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Restaurants Climb Top U.S. Retailers' List: Report

Reuters
Friday, 29 Jun 2007 | 6:33 AM ET

In a sign of the growing influence that restaurants have on how and where consumers spend their money, a major retail trade group has included for the first time six restaurant companies on its list of the top 100 retailers, released on Friday.

According to the annual Top 100 Retailers ranking featured in the July issue of the National Retail Federation's magazine STORES, McDonald's, the world's largest fast-food chain, is the 16th largest retailer.

Yum Brands, which operates the Pizza Hut, Taco Bell and KFC chains, is No. 35, while Starbucks clocks in at No. 42. Darden Restaurants, the operator of Red Lobster and Olive Garden, is No. 53.

The rankings are based on 2006 annual revenues.

The addition of restaurants to this year's ranking shows that the definition of "retail" is broadening, and that food is becoming a more important part of shopping, especially with the growth of lifestyle centers versus traditional malls, according to Susan Reda, executive editor of STORES.

"Malls always had a traditional food court but lifestyle centers integrate food with retail," Reda said, noting that the integration gets to the heart of how consumers shop.

"They like to go out to eat ... and, 'Oh, let's walk next door and see what's in Pottery Barn ... and by the way I need a new pair of jeans for the weekend,"' Reda said. "'If I can hit those three stores in one shopping trip, I'm happy."'

Reda also said that an increasing portion of shoppers' budgets are being devoted to restaurants.

The other restaurant chains to make the list are Brinker International, which owns Chili's Grill & Bar and Macaroni Grill, at No. 73, and Outback Steakhouse, which was recently taken private, at No. 80.

Top Three Unchanged

Wal-Mart Stores, Home Depot, and Kroger maintained their standing as the top three retailers, respectively.

"It shows a certain amount of resilience in our industry and continued growth despite challenging times for all three of those companies," Reda said.

Wal-Mart's 2006 sales, which rose 11.7% to $348.65 billion, were greater than those of the next five largest U.S. retailers combined, the report said.

"I don't think there's a company that gets more beat up by all of us than Wal-Mart," Reda said. "We're constantly taking them to task for one thing or another. But at the same time, this is a company that continues to innovate, continues to grow and continues to respond to the consumer."

Costco Wholesale and Target each advanced one notch to move into the No. 4 and No. 5 spots, respectively.

Sears Holdings, which is controlled by hedge fund manager Edward Lampert, dropped two spots to No. 6, while drugstore chain Walgreen, rose one spot to No. 7.

Bringing up the rear of the top ten U.S. retailers were Lowe's at No. 8, CVS/Caremark, at No. 9; and Safeway at No. 10.

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