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
Source: Vertical IQ and Inforum

Recent Developments

May 14, 2024 - Consumer Spending Driving Growth
  • Employment by limited-service restaurants grew 1.9% in March compared to a year ago, according to the latest US Bureau of Labor Statistics data. Meanwhile, average industry wages continued to rise, up 3.1% in March year over year to $15.86 per hour, just pennies shy of their all-time high in January, BLS wage data show. Sustained consumer spending, up 3.1% in March year over year and 0.5% from the previous month, is driving sales and supporting payroll growth. Sales for food services and drinking places jumped 10.7% in February compared to a year ago and 5.1% over January, per the BLS.
  • What do Wingstop, Texas Roadhouse, Chipotle Mexican Grill, and Domino’s Pizza have in common? They are all outperforming their peers by keeping prices low to appease consumers turned off by rising menu prices, The Wall Street Journal reported in April. WSJ cited a research note by Guggenheim analyst Gregory Francfort that said the restaurant brands that have taken the most restrained approach to raising prices have widened their lead against their peers over the past three months, noting that each company has posted double-digit, year-to-date share price gains relative to a 7% jump in the S&P 500. Chipotle’s price increases were limited to about 2.8% during its first quarter of the year, while Domino’s Pizza has been relying heavily on value offerings and deals, per WSJ. Low prices keep loyal customers coming back for more while attracting new customers looking to trade down from pricier eateries.
  • 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.
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.

Request A Demo