Author: Daniel B. Kline | February 27, 2018
Open for business
The past year was not a great one for many retailers. A number of chains shrank, while others went out of business entirely. Restaurants may not have been hit as hard, but many struggled to grow and saw expansion plans stall out.
These chains, however, have figured out how to navigate the current challenging market. At a time when other operators are getting smaller or standing pat, these companies opened more than 300 U.S. locations in 2017.
The world has a seemingly endless hunger for mediocre pizza. Domino's (NYSE: DPZ) has not only delivered 26 straight quarters of domestic same-store sales growth, but put up a spectacular 95 consecutive quarters of same-store growth internationally.
While sales grow at existing stores, the chain has also been aggressively adding new locations. As of Q3 it has added 218 domestic locations and 964 international restaurants for a total of 1,182 in 2017.
Discount stores have generally thrived in recent years, because they sell things that consumers need now and don't want to order online -- all at bargain-basement prices. Dollar General (NYSE: DG) has followed that model, serving an audience that's not flocking to buy from digital retailers.
Through the first three quarters of 2017, the discount chain opened 1,044 new stores and
remodeled or relocated 719 stores. That growth includes the rebranding of 263 store locations acquired in the second quarter of
2017. Dollar General plans to open more than 1,000 U.S. locations in 2018.
Yum! Brands (NYSE: YUM) chain Pizza Hut has not been as successful as Domino's when it comes to same-store sales. In fact, the chain has struggled to connect with an audience, especially here in the U.S. This has not stopped the brand from expanding, though: In 2017 the chain opened 826 restaurants in 77 countries.
While H&M has faced challenges recently, partly because traffic is down at some of the malls where it operates, the discount clothing retailer is nonetheless expanding. The retailer had 4,380 stores at the end of January 2017 and closed the year with over 4,700.
While the doughnut chain has been revamping its menu and considering dropping the second half of its name, Dunkin' Donuts (NASDAQ: DNKN) has been growing its footprint. The company added about 250 restaurants each quarter in 2017 and has similar plans for this year.
Consumers are less likely to shop online for an item that costs $1. In general, offering very-low cost goods has been a good model for surviving, and even thriving, during the retail apocalypse.
Dollar Tree (NASDAQ: DLTR), which also owns Family Dollar, has been taking advantage of consumer demand in its space. The chain added 460 stores through the first three quarters of its fiscal 2017.
Another Yum! Brands company, Taco Bell has used wacky promotions -- like using fried chicken as a taco shell -- to grow its sales. This helped the company to open 314 restaurants in 2017.
StarbucksStarbucks (NASDAQ: SBUX) has been opening about a store a day in China, and it's also growing quickly in the rest of the world. The chain added over 2,000 locations in 2017, and it has shown no signs of slowing down. In 2018, look for the company to open some Reserve stores that sell higher-end coffee, along with more regular Starbucks shops.
While KFC's sister brands Taco Bell and Pizza Hut posted impressive growth in their store counts, the Colonel blew them both away. The fried chicken vendor, which has used a series of actors in ads to portray its iconic founder Col. Harlan Sanders, added 1,247 new restaurants in 2017 across 84 countries.
Yum China (NYSE: YUMC) is an entirely separate company from Yum! Brands, though it operates KFC and Pizza Hut much like its U.S. counterpart. In 2017, Yum China opened 691 new restaurants, bringing its total to nearly 8,000. That includes only three Taco Bell locations, as the Mexican fast-food chain has not yet become popular in China.
Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.