America’s Quick-Service Restaurant Boom: Opportunities and Trends for Investors in 2024
In the fast-paced world of food and beverage, quick-service restaurants (QSRs) are continuing to dominate the American dining landscape. From coffee and chicken sandwiches to rice bowls and salads, the QSR sector is experiencing rapid expansion. As more Americans opt for convenience and value, QSRs have seen unparalleled growth, presenting numerous opportunities for investors and landlords looking to capitalize on this surge. Understanding the factors behind this growth and identifying the strongest performers can provide insights for those seeking to invest in this booming market.
The Rising Demand for Quick Service: A Shift in Consumer Preferences
Whether dining out or ordering in, Americans are spending more on food and drinks than ever before. According to the U.S. Census Bureau, consumer spending on food and beverages consumed outside of the home hit a record $95 billion in July 2024, a 40% increase since the start of the pandemic. While rising costs have contributed to this growth—the Consumer Price Index for food away from home has risen 25% since early 2020—there’s another critical factor driving demand: convenience.
Consumers associate QSRs with value, speed, and reliability. Despite rising menu prices, the majority of consumer dollars have shifted toward QSRs rather than full-service restaurants. The added convenience of mobile ordering and food delivery apps has made it easier for people to choose quick, affordable meals without leaving home. As customers continue to prioritize fast, convenient dining options, QSRs are benefiting from this trend by expanding aggressively across the country.
Expansion Surge: 2,300 New Restaurants in 2023
QSRs have become the leaders in retail leasing activity, accounting for nearly a fifth of all retail leases over the past year. In 2023 alone, the 50 largest QSR chains opened a net 2,300 new locations, almost mirroring the 2,240 net openings in 2022. This robust expansion is a testament to the sector's ability to cater to shifting consumer preferences while offering scalability and profitability.
One of the biggest players in the expansion game is Starbucks. Known for its ubiquity and brand loyalty, Starbucks opened a net 473 new locations in 2023, marking the second consecutive year it led the QSR market in expansion. Since the beginning of 2021, Starbucks has opened more than 1,000 new stores—a 30% higher growth rate than the next-fastest growing QSR, Jersey Mike's. Starbucks’ aggressive expansion aligns with its strategy to capture more market share as Americans’ demand for specialty coffee grows.
Jersey Mike’s, a sandwich chain based in the Northeast, opened 287 new stores in 2023, representing a modest yet steady increase from the previous year. Its consistent growth highlights how smaller, regional brands can scale successfully by tapping into niche markets.
Struggling Chains: Subway’s Decline Continues
While many QSR brands are flourishing, others are struggling to maintain relevance. Subway, once the world’s largest fast-food chain by number of locations, has been experiencing significant closures over the last several years. In 2023, Subway shuttered 447 stores, continuing its downward trend. Though an improvement from the previous year when the chain closed 571 locations, the closures reflect larger challenges for the brand.
Subway’s declining performance is partly due to its inability to keep up with consumer preferences. Its average annual unit volume—essentially, sales per location—fell by 3.3% in 2023 to $493,000. This is less than half the average performance of its competitors, Jimmy John’s and Firehouse Subs, which each generated around $936,000 and $963,000 in sales per store, respectively. Despite being an early leader in the sandwich market, Subway has failed to innovate and compete with more dynamic brands.
Top Performers: Chick-fil-A Leads the Pack
While Subway struggles, other QSR brands are shining, with Chick-fil-A standing out as a true superstar. The fast-growing chicken chain reported an average of $7.5 million in sales per location in 2023, a figure that dwarfs nearly every other QSR on the list. In fact, Chick-fil-A’s per-store sales are more than double that of all but four chains in the top 50.
What makes Chick-fil-A’s success even more remarkable is that its stores are closed on Sundays, meaning its sales come from just six days of business each week. Its strong brand loyalty, exceptional customer service, and consistently high-quality food have earned Chick-fil-A a cult following, making it a prized tenant for landlords and municipalities alike. As municipalities vie to attract Chick-fil-A to their locations, the brand's expansion is helping elevate the average performance of the entire QSR sector.
QSRs’ Impact on Real Estate: Landlords’ New Favorite Tenants
With the QSR sector expanding so rapidly, the impact on real estate has been significant. Restaurants, coffee shops, and bars now make up nearly 20% of all retail leasing activity, underscoring the sector’s growing influence on commercial real estate. For landlords and investors, QSRs represent reliable, stable tenants with strong brand recognition and a high likelihood of profitability.
As mobile ordering and delivery continue to rise in popularity, the layout and location of QSRs are also evolving. Many chains are opting for smaller, more efficient footprints with drive-thrus and pick-up windows, which maximize customer convenience and reduce overhead costs. These innovations help boost margins while enabling brands to expand more rapidly across new markets.
The Opportunity for Investors
For investors, the rapid expansion of QSRs presents a lucrative opportunity. As chains like Starbucks, Jersey Mike’s, and Chick-fil-A continue to grow, investing in commercial real estate that caters to these tenants can yield strong returns. Furthermore, smaller regional chains and emerging brands also offer exciting growth prospects for those looking to invest in up-and-coming names in the QSR sector.
By capitalizing on the continuing rise of convenience-focused dining, investors can tap into a resilient and dynamic market that shows no signs of slowing down. Whether through direct investments in QSR franchises, partnerships with commercial real estate developers, or stock investments in publicly traded QSR brands, there are multiple ways to profit from this booming sector.
In conclusion, the quick-service restaurant sector is experiencing unprecedented growth as consumers continue to seek value, convenience, and quality in their dining choices. With chains like Starbucks and Chick-fil-A leading the way, the rapid expansion of QSRs presents compelling opportunities for investors and real estate developers alike. By understanding the trends driving this growth and focusing on strong performers, savvy investors can position themselves for success in the thriving world of quick-service dining.
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