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 156,000 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
Industry Forecast
Limited-Service Restaurants Industry Growth
Recent Developments
Apr 14, 2024 - Wages Climb to New High
- Employment by limited-service restaurants has eased from last summer’s seasonal high while the industry’s average wage continues to rise, according to the latest US Bureau of Labor Statistics data. Overall employment grew by 1.8% in February compared to a year ago after rising 3.2% in the previous annual comparison, per the BLS. Meanwhile, average industry wages were $15.88 per hour in January, a new high and an increase of 3.9% year over year. California’s $20 per hour minimum wage hike for fast-food workers, which took effect on April 1, will drive wages in the state up even more. California employs more fast-food workers than any other US state, according to BLS data.
- Yum! Brands is going all in on artificial intelligence, The Wall Street Journal reported in April. The company, which operates Taco Bell, Pizza Hut, KFC, and other quick-serve chains, has been increasing its investment in technology and automation. With nearly half (45%) of Yum’s sales coming from digital channels, the company collects and consolidates customer data for its restaurants to drive new sales and lower costs. “Our vision of [quick-service restaurants] is that an AI-first mentality works every step of the way,” Yum’s chief digital and technology officer, Joe Park, told WSJ in an interview. The rapid growth of generative AI is further accelerating the pace at which Yum! and other fast-food chains embrace cutting-edge technologies. The company is testing generative AI use by its customers, managers, and employees. Tech fees paid by Yum’s franchisees are helping fund its AI investments, Park told WSJ.
- Baby boomers are the key drivers of quick service restaurant (QSR) sales, Marketing Daily reported in February, citing a recent Affinity study. Data collected between January 2021 and January 2024 using Affinity Solutions’ Consumer Purchase Insights, which are based on credit card, debit card, and transaction data, showed boomers were the highest spenders at QSRs such as McDonald’s, Burger King, Wendy’s, and Chick-fil-a, followed by Gen X and millennials at these chains. Moreover, boomer women outspent their male counterparts to rank as the top spenders at coffee chains such as Dunkin’ and Starbucks. However, millennial men spent slightly more than millennial women at fast food chains. “Traditional fast-food chains are favored by Boomers, while Millennials prefer fast-casual chains,” Affinity’s CEO Jonathan Silver told Marketing Daily.
- Chicken is eclipsing beef at restaurant chains, The Wall Street Journal reports. While burgers still outsell chicken sandwiches at fast-food restaurants, since 2020, chicken servings across types of products have outsold beef in the restaurant industry overall, according to market research firm Circana. Chicken offerings on restaurant menus – including wings, tenders, nuggets, and sandwiches – have risen by 6.4% in the past five years, compared with 4.7% for burgers and other beef-based items, according to Technomic. Chicken wings and sandwiches both were added to menus at a higher rate than burgers in 2023, according to WSJ. The rise in poultry popularity is partly due to lower, more stable prices for chicken relative to beef. As more diners opt for chicken, even major burger chains are cashing in with McDonald’s McCrispy Chicken sandwich, launched in the US in 2021, now generating $1 billion in annual global sales, per WSJ.
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