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
Nov 14, 2024 - Expanding Payrolls
- 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.
- 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.
- Portion creep, which took off in the 1980s and led to the super-sized portions of today, may finally be reined in, thanks to a combination of economics, demographics, and climate science, The New York Times reports. Faced with rising food costs and diners turned off by sky-high menu prices, restaurants are trying to figure out how to offer smaller servings without upsetting customers. A new study by the Portion Balance Coalition at Georgetown University is underway to do just that, NYT reported in September. Meanwhile, some eateries are already shrinking offerings or launching snack-focused menus. According to the National Restaurant Association, 75% of US adults would opt for smaller-sized portions for a lower price, a trend which could help reduce food waste and improve restaurants' profits. Restrictions by some states on how much food can end up in landfills, is also driving the move toward smaller portions.
- Most restaurant operators reported a decline in same-store sales in July, according to the National Restaurant Association. Only a fifth of restaurant operators said their same-store sales increased between July 2023 and July 2024, per the association’s monthly tracking survey. That’s down sharply from 35% of operators who reported higher sales in June. Nearly two-thirds (63%) of operators said their sales fell in July, up from 56% in June and the highest percentage since January 2024. July’s weak performance marked the continuation of a soft patch in sales, with July representing the seventh consecutive month of net-negative sales readings, per the NRA. Moreover, only 13% of restaurant operators said their customer traffic increased in July year over year, while 71% reported a traffic decline, marking the 16th consecutive month of net declines in customer traffic.
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