Restaurants

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                                  Coronavirus Update

                                  May 9, 2022 - Food Prices Skyrocket
                                  • Food prices have been rising since mid-2021, but they are expected to increase further amid the Ukraine war and rising interest rates. On a seasonally adjusted basis, US food manufacturers’ prices rose 1.5% in March 2022 compared to the prior month, but unadjusted food prices grew 14.6% over March 2021, according to the US Bureau of Labor Statistics. While restaurants have tended to increase their prices as food costs rise, firms and their customers are not likely to get much relief. Food-away-from-home prices are expected to rise between 5.5% and 6.5% for all of 2022 compared to 2021, according to the food price outlook released in March by the US Department of Agriculture.
                                  • In response to Russia’s invasion of Ukraine, several major restaurant chains announced they would reduce or cease operations in Russia, according to Restaurant Dive. Firms ceasing operations in Russia included Yum Brands (Pizza Hut, KFC), McDonald’s, and Starbucks. Restaurant brands that operate in Russia primarily through franchisees have found it more difficult to wind down business there.
                                  • In March 2022, 6.1% of accommodation and food services workers quit or left their jobs, the highest percentage of any US industry sector. To cope with labor shortages, food services providers and restaurants are doing more than just offering better wages to retain their workers, according to Bar & Restaurant. Some have invested in technology, including new point-of-sale (POS) systems with handheld devices and QR code ordering kiosks to ease team member workloads. Others offer bonuses for employment referrals or have created clear upward mobility tracks.
                                  • Sales in food services and drinking places increased 20.2% in March 2022 compared to March 2021, on an unadjusted basis. Sales in March 2022 were up 1% over February on a seasonally adjusted basis.
                                  • In early April 2022, the US House passed the Relief for Restaurants and Other Hard Hit Businesses Act of 2022 (HR 3807), which would add another $42 billion to the Restaurant Revitalization Fund (RRF). The legislation would provide RFF grants for the 177,000 restaurants that applied for relief but didn’t receive any before the funding ran out in May 2021. The National Restaurant Association says the group of unfunded RRF applicants represents about 20% of US restaurants. HR 3807 has moved to the US Senate.
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