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 441,694 restaurant companies in the US include full-service restaurants, quick-service restaurants (fast food, snack and non-alcoholic beverage bars), fast-casual restaurants, grills, buffets, and cafeterias. Franchise restaurants are individually owned and operated and benefit from marketing and operational assistance provided by a franchisor.
Competition For The Food Dollar
While the restaurant industry is highly competitive, eating establishments also compete with convenience stores, grocery stores, warehouse clubs, and home cooking.
Emphasizing Health and Sustainability
Increasing consumer concern for health and the environment has led to growing demand for healthier and more sustainable restaurant menu options.
Industry size & Structure
A typical restaurant operates out of a single location, employs about 22 workers, and generates $1-2 million annually.
- The restaurant industry consists of about 441,694 companies which employ 10 million workers and generate almost $800 billion annually.
- The industry includes full-service restaurants, quick-service restaurants (fast food, snack and non-alcoholic beverage bars), fast-casual restaurants, grills, buffets, and cafeterias. Food service contractors, bars that serve mainly alcoholic beverages, mobile food services, and caterers are not included.
- Franchise restaurants are individually owned and operated and benefit from a recognizable brand name, corporate marketing, volume purchasing, and operational assistance provided by a franchisor.
- Restaurants may specialize by type of fare (Mexican, Chinese), dish (hamburgers, sushi), item (cookies, ice cream), or meal (breakfast, lunch, dinner).
- Large restaurant companies include McDonald's, Subway, Burger King, Wendy's, Golden Corral, Ruby Tuesday, DineEquity (Applebees) and Starbucks.
Industry Forecast
Restaurants Industry Growth
Recent Developments
Dec 14, 2024 - Menu Prices Still Rising
- Inflation picked up slightly in November, with the consumer price index increasing 2.7% from a year earlier, according to the Bureau of Labor Statistics. BLS data shows the food-away-from-home (includes restaurants) index rose 0.3% in November, after rising 0.2% in October. The index for both full-service and limited-service meals was up 0.3% over the month. Compared to last year, menu prices are up 3.6%, with limited-service meals rising 3.7% over the last 12 months and full-service meals up 3.6% over the same period. November was the 20th consecutive month in which menu prices continued to outpace grocery/supermarket inflation, which rose 1.6% year-over-year. However, the rise in the food-at-home index was significantly higher than the rise in restaurant prices month-over-month, narrowing the gap between the two. Citing Kalinowski Equity Research, NRN notes that the gap between grocery and restaurant pricing in November was the smallest since April 2023.
- Krispy Kreme is the latest restaurant operator to be hit with a cyberattack, Nation’s Restaurant News (NRN) 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.
- Restaurant industry bankruptcies are on the rise 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, when the COVID-19 pandemic upended the industry, 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 in 2024 include TGI Fridays, Red Lobster, Buca di Beppo, and Rubio’s Coastal Grill. As consumers pullback from some types of discretionary spending, including dining 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. Visits to casual-dining restaurants fell 4.5% over the same period.
- Overall employment by full-service restaurants ticked up 0.8% in September compared to a year ago, while average industry wages increased by 4.3% over the same period to $20.13 per hour, just shy of their record high in August, according to the latest US Bureau of Labor Statistics data. While job growth at restaurants appears to be cooling somewhat after big gains in August, wage growth is more robust. Payroll growth at restaurants is being supported by rising consumer expenditures, up 2.6% year over year in June and 0.2% compared to May, according to the Bureau of Economic Analysis. Sales for food services and drinking places are also rising, growing by 3.5% YoY in June.
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