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 217,100 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 between $1 million and $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 $365.5 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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              May 14, 2024 - Rising Consumer Spending Supporting Growth
                              • Employment by full-service restaurants grew a modest 1.2% in March compared to a year ago, while average industry wages climbed by 5% over the same period to $19.94 per hour – on par with their record high in December – according to the latest US Bureau of Labor Statistics data. Sustained consumer spending, up 3.1% in March year over year and 0.5% from the previous month, is driving sales and supporting payroll growth at full-service eateries. Food services and drinking places saw sales jump 10.7% in February year over year and 5.1% over January, according to the latest data from the Census Bureau.
                              • 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.
                              • Stung by a rise in no-shows and last-minute cancellations, restaurants are increasingly turning to charging fees that can range from as little as $10 per diner to more than $50 per head, The New York Times reports. According to data from the reservation service Resy, 17% of the US restaurants on the platform charged at least one cancellation fee in January, up from 13% a year earlier and 4% in January 2019. The practice is more common in big cities such as New York, where a quarter of New York restaurants on Resy charged at least one cancellation fee in January, according to NYT. While diners are pushing back against the fees, restaurants that have imposed them report a steep decline in no-shows and last-minute cancellations. Restaurants that require a reservation for every table are especially vulnerable to no-shows and late cancellations as they can’t replace the business.
                              • Artificial intelligence has a role to play in the food and beverage industry, according to Bar & Restaurant News. Scheduling and schedule management, a challenge for many restaurant operators juggling multiple shifts, was cited as the number-one thing managers wish was intelligently automated, according to Legion Technologies, the maker of Legion Copilot, a generative AI-powered workforce management assistant for the food service and hospitality industries. "Through simple voice commands, they [employees] can bypass manual searches on the app to get the information they need, whether it’s their schedule for the next week, important compliance documents, or tips from the employee handbook. The introduction of generative AI won’t interfere with day-to-day systems and processes but will make them easier to manage and understand,” says Legion’s chief customer officer. The AI-powered tool allows for easy access to schedule data and insights to easily make schedule modifications.
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