Limited-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 159,000 limited-service restaurants in the US offer counter service, a practice in which patrons order food and beverage and pay before eating. Food and beverages may be consumed on-premise, taken out, or delivered. Franchises, like McDonald’s and Subway, are ubiquitous in the limited-service restaurant industry and provide independent owners with a well-known brand name and operational and marketing support.
Competition from Alternative Meal Sources
Limited-service restaurants face competition from various alternative sources, including full-service restaurants, prepared foods, specialty food and beverage retailers, and home cooking.
Junk Food Reputation
Fast food (aka "junk food") has a reputation for being unhealthy, an image that runs counter to the consumer trend toward more nutritious eating.
Industry size & Structure
The average limited-service restaurant employs about 30 workers and generates about $2.3 million annually.
- The limited-service restaurant industry consists of about 159,000 firms that employ between 4 million and 5 million workers and generates over $367 billion annually.
- The limited-service restaurant industry includes chains, franchises, and independent operators. Large franchises include McDonald’s, Taco Bell, Burger King, Subway, and Panera Bread. Large chains include Chick-fil-A, Chipotle, and Panda Express. The largest firms have an international presence.
- Limited-service restaurants accounted for 38.5% of food-away-from-home expenditures in 2019 and have increased their share since the COVID-19 pandemic.
- Between 1997 and 2022, spending at limited-service restaurants increased by over 300% from $112 billion to $468 billion.
- Fast food chains account for 75% of limited-service restaurant traffic, according to NPD. Fast casual restaurants account for 8%. Quick-service retail, which includes prepared foods, accounts for 17%.
- In 2020, there were 785,316 franchise owners of fast food restaurants in the US.
Industry Forecast
Limited-Service Restaurants Industry Growth
Recent Developments
Apr 14, 2025 - Declining Consumer Confidence Threatening Restaurants
- The dramatic drop in consumer confidence is expected to cause diners to pull back on spending, presenting restaurants with ongoing challenges amid a deteriorating economic landscape, Nation’s Restaurant News reports. In April, consumer confidence fell off a cliff according to the University of Michigan, whose consumer confidence index fell 11% for the month and is down 30% over the past five months as consumers in the US have grown increasingly pessimistic about the prospects for unemployment and worried about inflation. Restaurants rely on discretionary spending. When consumers feel stressed they skip dining out and eat at home instead. The U of M survey shows that Trump’s tariff pronouncements, along with the severe reaction of the stock and bond markets, are taking their toll on US consumers.
- Driving on-premise traffic will be a higher priority for restaurant operators than capturing off-premise visits this year, according to the National Restaurant Association’s State of the Industry Report 2025. During the pandemic and its aftermath, restaurants – by necessity – focused on their take-out and delivery services. Now, according to the report, 81% of consumers say they would eat at full-service restaurants more frequently if they had more money to spend. Across segments, restaurants are prioritizing on-premise service with 60% of quick-service restaurant (QSR) operators saying on-premise visits would be more important in 2025 than off-premise, while 90% of fine dining operators said the same, per NRA’s report. Major brands – notably Starbucks and Subway – are focusing their efforts on improving the dine-in experience and make their eateries more appealing places to linger. QSR customers identified store cleanliness as one of the most important factors determining their visit, per the NRA survey.
- The Trump administration’s deportation sweeps are a threat to workers and restaurant operators, Restaurant Business reports. The restaurant industry is the largest employer of immigrants, according to the labor activist nonprofit One Fair Wage. Moreover, in cities like New York, Chicago, and Los Angeles, up to 70% of restaurant workers are foreign born, and an estimated 40% aren’t legally authorized to work. Many restaurant workers who lack legal status are afraid to go to work for fear of being deported, boosting absenteeism. “Restaurant workers and immigrant service workers are the backbone of the American economy, yet they are being targeted, vilified, and left without the support they desperately need,” said Saru Jayaraman, president of One Fair Wage. To support immigrant workers, Jayaraman’s organization has launched the Service Workers’ Emergency Relief Fund to offer immediate financial assistance and legal support to restaurant workers caught up in the sweeps.
- Employment by limited-service restaurants grew 0.8% in January compared to a year ago while wages at limited-service restaurants rose 4.2% over the same period to $16.55 per hour, according to the latest US Bureau of Labor Statistics data. Rising consumer expenditures – up 2.7% in February year over year and 0.1% versus January – have been supporting rising restaurant payrolls. But that may be about to change as plummeting US consumer confidence triggered by President Trump’s tariff threats and economic turmoil cause more people to skip restaurant meals in favor of eating at home.
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