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
Mar 14, 2025 - Declining Same-Store Sales
- McDonald’s – the bellwether of the fast-food industry – saw its same-store sales fall 1.4% in the three months ended December 31, driven in part by customers spending less money per visit, The Wall Street Journal reports. The company said consumers remain pressured, particularly low-income diners and families. Sales were also sluggish in January, reflecting a broader slump in the industry, its CFO said. McDonald’s wasn’t alone in reporting lower same-store sales in the fourth quarter. Starbucks, Pizza Hut, and KFC also saw declines in the US, per WSJ. In a sign of trouble to come, consumer confidence plunged in March. According to a closely-watched index from The University of Michigan, consumer sentiment nosedived to 57.9 in mid-March from 64.7 last month, much weaker than expectations and the lowest level since July 2022 following three consecutive months of decline.
- 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.
- The soaring price of eggs is a challenge for restaurants, especially breakfast-focused formats where eggs are a cornerstone ingredient, Fastcasual.com reports. Bird flu outbreaks have caused the cost of eggs to surge by 30% over the past year. The average cost of a dozen Grade A large eggs was $3.65 in November 2024, up 28 cents from October, according to the Bureau of Labor Statistics. By comparison, in 2023 the cost averaged $2.07 per carton. Rising and volatile egg prices impact everything from food costs to menu pricing strategies for full-service and quick-service restaurants. Strategies for managing volatility and protecting the bottom line include reducing waste and managing costs using inventory management software such as Restaurant365. Other cost-saving measures include preventing over-portioning, adjusting menus to include less egg-centric dishes, and negotiating with vendors to reduce other food costs to compensate for higher egg prices, according to Fastcasual.com.
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