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Active Year for Restaurants, Even Before Chipotle

Boy, will this list be different next year.

Chipotle Mexican Grill Inc.—moving from Denver to Newport Beach—will debut on next year’s Business Journal restaurant chains list as the second-largest based in Orange County, with about $4.5 billion in systemwide sales.

Even without that headline-grabber, the list of chains headquartered here had solid sales last year and plenty of activity. A companion list of big OC-based restaurant franchisees also did well.

The first ranks 39 companies with $17.1 billion in systemwide sales last year, up 4.6% year-over-year, the second list includes five ownership groups and $935.5 million in sales, up 8.9%.

Chipotle sales will take the revenue total into the low 20s next year, and look for No. 1, Irvine-based Taco Bell Corp., to top $10 billion in sales for the ranking.

Taco Bell’s $9.7 billion in sales is up 4% this time and makes up more than half of the list’s total.

Brian Niccol left Taco Bell in February to become Chipotle’s chief executive.

The six largest locally based chains are ranked the same as last year: Taco Bell, BJ’s Restaurants Inc., In-N-Out Burger Inc., El Pollo Loco Holdings Inc., Del Taco Restaurants Inc. and Yard House USA Inc.


Public Houses

Five of the six largest are publicly traded, In-N-Out being the outlier, and three—Taco Bell, In-N-Out, Yard House—are based in Irvine. The others are in Huntington Beach, Lake Forest and Costa Mesa. Seven of the top 10 have tapped public markets, including No. 7, Irvine-based Habit Restaurants Inc.

El Pollo Loco, Del Taco and Habit went public in 2014 and 2015, when restaurant IPOs were especially hot. Wall Street expectations exceeded performance soon after the moves, but the chains chugged along and are turning in sales gains.

El Pollo Loco and Del Taco’s 2017 sales were up some 6% at about $800 million each. Habit’s sales grew 17% to $331.7 million, and it added nearly 50 restaurants in the trailing 12 months.

BJ’s steadily opened locations through the year to 199. Its 200th opened this month in Colonie, N.Y.

Private Dining

Privately held chains were more of a mixed bag.

One factor in the arrow’s direction involves whether changes in design, branding, franchising and menus over the past few years have worked.

• No. 9, Wienerschnitzel in Irvine, and No. 11, Sizzler USA Inc. in Mission Viejo, showed slight gains with older concepts working to find relevance among consumers, and operators buying in.

• No. 10, Real Mex Restaurants Inc. in Cypress, is for sale.

• No. 12, Johnny Rockets Group Inc., No. 13, Yogurtland Franchising Inc., and No. 26, zpizza in Irvine, were down. Lake Forest-based Johnny Rockets has launched a full redesign, but sales declined in the year. Irvine-based Yogurtland has sought to grow beyond dessert. Zpizza’s ongoing turnaround moved it to close underperforming locations and amp up design and franchising.

Build-your-own pizza purveyor Pieology Pizzeria in Rancho Santa Margarita, No. 15, held steady at $150 million.

Some systemwide sales figures are from Chicago-based consultant Technomic Inc.

Double Dips

Some chains showed big gains.

• No. 15, Lazy Dog Restaurant & Bar in Huntington Beach, was up 28%. Its private equity owner is backing an effort to grow to $300 million in sales.

• No. 17, King’s Seafood Co. in Costa Mesa, climbed 24%. The multiconcept operator recently opened several locations of its high-end Water Grill restaurant.

• No. 23, Nekter Juice Bar Inc. in Santa Ana, jumped 40%. The juice bar chain debuted 34 locations and entered new markets.

• No. 30, Oggi’s Pizza & Brewing Co. in San Clemente, rose 37%. It has slimmed its footprint to tap fast-casual diners, and brews its own beer.

• No. 32, Chronic Taco in Aliso Viejo, and No. 37, Slapfish, were up 23% and 33%. Both are pushing international franchising.

Bracketing the big gainers are No 33, nitrogen-infused ice cream chain Creamistry in Yorba Linda, up 77%, and No. 34, John’s Incredible Pizza Co., up 10%; it recently opened a location in Westminster.

Spare Change

Two companies debut on the list this year:

• No. 14, Mountain Mike’s Pizza LLC, was based in Northern California until a Newport Beach private equity firm bought it and moved the chain to OC; the same investors own No. 31, Juice It Up (see related story page 1).

• No. 38, Bear Flag Restaurant Group in Newport Beach, runs three namesake fish markets and fast-casual restaurants, as well as edgy Cali-Mex joint Wild Taco.

The biggest change on the franchisees list came at Cotti Foods Corp. in Rancho Santa Margarita, up 45% to about $281 million in sales.

A late-2016 acquisition of 38 Wendy’s locations produced a full year of sales last year, a spokesperson said.

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