These 15 Retail and Restaurant Chains Are Growing

Plenty of brick-and-mortar chains are slumping these days. Forever 21, the teen-focused, fast-fashion staple, just declared bankruptcy and said it would close as many as 178 stores in the U.S. Meanwhile, another recent report showed that retail vacancies in New York City have doubled over the last 10 years.

While the rise of e-commerce continues to reshape the retail industry, there are still a number of chains that are expanding to take advantage of opportunities in the market.

Keep reading to see 15 retail and restaurant chains that are bucking the trend and continuing to grow.

A few years ago, Chipotle Mexican Grill (NYSE: CMG) was reeling from the E. coli crisis. After being left for dead by the market, the burrito chain has bounced back under new CEO Brian Niccol, and the stock is back at record highs.

Helped by the app-based food delivery boom, Chipotle’s sales are climbing and the company is opening new locations. The burrito chain is planning to add 140-155 new restaurants this year, bringing its grand total above 2,600. Considering established rivals like McDonald’s have more than 14,000 locations in the U.S., Chipotle should have plenty of room for expansion, especially as sales are booming right now.

ALSO READ: Analysts Are Becoming Increasingly Bullish on Chipotle

Would you believe that Target (NYSE: TGT) has been one of the best-performing stocks on the S&P 500 this year? During a time when much of the retail industry is collapsing, shares of the big-box chain are up 61% this year through Oct. 1.

Target has revamped its strategy, and leveraged its store base to boost its e-commerce business and allow for easy pickup of online orders. As part of its new strategy, it’s also opening small-format stores in underserved urban neighborhoods and college towns, where its low prices and wide range of merchandise are in high demand.

Over the past four quarters, Target has opened 23 such stores, bringing its total store count to 1,853, and the company has dozens more planned.

Costco (Nasdaq: COST) has fared better during the retail apocalypse than almost any other brick-and-mortar chain. Americans can’t get enough of bargain-priced bulk goods, it seems, and Costco has found a great formula for staving off the threat of e-commerce. Its membership model locks customers in and persuades them to take advantage of bargain prices that online retailers can’t compete with, as bulk goods often have high shipping costs.

Over the last four quarters, the company has opened 16 warehouses in the U.S., and has announced six more upcoming openings through the second half of the year.

Chipotle isn’t the only restaurant chain taking advantage of the delivery boom, Shake Shack (NYSE: SHAK) is also riding the wave as its stock has more than doubled this year. That growth has come on optimism for the company’s expansion potential, as it’s still a relatively small chain, and on improving comparable sales from the company. The fast-casual burger chain has opened 40 domestic, company-operated locations over the last four quarters, and the company is planning to continue to aggressively open new locations as it’s one of the best-performing fast-food restaurant chains by average sales. In the past, management has said it sees room in the market for 450 domestic, company-operated stores, but that number could increase, especially as the delivery boom has increased demand for restaurant food.

Arguably, no apparel retailer is having more success than lululemon athletica (Nasdaq: LULU) these days. The yoga and athletic apparel seller that helped start the athleisure boom continues to see impressive growth both on and offline. In its most recent earnings report, comparable sales jumped 15% and comparable store sales were up 10%, showing the company is growing customer traffic at a time when many mall-based retailers are having trouble keeping the lights on.

Given that performance, it shouldn’t come as a surprise that the company is steadily adding new stores. Over the last year, it increased its store base by more than 10%, adding 45 stores to grow the total count to 460.

ALSO READ: Lululemon Is the Envy of Retail

Another retailer thriving in today’s environment is Five Below (Nasdaq: FIVE), the novelty seller of items like toys, clothes, games, and candy, all for $5 or less. As space in malls across the country becomes available, Five Below is fast filling it as the company has found a niche catering to teens and others seeking cheap thrills as its model is basically Amazon-proof.

Net sales jumped by 20% in its most recent quarter as the company added 44 stores in the period. For 2019, it expects to open 150 new locations, bringing its total to about 900.

No other large fast-food chain is doing better than Chick-Fil-A. The privately held chicken slinger doesn’t report quarterly numbers, but the company’s average unit volumes are tops out of the 50 biggest restaurants, according to QSR Magazine.

Last year, its average restaurant generated $4.17 million in sales, and that’s without being open on Sundays. The total company made $10 billion in sales last year, and added 175 new locations to bring its nationwide total to 2,400.

With its product in high demand, Chick-Fil-A is aggressively expanding across the country and recently opened its first international location in Toronto. Like Chipotle, Chick-Fil-A should have a long growth path of it.

The eat-and-play chain has struggled in recent years as comparable sales have declined and the stock price has crumbled. Competition from food delivery apps may be causing more diners to stay home, and the Fortnite boom may have also been keeping gamers away.

Nonetheless, Dave & Buster's (Nasdaq: PLAY) has continued to open new locations as the company sees room in the market for about 200 of its restaurant-arcade hybrids in North America. Over the last four quarters, the company has added 13 locations to bring its total to 130. Recent openings have been in Kansas, California, and Alabama.

