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INDUSTRYREPORT72221A
FastFoodRestaurantsintheUS
Drivingthrough:Industrycompetitionwilllikelykeeppriceslow,cuttingintooverall
revenuegrowth
JaredRistoff | June2022
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Contents
COVID-19(Coronavirus)ImpactUpdate.............................3
ABOUTTHISINDUSTRY..................................5
IndustryDefinition................................................................5
MajorPlayers......................................................................5
MainActivities.....................................................................5
SupplyChain.......................................................................6
INDUSTRYATAGLANCE................................7
ExecutiveSummary............................................................9
INDUSTRYPERFORMANCE..........................10
KeyExternalDrivers.........................................................10
CurrentPerformance........................................................11
INDUSTRYOUTLOOK....................................14
Outlook..............................................................................14
IndustryLifeCycle.............................................................16
PRODUCTS&MARKETS...............................17
SupplyChain.....................................................................17
Products&Services..........................................................17
DemandDeterminants......................................................19
MajorMarkets....................................................................20
BusinessLocations...........................................................22
COMPETITIVELANDSCAPE..........................24
MarketShareConcentration.............................................24
KeySuccessFactors........................................................24
CostStructureBenchmarks.............................................25
BasisofCompetition.........................................................27
BarrierstoEntry...............................................................28
IndustryGlobalization........................................................29
MAJORCOMPANIES......................................30
MarketShareOverview.....................................................30
RelatedCompanies...........................................................30
ChipotleMexicanGrill, inc.................................................31
Chick-Fil-A,Inc..................................................................33
Mcdonald’s Corporation....................................................35
OPERATINGCONDITIONS............................37
CapitalIntensity.................................................................37
Technology&Systems......................................................38
RevenueVolatility..............................................................39
Regulation&Policy...........................................................40
IndustryAssistance...........................................................41
KEYSTATISTICS............................................43
IndustryData.....................................................................43
AnnualChange..................................................................43
KeyRatios.........................................................................43
IndustryFinancialStatement.............................................44
ADDITIONALRESOURCES............................46
AdditionalResources........................................................46
IndustryJargon..................................................................46
Glossary............................................................................46
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IBISWorld'sanalystsconstantlymonitortheindustryimpactsofcurrenteventsinreal-time–hereisanupdateof
howthisindustryislikelytobeimpactedasaresultoftheglobalCOVID-19pandemic:
•FastFoodRestaurantsindustryoperatorswererequiredtotemporarilyclosetheirdiningareastocomplywith
shelter-in-placeordersduringtheCOVID-19(coronavirus)pandemic.
•Supplychaindisruptionshaveresultedinrisingfoodcosts,resultinginariseinpurchasecostsandlimitingprofit
growth.
•Industryoperatorshaveexperiencedasurgeindemandformobiletakeoutanddeliveryservices,therefore
enablingcustomerstoregularlyorderfoodfromindustryestablishments,bolsteringindustryrevenue.
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AboutIBISWorld
IBISWorldspecializesinindustryresearchwithcoverageonthousandsofglobalindustries.Ourcomprehensivedataandin-depthanalysishelp
businessesofalltypesgainquickandactionableinsightsonindustriesaroundtheworld.Busyprofessionalscanspendlesstimeresearching
andpreparingformeetings,andmoretimefocusedonmakingstrategicbusinessdecisionsthatbenefityou,yourcompanyandyourclients.We
offerresearchonindustriesintheUS,Canada,Australia,NewZealand,Germany,theUK,Ireland,ChinaandMexico,aswellasindustriesthat
aretrulyglobalinnature.
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AboutThisIndustry
Thisindustrycomprisesrestaurantswherepatronspayforquick-servicefoodproductsbeforeeating.Purchases
maybeconsumedon-site,takenoutordelivered.Thisindustryexcludescoffeeandsnackshops.Mostindustry
establishmentsalsosellbeverages,suchaswater,juiceandsodas,butusuallynotalcohol.
ChipotleMexicanGrill, inc.
Chick-Fil-A,Inc.
