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Restaurants

Chain restaurants growing as more independent eateries close, says industry report

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Despite multiple E.coli outbreakts linked to the Mexican Grill chain, Chipotle added hundreds of locations in 2015. (AP)

Big chains have been wooing consumers with increasingly discounted food --and it appears to be working—at the expense of the little guy.

According to a new report from food industry research firm NPD Group, last year the total number of chain restaurants increased by more than 3,200 locations while over 7,100 independent eateries closed up shop in 2015.

Total restaurant visits last year were up by 700 million compared to five years earlier, almost returning to pre-recession levels. But according to NPD, many restaurants—which the group defines as eateries with one or outlets—were hit hard by the recession and are struggling to recover since smaller restaurants don’t have the capital to recover as quickly.

“Chains have been heavily investing in advertising and ‘dealing’ to drive customer traffic these past several years and independents don’t have the resources to compete,” NPD spokeswoman Kim McLynn told Buzzfeed.

On average, fast food chain restaurants grew by 1.5 percent last year while visits to full service restaurants declined. Starbucks added 559 U.S. locations in 2015 while Dunkin’ Donuts added 349 outlets. Both Taco Bell and Chipotle each added about 200 stores in the same time period.

Growth has been spurred in part by the slew of new promotions offered by the larger chains. Burger King, Wendy’s, McDonald’s and now Taco Bell have all recently rolled out different dollar deals—ranging from simple dollar items to Wendy’s four for $4. Burger King had an even cheaper promotion with five items for $4. 

That's not to say that big fast food joints are immune to the restaurant struggle. McDonald’s, which has faced notorious revenue problems, had 91 fewer U.S. locations in 2015 than the previous year. KFC closed 100 and Pizza Hut closed 41 restaurants.

But all is not lost for the restaurant industry. The fast casual quick service category continued to expand, growing by 5 percent from 18,176 in fall of 2014 to over 19,000 last year.

McLynn said “the restaurant business is challenging and in the end it’s the survival of the fittest.” In a post-recession era, the “fittest” may be those restaurants which are perceived as offering the greatest value.