Nation’s Largest Restaurant Franchisees Grew in Size & Scope in 2012

The 200 largest restaurant franchisees recorded $26 billion in sales in 2012

APPLEBEES GRILL AND BAR

Thanks to cheap, available credit and numerous acquisition opportunities, the nation’s largest restaurant franchisees grew in size and scope in 2012, according to the Monitor 200, the annual ranking of the 200 largest restaurant franchisees in the nation published by the Restaurant Finance Monitor.

Combined, the 200 largest restaurant franchisees recorded $26.3 billion in sales and operated 20,331 total units in 2012, both up more than 10 percent from the previous year, and up 20 percent from depths of the recession in 2009.

“Life is good in the restaurant franchise business,” said Jonathan Maze, editor of the Restaurant Finance Monitor. “Big franchisees have taken advantage of a friendly acquisition market to grow their operations. And some of them have become very big.”

This year’s ranking includes a new No. 1 — San Francisco-based Flynn Restaurant Group. Formerly known as Apple American Group, the Applebee’s franchisee made a pair of huge acquisitions last year, including its first of a Taco Bell operator out of Los Angeles, to become the first franchisee to report sales of more than $1 billion. Flynn has more than doubled in size since 2009, and now has more than 500 restaurants in 23 states.

NPC International, which had been the largest franchisee since 2006, fell to No. 2, with just less than $1 billion in sales. Based in Overland Park, Kansas, the company operates more than 1,200 Pizza Huts. And it promises to grow bigger in future years, too; it recently bought 37 Wendy’s locations in the Kansas City market.

The nation’s largest franchisees tend to operate large brands, mostly among casual dining and quick-service restaurants including Applebee’s, Burger King, Wendy’s, KFC, Taco Bell, Pizza Hut and McDonald’s. Lenders have grown increasingly aggressive in making loans to this group, providing these franchisees with the fuel needed to grow.

Large franchisee groups also had plenty of acquisition opportunities. Refranchising strategies by franchisors like Applebee’s, Yum and Burger King have fueled rapid growth by a number of the largest operators.

“Refranchising has been an absolute boom for the nation’s largest franchisees,” Maze said. “If you look up and down the list, you see numerous franchisees that have been able to grow by leaps and bounds the past couple of years because they’ve been able to buy company-owned restaurants at a low cost from  franchisors that have decided to get out of the restaurant operations business.”

Restaurants on the Monitor 200 are ranked based on the previous year’s sales figures. Those figures don’t include any brands the companies may own. Sales figures are either obtained directly from the company or they’re estimated based on various publicly available sources.

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