The largest Orange County-based restaurants saw their best-ever year for cumulative sales in 2018, thanks to improving same-store sales, expansions, and one very high-profile relocation here.
Led by a blockbuster move of Chipotle Mexican Grill Inc. to Newport Beach after it hired Brian Niccol as chief executive—the pioneering fast-casual Mexican food chain, formerly based in Denver, enticed Niccol from his perch at Irvine-based Taco Bell Corp.—this week’s Business Journal list shows significant strength in the local food selling scene.
The list ranks more than 40 chains with a combined $23.4 billion in systemwide sales. That’s an all-time high figure for our annual list; the systemwide sales total is roughly the GDP of Honduras.
The record year wasn’t all Chipotle’s doing; sales figures show an impressive 7% year-over-year increase for companies on the list, who employ more than 24,000 workers in Orange County, up 4% year-over-year.
The growth illustrates unexpected strength in an industry that for much of last year was said to be hurting.
Still Life
Roughly a year ago restaurant chain chatter was about an oversupply of restaurants: a hot market in the previous few years had produced a food chain inversion of musical chairs: “too many seats” and too few diners to fill them.
A tighter economy near the end of 2018 seemed primed to maintain pressure on discretionary dollars.
That didn’t happen, at least not at OC-based chains.
2018 showed increases and recent moves presage a robust 2019 as well:
• Chipotle is here and continues to confound analyst comments that it’s done growing under Niccol.
• The Business Journal reported last week that No. 25 Kura Sushi USA in Irvine plans an initial public offering.
• Two family-owned chains, No. 30 Rodrigo’s Mexican Grill in Orange and No. 37 Avila’s El Ranchito in Newport Beach, together account for about $60 million in annual sales.
• No. 40 Bruxie is jump-starting its growth refocused on fried chicken under new executives (see story, page 20).
New Kids
All the chains mentioned above, along with No. 29 California Fish Grill in Irvine and No. 41 Polly’s Pies in Anaheim, are new to this year’s list.
Chipotle arrived in OC in September.
Niccol began to paint from his marketing-focused palette immediately after his hiring, the chain was lauded for months in national media, and Chipotle (NYSE: CMG) has roughly tripled its market cap to $21 billion since his hire 16 months ago.
The restaurant operator, with more than 2,500 locations—all company-owned—debuts on the list at No. 2, with $4.9 billion in annual systemwide sales, up 9% year-over-year.
It lags only Taco Bell, which grew 7% in 2018 to $10.8 billion in systemwide sales.
No. 3 BJ’s Restaurants Inc. in Huntington Beach also delivered strong results, up more than 8% to $1.1 billion.
Kura is an under-the-radar operator of sushi-by-conveyor belt; it has 21 stores and seeks 10 times that via proceeds from a $57.5 million IPO.
Rodrigo’s and Avila’s are each about 50 years old, products of a 1960s SoCal boomlet in Mexican food-focused restaurant foundings. A third chain, El Torito and Acapulco parent Xperience Restaurant Group in Cypress—formerly Real Mex—emerged from bankruptcy last year. The Business Journal estimates its systemwide sales at $263 million, good for the No. 11 spot.
Bruxie, not yet a decade old, hits the list as it pushes a revamped franchising program, including international sites.
Strong Showing
Others making a strong showing:
• Irvine-based No. 8 Habit Restaurants Inc. (Nasdaq: HABT), with a $265 million market cap, chugs along, turning in annual sales growth under longtime restaurateur, Chief Executive Russ Bendel; it reported 21% growth to $402 million last year.
• No. 10 Sizzler’s systemwide sales are up 9% to about $267 million, according to industry tracker Technomic Inc. in Chicago, though the Mission Viejo casual steak chain’s chief executive, Kerry Kramp, departed this spring.
• Lazy Dog, in new creative office digs in Costa Mesa, is No. 13 on a 17% jump to $176 million. Chief Executive Chris Simms leads a national expansion to double the mountain cabin-vibed comfort food chain’s size.
Another rugged individual-experience branded chain, No. 14 Newport Beach-based Mountain Mike’s Pizza, is up 5% to $164 million, a respectable showing in an ongoing modernization and turnaround following the chain’s recent sale to private equity owners based here.
Down Diners
A few chains on the list showed declines:
• Technomic gives Irvine-based Wienerschnitzel a 3% drop to $256 million, clipping the hot dog chain’s ranking by three spots and dropping it out of the Top 10. The venerable protein purveyor seems to run steady year-to-year, but never quite breaking free of its one-product image.
• No. 15 Yogurtland reported a roughly 5% decline to $157 million—another one-product offering and this one only for dessert; founder Phillip Chang continues searching for an executive team and product innovation—ice cream drinkables and Greek yogurt are recent efforts—to push the chain forward.
• Laguna Hills-based Pick Up Stix dropped 12% to $60 million and three spots to No. 24 (see related story, page 39).
• zpizza fell nine slots, down nearly 17% to $30 million, according to Technomic. The Irvine-based chain has been in refresh mode for a couple years, trying to tack better to changing diners’ tastes.
• Two chains, Johnny Rockets and Tutti Frutti, dropped off the list by leaving OC. The retro burger chain, owned by Boca Raton, Fla.-based Sun Capital, moved to Massachusetts, where ice cream chain Friendly’s, a Sun Capital sister company, is based.
Tutti Frutti, which sells frozen yogurt, moved from Fullerton to City of Industry.
