US Accommodation and Food Services Sector
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 770,895 establishments in the US accommodation and food services sector prepare meals, snacks, and beverages to customer order for immediate consumption or provide short-term lodging for travelers and vacationers.
Economic Sensitivity
The accommodation and food service sector is driven by discretionary spending and is vulnerable to economic downturns.
Labor Intensive, High Turnover
Food service and accommodation operations are labor-intensive, and the sector struggles with turnover.
Industry size & Structure
The accommodation and food services sector comprises 770,895 establishments that employ 14.1 million workers and generate $1.2 trillion in annual revenue, according to government sources.
- The accommodation and food services sector represents 3.3% of the nation's Gross Domestic Product (GDP) and employs about 10% of the country's workers.
- The sector is fragmented with the 20 largest firms representing 13.6% of revenue.
- In addition to employer establishments, the accommodation and food services sector has 491,800 owner-operated establishments with no employees. The subsectors with the highest number of nonemployer establishments are special food services (56%), restaurants and other eating places (23%), and traveler accommodation (11%). The owners of nonemployer firms typically perform the work and may outsource support functions like marketing and accounting.
- The leisure and hospitality sectors shed about 65,000 establishments in 2021, which equals about 6.9% of existing establishments, according to the Bureau of Labor Statistics. However, the sectors added about 93,000 new establishments, equivalent to 9.9% of existing establishments. As a result, the sectors had a growth rate of 3%.
Industry Forecast
US Accommodation and Food Services Sector Industry Growth
Recent Developments
Feb 13, 2025 - Rising Payrolls
- Employment by accommodation and food services firms grew 1.5% in December compared to a year ago but remained stuck below its pre-pandemic high, according to the latest US Bureau of Labor Statistics data. Average sector wages reached a new high of $19.16 per hour in November, a 2.7% year over year increase. While sales for food services and drinking places rose 3.1% YoY in November, revenue for accommodation services providers fell 1.7% in the third quarter of 2024 versus Q3 2023. Both metrics have risen steeply from pre-pandemic depths but revenue for lodging providers fell in 2024 amid rising costs.
- US hotels faced a challenging business environment in 2024 as rising costs outpaced revenue growth, according to the American Hotel & Lodging Association's (AHLA) 2025 State of the Industry Report released in February. The report found that property-level costs overall rose faster than revenue and that specific expenses associated with operations and maintenance, sales and marketing, and IT each rose nearly 5% last year, further intensifying a challenging hotel operations environment. “America’s small business hotel owners have been struggling as rising costs, compounded by high inflation and interest rates, make it difficult to stay open and serve guests,” said AHLA President & CEO Rosanna Maietta. In 2025, payroll costs will rise with hotels projected to add 14,000 employees and pay them a record of $128.47 billion in wages, salaries, and other compensation, up from $125.79 billion in 2024, per the AHLA report.
- With the exception of the pandemic-year 2020, 2024 set a record for restaurant bankruptcies, which increased by more than 50% versus 2023, Nation’s Restaurant News reported in December. Challenges facing food service providers last year included rising inflation and the cost of living, which caused consumers to pull back on dining out. Also, higher labor costs – up 33% since 2020 – and persistent food price inflation squeezed restaurant profits. To avoid a repeat in 2025, Ragini Bhalla of credit report provider Creditsafe, advises restaurant operators “know their finances in and out,” adding restaurants should regularly forecast and monitor their cash flow and plan for the unexpected, including not getting paid on time, which impacts cash flow. According to a survey of small businesses by Barlow Research Associates, 51% of restaurants do not seek cash flow advice from an accountant or bookkeeper.
- Portion creep, which took off in the 1980s and led to the super-sized portions of today, may finally be reined in, thanks to a combination of economics, demographics, and climate science, The New York Times reports. Faced with rising food costs and diners turned off by sky-high menu prices, restaurants are trying to figure out how to offer smaller servings without upsetting customers. A new study by the Portion Balance Coalition at Georgetown University is underway to do just that, NYT reported in September. Meanwhile, some eateries are already shrinking offerings or launching snack-focused menus. According to the National Restaurant Association, 75% of US adults would opt for smaller-sized portions for a lower price, a trend which could help reduce food waste and improve restaurants' profits. Restrictions by some states on how much food can end up in landfills, is also driving the move toward smaller portions.
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