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8 Fast-Growing Restaurant Chains That Defied the Downturn

We all know the names of the biggest restaurant chains in America -- brands such as Subway, McDonald's (MCD) and Red Lobster. But where are the Subways of tomorrow? They're out there right now building their businesses, offering innovative twists on classic categories such as burgers, sandwiches, smoothies and coffeehouses. While many of the big chains fret about recession, these upstarts are grabbing up cheap real estate and growing fast -- in one case, more than 800 percent over the past five years.

A new report from Chain Store Guide (the research arm of trade magazine Chain Store Age's parent company Lebhar-Friedman) reveals the fastest-growing smaller chains that are poised to become the restaurant industry's next household words. A look at the strategies driving these fast-growing brands:

  • Which Wich -- This Dallas-based sandwich chain tops the list with more than 800 percent growth to roughly 100 stores, mostly in Texas and across the southern U.S. The company has at least 10 more locations in the works. The stroke of genius here from founder Jeff Sinelli (also of #12 fastest-grower Genghis Grill)? A no-frills concept that's easy to execute. No soups, no salads, just really fresh sandwiches, and lots of them -- 50 varieties. There's good patron involvement here, too, and a sense of fun -- if you do an interesting doodle on one of the company's signature brown takeout bags, they'll publish it on their Web site.
  • Salad Creations -- This fresh-salad chain out of Florida fueled its 600 percent growth in part by becoming an international franchise soon after its 2003 launch. The chain leverages its healthy-food position by working with the Diabetes Research Association to create low-calorie meal choices. About one-quarter of its roughly 50 locations are abroad, in markets from Brazil to Kuwait. More than two dozen additional units are planned.
  • Five Guys Burgers and Fries -- You might think there's nothing new to do with the burger category, but Five Guys has grown like topsy to 500 restaurants and $26 million in sales on a basic formula of quality burgers and '50s-reminiscent red-and-white decor. A perenniel "best of" winner, Five Guys even has a tab on its Web site labeled "fanatics."
  • Freddy's Frozen Custard & Steakburgers -- More '50s nostalgia here from a Wichita chain that's translated old-timey desserts and gourmet burgers from four stores in '04 into more than 40 stores across the Midwest and Southwest, and 471 percent growth. At least 11 more units are planned for this year.
  • Froots Fresh Smoothies, Salads & Wraps -- Another smoothie chain? Yep, but one that's grown 440 percent to hit 54 stores last year. In a similar vein to Salad Creations, this Florida-based healthy-dining chain is already in Singapore, Honduras and other far-flung locales. Bonus points for voluntarily posting detailed nutritional info about its meals online.
  • Spicy Pickle (SPKL) -- The only publicly traded company in the top 10, Spicy also owns the Bread Garden Urban Cafe chain in Canada. Both chains revolve around artisan breads and many gourmet options for sandwich fillings, including 21 toppings and 15 spreads. This penny stock has seen its results dinged by the downturn, with sales down 7 percent in '09. But that hasn't discouraged franchise owners, who've signed up to open 60 stores this year. Spicy appears to be on the problem, professionalizing its management this month by dividing its CEO and president roles and bringing in seasoned former Little Caesars and Quiznos vet Mark Laramie as CEO to back up founder and president Marc German.
  • Foster's Grille -- A casual neighborhood atmosphere and its signature charburger have helped Virginia-based Foster's grow to 25 units that pull in $1 million apiece in sales. Its "Dining for Dollars" program builds community goodwill, letting nonprofits keep 10 percent of proceeds from supporters' meals.
  • Saxby's Coffee -- This feisty little latte chain out of Pennsylvania has been around since '93, but hit a 300 percent growth spurt in the last five years. Its point of difference: unique, handcrafted coffee blends. With 40 units now mostly on the east coast, Saxyby's has about a dozen more stores under construction, and is looking across the U.S. and overseas for franchise partners.
Photo via Flickr user flickr4jazz
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