Restaurant Industry Analysis

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Industry Analysis

Restaurant Industry

Eating is an essential part of our everyday lives, therefore the restaurant industry has become quite important in today’s society, slowly changing from having a cooked meal at home to getting something on the go. The restaurant industry is valued through the total sales of all food and drink, this includes it’s four general segments according to the services customers receive: full service (dine in), quick service (fast food), fast casual (eating and drinking place) and retail host (gas stations).

Chart 1 illustrates the industry’s sales by generation and how much it has expanded since the 70’s

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The increased competition, rising costs, and changes in consumer needs all have characterized the evolving nature of the restaurant industry. As seen in the chart above, an increase in the industry’s sales jumping from generation to generation. The many different chains and restaurants have started offering more products/ bundle deals to expand its customer market and gain an advantage against competitors. Like mentioned before each industry segment is split into the specialty items offered by each type of service.

Full Service (Dine in)

A full service dine in experience provides services while one is seated and must pay tab after they have consumed food and drinks, a wait staff will help provide these services by bringing your drinks and food to your table. This segment includes your casual dining night, family restaurants, such as: BJ’s, Cheddars, Olive Garden, Red Lobster, etc.

        Fast Casual

This is a tad bit different than a full service restaurant. Price wise it will be a cheaper than a full service restaurant, think of it as the middle class of the restaurant industry. According to www.thebalance.com, their article “What is Fast Casual Dining” explains that “it’s a fast casual restaurant that offers the ease and convenience of fast food, but with a more inviting sit-down atmosphere.” Chain restaurants like Panera Bread, Zoe’s Kitchen, are examples of the fast casual concept.

        Fast Food

Fast food restaurants are what we see in every corner nowadays, whether it’s a McDonald’s, Wendy’s, Burger King, etc. These places are what are known as limited service restaurants, typically a low-cost alternative to those consumers who are in a hurry and need a quick bite.

Retail Host (Others)

This will consist of gas stations that provide snack and beverages. Other components falling under this segment can also be places such as bars and caterers.

Industry Leaders

The restaurant industry has become a very intense and competitive industry. A number of these larger corporations controlling a large part of the market share find themselves competing for an advantage. Along with also competing with the smaller restaurants for the same customer base makes it that much more interesting.

Chart 2 illustrates some of the major companies in the restaurant industry based off the revenue from the year 2015.

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Since the restaurant industry tends to be valued on a cash and sales basis Chart 2 evaluates how some major name companies compared against one another. I believe in comparing their revenue to one another gives us a strong sense on how successful the company was at the end of the year, giving us an idea as to who has established themselves as the leader in the industry. In looking at the industry leaders I decided to include one company that was out of the top portion of leaders in the restaurant industry. Reason for doing this was to show how much of a gap McDonald’s has put between them and not only sit in restaurants but also a fast food foe like Wendy’s. Which leads in to the next point, how is it that the top companies in the industry stay atop for so long?

Trends, Threats, and Opportunity

Chart 3 shows us how consumer spending has increased from year to year just depending on how well the economy is doing. If you take a closer look from 2007-2008 you can see that the consumer spending dropped due to the recession that our economy fell into. (bubble burst)