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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Sep 14, 2024 - Sales and Payrolls Rising
                                  • Overall employment by full-service restaurants ticked up 0.9% in July compared to a year ago, while average industry wages increased by 2.6% over the same period to $19.91 per hour, according to the latest US Bureau of Labor Statistics data. Payroll growth at restaurants is being supported by rising consumer expenditures, up 2.6% in June year over year 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% year over year in June.
                                  • 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 associations’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.
                                  • 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%.
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