Full-Service Restaurants
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 219,000 full-service restaurants in the US provide food services to patrons who order and are served by waitstaff while seated and pay after eating, a practice known as “table service.” Firms may also offer catering services, food and beverage for off-premise consumption, and non-theatrical entertainment. The full-service restaurant industry includes chains, franchises, and independent operators.
Uneven Demand
Customer traffic at full-service restaurant can vary by day of the week and time of day.
High Labor Turnover
Full-service restaurant operations are labor-intensive, and the quality of service is highly dependent on staff.
Industry size & Structure
The average full-service restaurant operates out of a single location, employs about 25 workers, and generates nearly $2 million annually.
- The full-service restaurant industry consists of about 217,100 firms that employ between 5 million and 6 million workers and generate about $424.4 billion annually.
- The industry is highly fragmented; the top 50 companies account for about 17% of industry revenue.
- The full-service restaurant industry includes chains, franchises, and independent operators. The largest chains include Olive Garden, Buffalo Wild Wings, and Chili’s. The largest franchises include Denny’s, IHOP, and Applebee’s. Larger firms may operate both company-owned and franchised locations.
Industry Forecast
Full-Service Restaurants Industry Growth
Recent Developments
Dec 14, 2024 - Income From Tips Declining
- As base pay for full-service restaurant workers has risen, tips as a percentage of total compensation has declined, according to ADP Research that surveyed 100,000 hourly employees at full-service restaurants in 50 states. Nationwide, as of September 2024, ADP found median pay for full-service restaurant workers was $23.88/hour including tips and base wages. That’s up from $18.61/hour in January 2020, a 28% rise. Tips comprised 57.4% of the compensation of tipped restaurant workers in September, compared to 67% in August 2021. Base pay for tipped workers has increased since the pandemic, in part because of moves to eliminate the tip credit, according to ADP. Still, the majority of tipped worker compensation is derived from tips. The median tipped restaurant worker included in the ADP survey earned $14.48 per hour in tips and $10.74 in base pay in September.
- Inflation heated up in November, with the consumer price index increasing 2.7% from a year earlier, according to the Bureau of Labor Statistics. BLS data shows the food-away-from-home (restaurants) index rose 0.3% in November, after rising 0.2% in October. The index for both full-service and limited-service meals was up 0.3% over the month. Compared to last year, menu prices are up 3.6%, with limited-service meals rising 3.7% over the last 12 months and full-service meals up 3.6% over the same period. November was the 20th consecutive month in which menu prices continued to outpace grocery/supermarket inflation, which rose 1.6% year-over-year. However, the rise in the food-at-home index was significantly higher than the rise in restaurant prices month-over-month, narrowing the gap between the two. NRN notes, citing Kalinowski Equity Research, that the gap between grocery and restaurant pricing in November was the smallest since April 2023.
- Restaurant industry bankruptcies are on the rise amid increasing operating costs and empty tables, The Wall Street Journal reports. In 2024, restaurant chains and operators are on track to declare the most bankruptcies in decades excluding 2020, when the COVID-19 pandemic upended the industry, according to an analysis of BankruptcyData.com records cited by WSJ. The firm tracked chapter 11 filings of restaurants that are publicly traded, along with companies holding more than $10 million in liabilities. Restaurant chains filing for bankruptcy this year include TGI Fridays, Red Lobster, Buca di Beppo, and Rubio’s Coastal Grill. As consumers retreat from some types of discretionary spending, including eating out, same-store sales traffic at US restaurants dropped by 3.3% this year through Oct. 6 versus the same period in 2023, according to market-research firm Black Box Intelligence. Visits to casual-dining restaurants fell 4.5% over the same period.
- Overall employment by full-service restaurants ticked up 0.8% in September compared to a year ago, while average industry wages increased by 4.3% over the same period to $20.13 per hour, just shy of their record high in August, according to the latest US Bureau of Labor Statistics data. While job growth at restaurants appears to be cooling somewhat after big gains in August, wage growth is more robust. Payroll growth at restaurants is being supported by rising consumer expenditures, up 2.6% year over year in June and 0.2% compared to May, according to the Bureau of Economic Analysis. Sales for food services and drinking places are also rising, growing by 3.5% YoY in June.
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