You’ve heard of “Peak Oil,” right? Where the amount of oil we can pump out of the earth has peaked and is in decline? Well now there is “Peak Burger” in America, where the number of fast food outlets is in serious decline, reports Business Week:
For most of its history, the fast-food business in the U.S. has been characterized by rapid and dependable growth. From founder Ray Kroc’s first restaurant in Des Plaines, Ill., in 1955, McDonald’s (MCD) became a chain of more than 700 stores in the U.S. within 10 years. By 1983 there were 6,000, and for the next two decades the company opened about 360 U.S. outlets every year on average. Smaller rivals Burger King Worldwide (BKW) and Wendy’s (WEN) had impressive early growth stories of their own.
In recent years, however, the companies that made Big Macs and Whoppers into icons of American pop culture have seen robust domestic expansion disappear from their menus. Sales at restaurants open for at least 13 months slipped 0.2 percent last year in the U.S. at McDonald’s and 0.9 percent at Burger King for the U.S. and Canada. Even including newly opened locations, which experience rapid growth rates in their early months, sales at the major fast-food chains grew only 1.1 percent last year, compared with 4 percent in 2012, according to Euromonitor International.
Slower sales growth has many industry watchers forecasting the once unthinkable: the peaking of burger joint growth in the U.S. “Traditional fast food—McDonald’s, Sonic (SONC), Wendy’s, KFC, Taco Bell—are fairly well-saturated in this country with not a lot more room left for growth,” says Peter Saleh, senior research analyst at brokerage Telsey Advisory Group…
..In 2013, McDonald’s added only 121 stores in the U.S. (after subtracting the number of U.S. stores that were closed during the year). So to boost revenue, it needs to sell more food at each location. That’s not happening—U.S. same-store sales have slid or been unchanged for nine straight months—and it’s getting harder to increase sales as consumer habits change and the competition ramps up.
McDonald’s and its big rivals have tried to adapt by adding more healthful options—chicken sandwiches, salads—to the menu. But because they built their business selling burgers and fries, the traditional chains mostly attract people who like burgers and fries.
Diners who say they prefer to eat healthier aren’t choosing McDonald’s over relative newcomers such as Chipotle Mexican Grill (CMG)…
[continues at Business Week]