Apparel retailers have largely struggled in the current environment, but J. Crew subsidiary Madewell is thriving, and the preppy parent is spinning off the fast-growing women’s jeans brand as the company filed for an IPO in September.

In the first half of 2019, revenue rose 16.4% to $333 million, and the brand has been successful in growing both in stores and online. Madewell operates 132 stores as of Aug. 3, most of which are in upscale Class A malls, and the company generates $1,100 in annual sales per square foot, significantly above the industry average. Management said it plans to open 10 to 15 a year for the foreseeable future. The funding from the IPO should only boost its store expansion plans.

ALSO READ: J. Crew Preps a Madewell IPO in a Threadbare Market

Like Madewell, another jeans brand that has found success recently is Levi Strauss (NYSE: LEVI), the age old denim outfitter that had its IPO earlier this year.

Levi’s is transitioning from its traditional wholesale model to selling through its own stores and online. As a result, the company is aggressively opening stores, adding 78 over the last year and with plans to open 100 new locations in the current fiscal year, which should help support its expectation for revenue growth in the mid-teens.

Sweetgreen, one of the hottest restaurant brands out there these days, just closed a funding round valuing it at $1.6 billion. The privately held fast-casual salad chain has taken commercial corridors by storm. It currently has just 97 stores, but its high volumes, clever concept, and effective execution have made it a standout in a new generation of restaurant chains.

Sweetgreen has ambitions beyond being just a salad place, and the company is opening a new store in Manhattan that will act as an incubator for new ideas and is expected to include menu items like protein plates, appetizers, and sides.

With many of its locations already slammed at lunch time, expect Sweetgreen’s steady expansion to continue as it looks to move beyond salad.

The discount chain of the Gap (NYSE: GPS) has been a rare bright spot for the mall-based retailer in recent years. In fact, it’s outperformed its parent so consistently that it will soon be spun off as Gap management believes that Old Navy would be better off on its own.

The brand seems to occupy a unique niche with low-priced everyday clothes, which has helped fuel its growth. Over the last year, the company has added 28 Old Navy Stores in North American to bring the total to 1,166.

There are signs the chain is vulnerable, as comparable sales fell 5% at Old Navy globally in the most recent quarter, but Gap plans to open new stores, and its discount model plays better with physical stores than it does online.

Chick-Fil-A isn’t the only chicken chain that’s growing fast these days. Popeyes added 148 locations last year, and the fried chicken joint promises more growth now that it’s a part of Restaurant Brands International (NYSE: QSR), which acquired it back in 2017.

Fresh off the success of its new chicken sandwich, which proved so popular that it overwhelmed Popeyes’ locations, the chain looks primed for more growth. In its most recent quarter, Popeyes saw comparable sales growth of 3% and total sales at its restaurants rose 8.8%.

ALSO READ: The 10 Biggest Fast-Food Stocks

The American Eagle Outfitters (NYSE: AEO) sub-brand Aerie has been another standout performer in women’s apparel. The brand specializes in selling intimates and undergarments to young women, and it has been rapidly taking market share from Victoria’s Secret.

In its most recent quarter, Aerie’s comparable sales jumped 16%, following a 27% surge the year before, and the brand has now delivered double-digit comparable sales growth for 19 straight quarters.

American Eagle operates both standalone Aerie stores and in a side-by-side format next to American Eagle locations. In the most recent quarter, the company opened 13 standalone Aerie locations to bring the total to 131. Given the chain’s strong performance, that growth should continue.

Starbucks (Nasdaq: SBUX) may already be ubiquitous, but it is still opening more stores than any other restaurant chain annually as the company experiments with new concepts and taps into growth from the delivery boom.

Last year, the company opened up 895 new stores in the U.S., and through the first three quarters of the current fiscal year, the company has opened 645 locations in the Americas, the majority of which are in the U.S.

After a lull last summer, Starbucks shares have boomed as its performance has significantly improved in the U.S. and globally. In the most recent quarter, comparable sales rose 6% globally and 7% in the U.S.

Even as some retailers shutter stores and declare bankruptcy, there is still opportunity in brick-and-mortar retail. Delivery apps have helped drive business at restaurants, and in retail, newer brands and those that can’t be copied on the internet are finding success and continue to expand.

With the economy continuing to churn and the holiday season on its way, the companies on this list should have more good news to look forward to over the coming months.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns shares of Amazon, Chipotle Mexican Grill, Dave & Buster's Entertainment, Starbucks, and Target. The Motley Fool owns shares of and recommends Amazon, Chipotle Mexican Grill, Lululemon Athletica, and Starbucks. The Motley Fool has the following options: short January 2020 $180 calls on Costco Wholesale and long January 2020 $115 calls on Costco Wholesale. The Motley Fool recommends Costco Wholesale, Dave & Buster's Entertainment, and Five Below. The Motley Fool has a disclosure policy.