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
Jul 14, 2024 - Average Wage Tops $20 Per Hour
- Employment by full-service restaurants grew 1% in May compared to a year ago, while average industry wages rose by 3.7% over the same period to $20.16 per hour, according to the latest data from the US Bureau of Labor Statistics. May marked the first time average wages for nonsupervisory employees at full-service restaurants topped $20 per hour. Rising sales for food services and drinking places and sustained consumer spending are helping to support higher labor costs at full-service restaurants. Restaurant employment typically swells in the spring as the industry begins to staff up for the busy summer season.
- Rising menu prices across the restaurant industry have led to a broad pullback in eating out, The Wall Street Journal reported in July. Inflation fatigue among consumers is credited for the slowdown in restaurant traffic, especially in California, where April’s minimum wage hike to $20 per hour led to menu price increases at many fast-food chains and in the broader restaurant industry. “Guests have had it,” Jeff Uttz, CFO of Kura Sushi USA told WSJ, adding, “They’re deciding that restaurants are very expensive as a segment.” The California-based chain, which operates 64 restaurants across the US, reported surprisingly weak sales for the quarter that ended in May. Same-store sales inched up less than 1%, down from 3% growth the prior quarter and 10.3% a year ago. In response to falling sales, restaurants are focusing on efficiency and highlighting the value they deliver to diners.
- A new California law banning “junk fees” extends to surcharges at restaurants, marking a significant shift in billing practices in the food industry, according to Zaller Law Group’s California Employment Law Report. Under the Consumers Legal Remedies Act (Senate Bill 478), which takes effect July 1, 2024, California restaurants will be prohibited from adding service fees to bills, a tool many eateries have adopted to combat wage inflation. The bill is meant to promote pricing transparency by eliminating hidden costs that inflate the final bill unexpectedly. At the national level, the Federal Trade Commission has included restaurant surcharges in its proposed trade regulation rule. The FTC’s proposed rule would require businesses to include all required fees in the original listed price, including restaurant service charges. The National Restaurant Association reported that 16% of restaurants added a surcharge of some kind to customers’ bills in 2023, up from 15% in 2022.
- Sit-down restaurants are ditching QR menu codes, The Wall Street Journal reports. Growing customer complaints and concerns over the ubiquitous codes – a pandemic-era adaptation to reduce contact that has lingered – have convinced some sit-down eateries to retire them for good. Others are taking a hybrid approach, with QR codes as a secondary approach to ordering or paying the tab. Half of respondents to a January survey said having QR codes wouldn’t encourage them to visit a restaurant more often, according to Technomic. In 2022, the market research firm found that 88% of consumers preferred paper over QR code menus when dining at a sit-down restaurant. Attitudes about QR codes skew along generational lines, according to WSJ, with younger diners appreciating the more efficient service they get using QR codes. Readability, privacy concerns, and unfamiliarity with the technology among some users are reasons for preferring analog to digital menus.
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