5 restaurants that will dominate the fast-food industry

MINNEAPOLIS, MINNESOTA - The restaurant industry is getting increasingly competitive as more and more people take advantage of falling grocery prices by eating at home.

When eating out, consumers are increasingly looking for healthy, convenient food options that don't break the bank.

To get an indication of which restaurants chains will dominate the industry over the next decade, analysts should look at where teens are spending their money.

Teens spend the biggest chunk of their budgets on eating out, and the restaurants that win their favor are potentially gaining lifelong customers.

Here are the top five restaurants among upper-income teens, according to a new survey by Piper Jaffray, a full-service investment bank and asset management firm.

1. Starbucks

Image: Starbucks Canada

Starbucks is the perennial favorite among teens, having replaced the mall as their preferred place to meet up and hang out.

The coffee chain has been the No. 1 choice among both upper-income and middle-income teens in each of the past 12 surveys by Piper Jaffray.

The chain's food sales are exploding, and it has been adding beer and wine to the menu at dozens of locations across the US, which will most likely make it even more appealing to young people. The popular loyalty program and app are also major growth drivers.

2. Chipotle

Chipotle Twitter Page

Teens love Chipotle. The massive serving sizes, marketing, and endless free food offers are strong draws for the younger crowd.

The E. coli outbreak at Chipotle restaurants last year that sent the company's same-store sales plunging by as much as 30% appear to have had no impact on teens' preference for the burrito chain. 

In the aftermath of the outbreak, the chain never slipped from its No. 2 spot behind Starbucks.

3. Chick-fil-A

Image: Chick-fil-A Twitter Page

Chick-fil-Chick-Fil-A is dominating fast food. The chain, which is best known for its crispy fried chicken and waffle fries, generates more revenue per restaurant than any other fast-food chain in the US.

Chick-fil-A's average sales per restaurant in 2015 were $3.9 million. Its fried-chicken competitor KFC sold about $1 million per restaurant that year.

Despite its relatively small size, Chick-fil-A also ranks highly in terms of its total system-wide sales.
The chain generated nearly $6.8 billion in revenue in 2015, making it the eighth-largest fast-food chain in the US, according to QSR magazine.

4. Taco Bell

Image: Taco Bell Facebook

Taco Bell stole the No. 4 spot from Panera in the latest Piper Jaffray survey. Panera is now no longer among teens' top five favorite chains.

Taco Bell's new breakfast offerings, like the Triple Double Crunchwrap, have been a major growth driver.

The chain's breakfast sales jumped 14% in the most recent quarter, according to the company.

5. McDonald's

Image: McDonald's Canada

McDonald's has maintained its No. 5 spot since the last survey six months ago. But that's a decline from year ago, when it was teens' fourth favorite chain. Piper Jaffrey analysts say McDonald's has been losing customers to Chick-fil-A.

"Survey results suggest continued competitive intrusion from Chick-fil-A (specifically among average income teens)," analysts wrote. However, they also noted that "McDonald's overwhelming lead as the preferred hamburger brand was maintained in the latest survey cycle."

The chain's low prices are a big draw for cash-strapped young people, who are more likely to be underemployed and working multiple jobs to pay off student-loan debt.

"We believe operational, culinary, and technology initiatives position McDonald's for continued improvement over the next several years," analysts said.

Source Hayley Peterson, Business Insider