Limited-Service Restaurants NAICS 722513

Jul 14, 2026 - Supply Chain Concentration

• According to a QSR Pro report, the growing concentration of the foodservice distribution industry is increasing both costs and supply chain risks for quick-service restaurants. Sysco, US Foods, and Performance Food Group now control about half of the US foodservice distribution market, giving many QSR operators little leverage over pricing, delivery schedules, product availability, or payment terms. Independent restaurants and small franchisees are especially vulnerable, often paying higher prices and facing greater risks of product shortages and supply disruptions than large national chains with centralized purchasing agreements. As the largest distributors continue to expand through acquisitions, their pricing power is increasing, making it more difficult for smaller operators to manage food costs and maintain reliable inventory. Although regional distributors remain in the market, many are struggling to compete with the scale and resources of the industry's largest players. The same holds true for smaller QSR operators.
• Fast-food restaurants are proving resilient despite rising gas prices linked to the Iran war, The New York Times reported in May. The average price of a gallon of regular unleaded gasoline rose 35% during March, according to the AAA auto club. Nevertheless, limited-service giants like McDonald’s, Burger King, and Taco Bell all reported solid sales growth in the quarter ended March, with McDonald’s US same-store sales up 3.9%, suggesting that higher fuel costs have not significantly reduced consumer spending on fast food, even among more price-sensitive customers. A key reason is the industry’s focus on value. Chains are attracting customers with low-cost menu options, including meals priced under $3 and discounted breakfast deals. Their value-focused strategy is helping maintain traffic even as household budgets are under pressure from high gas prices.

• A combination of record high beef prices and value-hungry consumers has burger-centric restaurant chains in a vise, The Wall Street Journal reported in March. Limited-service operators McDonald’s and Burger King are facing significant margin pressure as beef prices surge at a time when consumers are demanding lower prices. Wholesale beef costs have risen about 48% over the past year, resulting in higher input costs for core menu items like burgers. Nevertheless, chains like McDonald’s and Burger King are expanding value menus and promotions to attract price-sensitive customers amid declining foot traffic. Some chains are offsetting pressure through technology, operational efficiency, and high sales volume, though smaller players are more vulnerable. Fast-food restaurants reported overall profit margins of 4% last year as costs rose, particularly for labor.
• US restaurants and bars shed nearly 33,000 jobs in June 2026, erasing much of the hiring gains made before the summer season, while May's seemingly impressive job growth was revised down by 10,300 jobs, Nation’s Restaurant News reports citing the latest government data. The slowdown reflects weakening restaurant traffic, soft sales, and rising labor costs that are causing operators to limit hiring. Restaurant employment has grown at an annual rate of just 0.62% over the past four years, well below the 1.8% average before the pandemic. Operators are also relying more on technology, including mobile ordering, kiosks, and third-party delivery, to improve efficiency and reduce labor needs. Despite major events expected to boost demand, the industry's hiring outlook remains subdued unless customer traffic improves.