McDonald’s and Other Restaurant Chains Seek Growth in the Sun Belt due to Surging Population

McDonald’s and other restaurant chains are looking to expand their presence in the Sun Belt region of the United States due to its surging population. The Sun Belt, which encompasses the southern third of the country, has experienced significant population growth in recent years, particularly during the Covid-19 pandemic. Consumers have been drawn to the region’s warmer weather, more spacious living arrangements, fewer government restrictions, and lower housing costs.

One company capitalizing on the growth in the Sun Belt is Portillo’s. The Chicago-based chain has been sending its “Beef Bus” to new markets in the region, introducing customers to its brand and generating excitement before opening new restaurants. Portillo’s CEO, Michael Osanloo, noted that the chain’s sales are much stronger in Texas, Arizona, and Florida compared to midwestern states like Indiana and Wisconsin. In fact, Portillo’s first location in Texas generated $13 million in sales within its first year.

McDonald’s, as the third-largest restaurant chain in the U.S., has been slower to tap into the potential of the Sun Belt. However, the company recognizes the opportunity for growth in the region and plans to open 900 new restaurants by 2027, with a focus on Florida, Texas, Arizona, Georgia, and North Carolina. Other chains, such as Raising Cane’s, Chipotle Mexican Grill, and Starbucks, have been quicker to expand in the Sun Belt and have seen success.

Not only are restaurants looking to the Sun Belt for growth, but other industries are as well. American Airlines is updating its routes to accommodate the population shift, while Macy’s is opening smaller stores in suburban strip malls. Real estate investment trusts that invested in the region earlier have also seen benefits from the southern migration.

The appeal of the Sun Belt goes beyond population growth. The region is known for its business-friendly environment, with several states offering lower taxes and fewer regulations. This has attracted companies and made it easier for restaurant operators to expand. Friendly’s, an 89-year-old chain known for its ice cream, is looking to expand beyond the Northeast into the Sun Belt. Dutch Bros., a coffee chain, is focusing its expansion plans on warmer markets where its cold drinks are more popular.

Overall, the Sun Belt presents a significant opportunity for restaurant chains and other businesses due to its surging population, favorable business environment, and appealing climate. As more consumers move to the region, companies are eager to meet their demands and capture their business. The future looks bright for the Sun Belt as it continues to attract growth and investment.