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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 217,000 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.

High Labor Turnover

Full-service restaurant operations are labor-intensive, and the quality of service is highly dependent on staff.

Uneven Demand

Full-service restaurants are characterized by demand that can vary by day of the week and time of day.

Industry size & Structure

The average full-service restaurant operates out of a single location, employs about 25 workers, and generates just over $1 million annually.

    • The full-service restaurant industry consists of over 217,000 firms that employ between 5 million and 6 million workers and generate about $300 billion annually.
    • The industry is highly fragmented; the top 50 companies account for just over 15% 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
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              May 3, 2022 - Food Prices Skyrocket
                              • Food prices have been rising since mid-2021, but they are expected to increase further amid the Ukraine war and rising interest rates. On a seasonally adjusted basis, US food manufacturers’ prices rose 1.5% in March 2022 compared to the prior month, but unadjusted food prices grew 14.6% over March 2021, according to the US Bureau of Labor Statistics. While restaurants have tended to increase their prices as food costs rise, firms and their customers are not likely to get much relief. Food-away-from-home prices are expected to rise between 5.5% and 6.5% for all of 2022 compared to 2021, according to the food price outlook released in March by the US Department of Agriculture.
                              • In March 2022, 6.1% of accommodation and food services workers quit or left their jobs, the highest percentage of any US industry sector. Full-service restaurants have been more impacted during the pandemic than limited-service eateries. In February 2022, full-service restaurant employment was down 11.5% compared to February 2020; limited-service restaurant employment was only down 0.8% over the same period.
                              • To cope with labor shortages, food services providers and restaurants are doing more than just offering better wages to retain their workers, according to Bar & Restaurant. Some have invested in technology, including new point-of-sale (POS) systems with handheld devices and QR code ordering kiosks to ease team member workloads. Others offer bonuses for employment referrals or have created clear upward mobility tracks.
                              • Consumers have returned to indoor dining despite an uptick in new COVID-19 cases. As of early May 2022, daily new cases were rising in most US states. However, the rate of daily new cases was at its lowest level since the summer of 2021 and hospitalizations remained as low as they have been at any point during the pandemic. In late April 2022, the CDC announced that according to the agency’s research, about 60% of the US population had been infected with COVID-19 by February 2022. Some medical experts suggest the high percentage of infection and the resulting increase in immunity among the US population may signal a new phase where infections cause less and less severe illness.
                              • In early April 2022, the US House passed the Relief for Restaurants and Other Hard Hit Businesses Act of 2022 (HR 3807), which would add another $42 billion to the Restaurant Revitalization Fund (RRF). The legislation would provide RFF grants for the 177,000 restaurants that applied for relief but didn’t receive any before the funding ran out in May 2021. The National Restaurant Association says the group of unfunded RRF applicants represents about 20% of US restaurants. HR 3807 has moved to the US Senate.
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