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
Dec 14, 2024 - Krispy Kreme Cyberattack
- Krispy Kreme is the latest restaurant operator to be hit with a cyberattack, Nation’s Restaurant News reports. The donut chain said it was notified of “unauthorized activity” within its IT systems on November 29 and has since been experiencing “certain operational disruptions,” particularly with its online ordering system. In a filing with the Securities and Exchange Commission, the company said the attack will likely have an impact on its operations and that the “expected losses” from the incident, as well as the financial cost of the investigation into the attack, will directly impact the company’s financial condition. NRN noted the attack was the third in the foodservice industry this year. Earlier in November Starbuck’s suffered a third-party ransomware attack on its back-end processes, and in March Panera Bread experienced a data breach that led to the leak of personal information of many employees, including social security numbers.
- According to a new Restaurant365 study, food and labor costs continued to be a major pain point for restaurant operators in 2024, with 88% experiencing rising staff expenses compared to 89% in 2023, FoodtruckOperator.com reports. Of operators reporting rising labor costs, 51% reported a 1-5% increase, 41% experienced a 6-14% increase, and 8% saw labor costs rise more than 15%. More than half of respondents (59%) said labor challenges led to operating below their full capacity. As for food, 53% of respondents reported a 1-5% jump in costs, 37% saw a 6%-14% increase, and 10% saw a rise of over 15%. Rising food costs led to menu price increases, with about 61% of respondents saying they hiked prices. Costs are expected to remain a challenge in 2025, with 82% of respondents expecting food costs to increase and 77% predicting rising labor expenses.
- Restaurant industry bankruptcies are rising amid an increase in operating costs and empty tables, The Wall Street Journal reports. In 2024, restaurant chains and operators are on track to declare the most bankruptcies in decades excluding 2020, according to an analysis of BankruptcyData.com records cited by WSJ. The firm tracked chapter 11 filings of restaurants that are publicly traded, along with companies holding more than $10 million in liabilities. Restaurant chains filing for bankruptcy this year include fast-casual operations such as Tijuana Flats and Roti. As consumers retreat from some types of discretionary spending, including eating out, same-store sales traffic at US restaurants dropped by 3.3% this year through Oct. 6 versus the same period in 2023, according to market-research firm Black Box Intelligence. Chains with fewer than 50 locations that can’t benefit from the scale advantages of bigger companies are considered the most vulnerable, per WSJ.
- Employment by limited-service restaurants grew 1.1% in September compared to a year ago, while average industry wages rose 4.8% over the same period to a new high of $16.26 per hour, according to the latest US Bureau of Labor Statistics data. Although employment by the industry is near record high levels, demand for new hires persists. According to National Restaurant Association data, between July 2023 and July 2024, the bulk of unique job postings in the restaurant industry were in limited-service restaurants, with 691,819 postings over the 12 month period.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.