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
Jul 14, 2024 - Average Wage Tops $20 Per Hour
- Restaurant employment grew by 1.4% in May compared to a year ago, while average wages at full-service restaurants rose by 3.7% over the same period to $20.16 per hour, according to the latest data from the US Bureau of Statistics. May was the first time average wages for nonsupervisory employees at full-service restaurants topped $20 per hour. Restaurant employment typically swells as the industry staffs up for the busy summer season. Rising sales for food services and drinking places and sustained consumer spending are helping to support higher labor costs for restaurant operators.
- 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.
- 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 who are 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.
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