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

                                  Jun 14, 2024 - Consumer Spending Fuels Sales
                                  • Employment by restaurants grew 1.3% in April compared to a year ago, while average wages at full-service eateries rose by 4% over the same period to $19.89 per hour, just a nickel shy of their peak in December, according to the latest US Bureau of Labor Statistics data. Rising consumer spending – up 3.1% year-over-year in March – is helping to support rising restaurant payrolls. Sales for food services and drinking places rose 6.2% in March compared to a year ago and was up nearly 10% from February, BLS data show.
                                  • 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 some reasons given 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.
                                  • California’s April minimum wage hike for fast-food workers has broad implications for all eateries in the state, regardless of format, size, or cuisine, Nation’s Restaurant News (NRN) reports. Targeted at fast-food establishments with at least 60 locations nationwide, the raise to $20 per hour is expected to set off competition for restaurant workers throughout the state. Moreover, it comes amid a period of acute inflation, particularly noticeable in the "Food Away from Home" sector, NRN noted, citing data that restaurant transactions have been under significant pressure over the past year, as evidenced by declining sales and foot traffic. Faced with consumers’ growing resistance to high menu prices, restaurants in California will have to scramble to mitigate costs without resorting to passing them on to diners. To cope, restaurant operators in California and beyond increasingly rely on labor-saving technology to cut costs.
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