Mcdonald’s Corporation
Theprimaryactivitiesofthisindustryare:
Operatingquick-servicerestaurants
Operatingfastfoodservices
Operatingdrive-thruandtake-outfacilities
Themajorproductsandservicesinthisindustryare:
Burgers
Sandwiches
Global
Pizzaandpasta
Chicken
Other
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SupplyChain
SIMILARINDUSTRIES
SpecialtyFoodStoresintheUS
ChainRestaurantsintheUS
SingleLocationFull-Service
RestaurantsintheUS
CaterersintheUS
StreetVendorsintheUS
Bars&NightclubsintheUS
RELATEDINTERNATIONALINDUSTRIES
GlobalFastFoodRestaurants
FastFoodandTakeawayFood
ServicesinAustralia
Fast-FoodRestaurantsinChina
Takeaway&Fast-FoodRestaurants
intheUK
PizzaDelivery&Takeawayinthe
UK
FastFoodRestaurantsinCanada
FastFoodandTakeawayFood
ServicesinNewZealand
RestaurantsandTakeawaysin
Ireland
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IndustryataGlance
KeyStatistics
$331.4bn
Revenue
AnnualGrowth
2017–2022
2.8%
AnnualGrowth
2022–2027
2.3%
AnnualGrowth
2017–2027
$16.9bn
Profit
AnnualGrowth
2017–2022
2.4%
AnnualGrowth
2017–2022
5.1%
ProfitMargin
AnnualGrowth
2017–2022
-0.1pp
AnnualGrowth
2017–2022
197k
Businesses
AnnualGrowth
2017–2022
0.6%
AnnualGrowth
2022–2027
1.1%
AnnualGrowth
2017–2027
5m
Employment
AnnualGrowth
2017–2022
2.5%
AnnualGrowth
2022–2027
2.2%
AnnualGrowth
2017–2027
$87.2bn
Wages
AnnualGrowth
2017–2022
2.9%
AnnualGrowth
2022–2027
2.2%
AnnualGrowth
2017–2027
KeyExternalDrivers
%=2017–22AnnualGrowth
-1.0%
Consumerconfidenceindex
2.4%
Consumerspending
0.8%
Urbanpopulation
1.3%
DomestictripsbyUSresidents
0.0pp
Healthyeatingindex
IndustryStructure
POSITIVEIMPACT
CapitalIntensity
Low
Concentration
Low
IndustryGlobalization
Low/Steady
MIXEDIMPACT
LifeCycle
Mature
RevenueVolatility
Medium
Regulation&Policy
Medium/Increasing
TechnologyChange
Medium
NEGATIVEIMPACT
IndustryAssistance
Low/Increasing
BarrierstoEntry
Low/Increasing
Competition
High/Increasing
KeyTrends
Industryrevenuegrowthcontendedwithchallenges
stemmingfromthecoronaviruspandemic
Fast-foodoperatorshaveperformedwithvaryingdegreesof
successdependingontheproductstheyoffer
Totheindustry'sdetriment,profitfellin2020duetosupply
chaindisruptions,risinginputcostsandunevendemand
Fast-foodrestaurantswilllikelybenefitastheeconomy
recoversoverthenextfiveyears
Industryoperatorsareexpectedtofurtherinvestin
innovationsandtechnology
Thenumberofestablishmentswilllikelyincreaseas
companiespursueafranchise-onlystrategy
Manymajorchainshaveinvestedinmeatalternativesand
otherdietarychangestoattractnontraditionalconsumers
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Products&ServicesSegmentation
MajorPlayers
SWOT
STRENGTHS
Low&IncreasingLevelofAssistance
LowImports
LowCustomerClassConcentration
LowProduct/ServiceConcentration
LowCapitalRequirements
WEAKNESSES
Low&IncreasingBarrierstoEntry
HighCompetition
LowProfitvs.SectorAverage
LowRevenueperEmployee
OPPORTUNITIES
HighRevenueGrowth(2017-2022)
HighRevenueGrowth(2022-2027)
HighPerformanceDrivers
Urbanpopulation
THREATS
LowRevenueGrowth(2005-2022)
LowOutlierGrowth
Healthyeatingindex
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Drivingthrough:Industrycompetitionwilllikelykeeppriceslow,cutting
intooverallrevenuegrowth
Overthefiveyearsto2022,theFastFoodRestaurantsindustryhasgrappledwithshiftingconsumerpreferences
andasaturatedfoodservicelandscapethathaskeptpriceslow.Theadditionandrisingpopularityoffast-casual
restaurantshavealsobenefitedthisindustryasawhole,helpingtheindustrymaintainrevenuegrowth,priorto
experiencingdeclinein2020amidtheCOVID-19(coronavirus)pandemic.Moreover,intenseinternalandexternal
competitionhasforcedfast-foodoperatorstoemphasizelowpricesinabattletoattractconsumers.Asaresult,
industryrevenueisexpectedtoincreaseanannualized2.8%to$331.4billionoverthepastfiveyears,includingan
increaseof2.9%in2022alone.
