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Friday, Apr 12, 2024

Restaurant Chains Serve Up Systemwide Growth, Plot Expansion

Panini Kabob Grill, King's Seafood show standout growth

Despite extensive headwinds ranging from supply chain shortages, ongoing pandemic restrictions and inflation concerns, Orange County’s expansive and varied restaurant chain industry served up a solid 2021.

The region’s 28 largest OC-based restaurant chains, a mix of nationally-known giants and regional businesses, ranging from upstart poke bowl chains to iconic brands like In-N-Out Burger, saw a cumulative 17% boost from the year prior, marking a return to gains for the industry, which saw revenue fall 2% in 2020.

For comparison, the $29 billion brought in by those 28 companies and their 14,980 combined stores is about the same as Estonia’s GDP.

Many on this week’s list added new employees despite one of its worst labor shortages in over a decade.

Local payrolls increased about 12% to about 22,000 employees.

Relocating Workers

Costa Mesa-based Panini Kabob Grill saw an 81% increase in revenue to $109 million in 2021, good for the No. 18 spot on the list. Currently with 18 restaurants, the Mediterranean chain plans to add locations in Las Vegas and Scottsdale, Ariz. An opening date has not been announced.

The company, which halted advertising last year, saw its customer base grow 38% organically, CEO Mike Rafipoor told the Business Journal.

After “the pandemic dragged on for two years … people [became] tired of having hamburgers and pizza.”

That translated into demand for fresher, healthier options, Rafipoor said.
“Everything we make is from scratch. Nothing we make is frozen.”

Panini increased its OC employee count 73% last year to over 300.

That growth in part stems from Panini’s wages; it guarantees $20 per hour for those working at least 40 hours per week.

Because of this, some employees who left the company during the pandemic returned to ask for their jobs back, he said.

“Even when we are quiet, we don’t send employees home. We want them to take the money [they make] and use it to feed their families,” Rafipoor said.

The company has also been making efforts of late to relocate workers to restaurants within a 3- to 5-mile radius from their homes, specifically for OC residents working in Panini’s four Los Angeles County restaurants.

“Gas prices are too high, and it takes too long for them to be on the road,” Rafipoor said.

Return to Indoor Dining

Costa Mesa-based King’s Seafood Co., the largest local upscale restaurant chain in OC, faced shortages on basic items from Coca-Cola to ketchup, but saw customers—tired of getting food delivered—return to indoor dining last year.

“Business is good. It just poses a lot of challenges that we didn’t think we’d have to be dealing with,” founder and CEO Sam King told the Business Journal in an interview last November. “So, it’s good, with an asterisk.”

The company, whose 23 restaurants range from fine dining at the Water Grill spots in Costa Mesa and LA to premium casual dining in the 12-location King’s Fish House chain and steakhouses like San Diego’s Lou & Mickey’s, generated $176 million in revenue last year, more than doubling its sales from the year prior. It moved up five notches to the No. 12 spot on the list, which ranks locally based restaurant firms by their 2021 systemwide sales.

Company officials said last year they hope to add to its fine dining restaurant, Water Grill, at the rate of one location per year.

Rising Wages

Chipotle Mexican Grill Inc. (NYSE: CMG) is another local chain aiming to offer competitive benefits in order to attract and retain talent.

Locations of the Newport Beach franchise chain are “staffed better than they were pre-COVID,” CEO Brian Niccol told analysts in a conference call in February.

In May of last year, Chipotle raised its average nationwide wage to $15 per hour.
“We want to make sure that we continue to be competitive on that front,” Niccol said.
Wage increases and inflation hikes did result in menu price increases during the fourth-quarter.

“We keep thinking that beef is going to level off and then go down. It just hasn’t happened yet,” CFO Jack Hartung said in the February conference call.

Despite rising costs, Chipotle grew its 2021 revenue 26% to $7.5 billion—with about 45% of that comprising digital sales.

“Incredibly, our full-year digital sales of $3.4 billion is nearly three and a half times what we did pre-COVID in 2019,” Niccol said.

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