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
Aug 14, 2024 - Sales and Traffic Declining
- Over 70% of US consumers believe that restaurants – along with supermarkets and food manufacturers – are overcharging, according to a recent survey conducted by economists at the University of Illinois and Purdue University. Restaurant patrons, fed up with high menu prices, are voting with their feet, with a majority of restaurant operators reporting softer same-store sales and customer traffic in June, according to the National Restaurant Association. More than half (56%) of operators said their sales declined in June, up from 45% who reported a sales decline in May. June was the sixth consecutive month of net-negative sales readings, per the NRA. Moreover, restaurants reported negative customer traffic in June, with 14% of operators saying their traffic rose between June 2023 and June 2024, while 58% reported a traffic decline. June was the 15th consecutive month of net declines in customer traffic.
- Citing high prices and weak foot traffic, Technomic has revised its 2024 restaurant sales forecast downward, Restaurant Business (RB) reports. After initially expecting a 5.3% increase in sales for 2024, the data and analytics firm now expects a 3.8% increase, a downward revision of 1.5 percentage points. Moreover, Technomic projects that menu prices will increase by 3.7% this year, according to RB. Limited-service brands are expected to outperform full-service establishments, with Technomic forecasting fast-casual sales to grow 6.4% this year and quick-service restaurants are expected to grow 4.6%, both of which are well above inflationary levels. By comparison, casual-dining chains are expected to grow sales by 2%, while family-dining or “midscale” restaurants are expected to grow 1.6%. Fine dining sales are expected to grow by 3.2%.
- Demographic shifts in the US are driving culinary diversity and growth potential in the restaurant industry, Nation’s Restaurant News (NRN) reports. As the nation’s Hispanic, Asian, and Hawaiian populations have grown, sales at related restaurant concepts are accelerating. For the first time, more Hawaiians now live in the continental US (53%) than in Hawaii (47%), according to Census Bureau figures. Not coincidently, NRN suggests, several restaurants that focus on Hawaiian cuisine appear on Technomic’s 2023 Top 500 list of high-growth restaurant concepts, including L&L Hawaiian Barbecue, Ono Hawaiian BBQ, and Hawaiian Bros. Island Grill. Hispanics, the third fastest-growing population in the US, are fueling interest and sales at Mexican-themed fast-casual eateries like Torchy’s Tacos. High-growth Asian concepts like KPOT Korean BBQ and Hot Pot have generated huge sales (251%) and unit count (243%) growth from 2022 to 2023, data from Technomic shows.
- Restaurants are ditching QR menu codes, The Wall Street Journal reports. Growing customer complaints and concerns over the ubiquitous codes – a pandemic-era adaptation to reduce contact that has lingered – have convinced some sit-down restaurants to retire them for good. Others are taking a hybrid approach, with QR codes as a secondary approach to ordering or paying the tab. Half of respondents to a January survey said having QR codes wouldn’t encourage them to visit a restaurant more often, according to Technomic. In 2022, the market research firm found that 88% of consumers preferred paper over QR code menus when dining at a sit-down restaurant. Attitudes about QR codes skew along generational lines, according to WSJ, with younger diners appreciating the more efficient service they get using QR codes. Readability, privacy concerns, and unfamiliarity with the technology among some users are reasons for preferring analog to digital menus.
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