National restaurants: Who’s hot and who’s not

By Jodi Schwan

Figure out a way to make a better burger, chicken sandwich or pizza, and the odds of a successful restaurant chain appear to be in your favor.

Some of the nation’s fastest-growing concepts center around so-called “better” offerings of traditional fast-food staples.

Shake Shack likely will become a nationwide brand, thanks to an infusion of private equity.

“Almost everybody” in that space is growing, according to Matt Ramsey, lead broker based in the Midwest for JLL, who represents several retailers.

“There’s a half-dozen pizza concepts expanding,” he said. “Blaze Pizza (a fast-fired, create-your-own pizza chain), and wood-fired pizza places are very hot right now.”

New players are starting to dominate the “better burger” space. Five Guys Burgers and Fries, which was opening 150 stores a year, is opening closer to 40 or 50. Smashburger is opening a handful of new franchised locations but also has had closures.

“Right now, Shake Shack is the leading concept, as a couple of the early leaders have slowed,” said Garrick Brown, the head of retail research for the national brokerage firm Cushman & Wakefield.

‘Better chicken’ among growing chains

Sioux Falls is starting to see chains in the “better chicken” movement come to town, too.

Slim Chickens is under construction on Minnesota Avenue.

Slim Chickens is under construction on Minnesota Avenue and should open in the coming months. It’s likely the first of multiple locations in the market.

“The chicken category is hot,” Ramsey said. “You’d think it would have slowed down, but you’ve got Slim Chickens, which is fried chicken, (emerging) mostly from the South.”

Cowboy Chicken, which focuses on rotisserie chicken, is opening on West 41st Street next to Great Western Bank later this year.

“It’s a great tenant and concept,” said Raquel Blount, of Lloyd Cos., who leased the space.

Barbecue is another active category, Ramsey said.

Sioux Falls is seeing it through a new local concept, Cody’s Smokehouse BBQ, which is opening near 69th Street and Louise Avenue.

Fast-casual chains, in general, continue to represent most of the growth in restaurants. Some that are expanding in Sioux Falls include:

  • Fazoli’s, an Italian chain that will open in a strip mall near The Empire Mall this summer.
  • Popeyes Louisiana Kitchen, which has two locations in Sioux Falls and likely will add more.
  • Schlotzsky’s, which opens May 25 in a store on West 41st Street that will include Cinnabon.

“I’m working on a lot of additional locations (for existing chains). There’s a lot of activity,” said Ryan Tysdal, a commercial broker with Van Buskirk Cos.

“Food continues to be a key driver in a lot of retail centers, partly because you can’t buy (restaurant) food online, so they don’t fight the same battle as retail.”

Some chains are struggling

While Sioux Falls is a traditionally strong market for restaurants, it has seen some closures from chains such as IHOP and TGI Fridays.

That’s in line with national trends, Brown said.

“Casual dining has its own set of challenges, but there you’ve got the problem of really connecting with customers, and a lot of older concepts that just aren’t the flavor of the month anymore.”

In some parts of the country, chains such as Applebee’s, Chili’s, Ruby Tuesday and Chevys Fresh Mex are struggling, he said.

“All these chains are probably too large to begin with, and shifting consumer tastes mean fast-casual came in and ate their lunch. It was a cheaper price point and more interesting food.”

In that way, it’s not unlike department stores that lost ground to cheaper alternatives and trendier options as traditional middle-class consumers went elsewhere, he said.

“It’s a universal theme. You don’t want to be in the middle.”

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National restaurants: Who’s hot and who’s not

Figure out a way to make a better burger, chicken sandwich or pizza, and the odds of a successful restaurant chain appear to be in your favor.

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