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 384,500 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.

More Healthy And Environmentally Conscious Eating

Consumers are trying to eat better by seeking out meals that are healthy, locally sourced, and environmentally-friendly.

Industry size & Structure

A typical restaurant operates out of a single location, employs about 11-27 workers, and generates $1-2 million annually.

    • The restaurant industry consists of about 384,500 companies which employ 8.6 million workers and generates $569 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

                                  Nov 11, 2022 - Dining Out Offers Relative Value
                                  • With grocery prices – including turkey – rising faster than the price of food away from home, dining out this Thanksgiving is shaping up to be a relatively good bargain, a new report from Wells Fargo finds. Consumer price index data for food at home has risen 9.81% since November 2021, compared to just 5.79% for food away from home. “This will be the year where you get the best relative value eating out that we’ve seen in a long, long time,” Michael Swanson, Wells Fargo's chief agricultural economist, told USA Today. Increased demand for eating out comes as the restaurant industry continues to struggle with a widespread labor shortage.
                                  • Fueled by rebounding office occupancy rates, restaurants in urban areas appear to be staging a comeback. New York City’s office occupancy rate increased by more than 10% in September and NYC-based Shake Shack is reaping the benefit, Nation’s Restaurants News reported in November 2022. “We saw strong momentum coming out of Labor Day, as mobility and back-to-office trends broadly improved. It’s clear that our hometown in New York and other urban centers, things are improving with more people moving about,” said Shake Shack CEO Randy Garutti. Individual city data from Placer.ai shows that some urban markets are exceeding the nationwide average, with foot traffic to offices in NYC, Denver, and Washington, DC tracking with, or exceeding the nationwide average since January 2022. Other eateries with exposure to urban markets including Tim Hortons in Canada, and Potbelly, have noted similar strong sales and traffic recoveries in Q3 2022, NRN reported.
                                  • In a show of commitment to increasing healthy eating, the National Restaurant Association is working with fast food chains to ensure that children’s meals contain water, milk, or juice instead of soda. The National Restaurant Association is expanding the voluntary children’s nutrition initiative Kids LiveWell (KLW) -- put forward by the White House in September 2022 -- to 45,000 more restaurants and creating educational resources for restaurants to support healthier food options. The program focuses on helping restaurants offer more meal options that meet certain guidelines on sugar, sodium, fats and calories, as well as a requirement that kids' meals not include soda. Restaurant chains such as Subway, Burger King, and Chipotle have already joined the program, and new participants include Applebee’s, Denny’s, Outback Steakhouse, and Panda Express.
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