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

Full-service restaurants are characterized by demand that 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

                              Nov 14, 2023 - Pay and Employment Rise
                              • Overall employment by full-service restaurants rose in August compared to a year ago but slipped slightly (less than 1%) from July. Industry employment remains below its level of four years ago. By contrast, average wages for nonsupervisory employees at full-service restaurants continued their steep rise in August and were nearly 30% higher than in August 2019.
                              • The price of olive oil – a staple ingredient at many finer restaurants and pizzerias – is soaring, The New York Times reported in October. Olive oil prices have more than doubled over the past year and are expected to continue to rise. Drought in Spain, the world’s largest olive oil producer, has been devastating to harvests there and bad weather has damaged olive crops in other major producing countries like Italy, Greece, and Portugal, according to NYT. Moreover, the outlook for the upcoming European olive harvest is negative. The European Commission recently forecast olive oil production in European Union countries to recover only slightly from last year’s 40% decline, further limiting supplies and pushing up prices. The US sources almost all of its olive oil from Spain and Italy, driving up the price for restaurants which may have to use less of it if the price continues to rise.
                              • Restaurant operators hoping for a break from unprecedented rapid wage growth can look forward to some relief, Restaurant Dive reports citing new data from the Bureau of Labor Statistics (BLS) that show that the restaurant labor market is cooling. The restaurant unemployment rate has returned to pre-COVID-19 levels (5.8% in September) after peaking at over 35% in April 2020. And while total employment by restaurants still is marginally behind pre-pandemic levels, the number of restaurant workers has stabilized at around 12.2 million in Q2 2023, ending a run of dramatic growth that began in December 2020. Also, turnover among the restaurant workforce began to stabilize in the first half of 2023, before falling in June and July, BLS data show. Slowing turnover is a sign that conditions in the restaurant labor market are shifting back in the favor of employers.
                              • A new rule proposed by the Labor Department to extend eligibility for overtime pay would impact about 180,000 leisure and hospitality workers, according to the department. If passed, the rule would increase the threshold for executive, administrative, and professional full-time salaried workers to $55,068, up from $35,568 at present, making 3.6 million more US employees eligible for overtime pay. As part of the potential new rule, the salary threshold would be updated every three years to reflect current earnings data. The National Restaurant Association is opposed to the change, noting that it would increase operating costs by an estimated 2.5% – a significant burden for small business restaurants that average a 3-5% pre-tax margin.
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