does.  
• McDonald’s aggressive remodel timeline frustrated some of its franchisees, who went on to form a National Owners Association late last year with an objective of gaining more leverage. It worked. 
• In 2015, a string of food safety incidents sickened dozens of people, causing Chipotle to become a case study of the delicate nature of the food business. The company lost about $8 billion in value, but has since made a staggering comeback, leaning heavily into digital initiatives and setting the pace for the entire industry. 
• At the start of the decade, gluten-free emerged as a headline, with gluten-free menu claims up 114% in 2011. The gluten-free market is still growing, with an expected CAGR of 7.12% through 2024. 
• Also in 2011, McDonald’s added healthier choices, like apple slices, to its signature Happy Meals. The company continues to evolve the offering, implementing new nutritional standards last year and injecting itself into the macro discussion (and corporate responsibility) about high childhood obesity rates.
• A years-long effort to mandate menu labeling at restaurants finally came to fruition in 2018, forcing restaurants to adhere to a complex new set of regulations.
• Domino’s took a massive risk in 2009 with its “Oh Yes We Did” campaign, which called itself out for having a lackluster product. The move has paid off in droves. Systemwide sales prior to the campaign were $3.1 billion. Last year, they were nearly $6.6 billion.
• Domino’s competitor Papa John’s continues to reel from founder John Schnatter’s very public ouster in 2018. The drama caused the company to lose $72 million in adjusted net income last year alone.
• Earlier this month, McDonald’s won a major battle absolving the company’s liability over alleged labor violations in its franchised restaurants. The ruling was not only a win for McDonald’s, but perhaps the franchised business model in general, insulating headquarters from any franchisee liabilities. For the restaurant industry specifically, this is a big deal. Approximately 33% of the total franchise establishments in the U.S. are restaurants.