Eatinghabitshaveshiftedasconsumershavebecomeincreasinglyhealth-conscious,demandingalternativesto
traditionalfast-foodoptions.Whilemajorfast-foodretailershaveexpandedtheirhealthyofferings,thegeneraltrend
towardhealthawarenesshasdecreaseddemandfortraditionalfast-foodrestaurantsinfavorofgrowingfast-casual
restaurants.Manymajorchainshaveinvestedinmeatalternativesandotherdietarychangestoattract
nontraditionalconsumersaspartofalong-termstrategytoadjusttothechangingconsumerlandscape.
Consequently,industryprofit,measuredasearningsbeforeinterestandtaxes,marginallydeclinedoverthepastfive
yearsasindustryplayersadjustedtheirproductmix.
Industryrevenueisexpectedtocontinuegrowingoverthefiveyearsto2027asthedomesticeconomyimproves.
Whilecompetitionwilllikelyremainhigh,theindustry'srevenuegrowthisanticipatedtoberobustasconsumer
spendingrisesandfastcasualrestaurantscontinuetoexperiencerisingpopularity.Nevertheless,fast-food
restaurantswilllikelycontinuetooperateinaslow-growthenvironment,asmanysegmentsoftheindustryhave
reachedasaturationpoint.Successfuloperatorsareexpectedtoadapttochangingconsumerpreferencesasthe
traditionalconceptoffastfoodevolvestoincludeawidervarietyofoptions.Nonetheless,industrycompetitionwill
likelykeeppriceslow,deceleratingoverallrevenuegrowthoverthenextfiveyears.Asaresultofthesetrends,
industryrevenueisexpectedtoincreaseatanannualizedrateof2.3%to$371.9billionoverthenextfiveyears.
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IndustryPerformance
Consumerspending
TheFastFoodRestaurantsindustryissensitivetochangesinconsumerspending.Forexample,duringthe
recession,thespikeinunemploymentledtodeclinesinconsumptionlevels,includingtheconsumptionoffastfood.
However,whenpersonalconsumptionexpenditureishigh,consumersaremorelikelytospendmoneyoneatingout
atindustryrestaurants.Consumerspendingisexpectedtoincreasein2022.
Consumerconfidenceindex
Changesinconsumersentimenthaveasignificanteffectonhouseholdexpenditureondiscretionaryitems,including
restaurantdining.Duringarecession,consumerdemandforlower-pricedvalueproductsfromrestaurantsincreases.
Theconsumerconfidenceindexisexpectedtoincreasein2022.
DomestictripsbyUSresidents
Largenumbersofindustryestablishmentsarelocatednexttohighwaysandinairports,makingthemconvenientfor
customerswhoareseekingaquickandinexpensivemealoptionwhiletheytravel.Themoreroadtripsand
domesticflightsforworkorleisureincreases,themorepeoplearelikelytospendatindustryestablishments.The
numberofdomestictripsbyUSresidentsisexpectedtoincreasein2022.
Healthyeatingindex
Inrecentyears,consumershavebecomeincreasinglyawareofissuesrelatedtoweightandobesity,fatty-food
intakeandfoodsafetyissues.Thisparticularlyaffectstheoftenmeat-andgrease-heavyfast-foodindustry.
Consumersarenowmoreawareofthehealthissuesassociatedwithfattyfoodsandareincreasinglygoingoutof
theirwaytoavoidthem.Thisisespeciallytrueamongindividualsthatfollowspecificdietaryregimens.Thehealthy
eatingindexisexpectedtoincreasein2022,posingapotentialthreattotheindustry.
Urbanpopulation
TheurbanpopulationmeasuresmeasurethenumberofindividualswithintheUnitedStateslivinginurban
municipalities.Thisrepresentsalargegroupofcustomersfortheindustry.Specifically,time-strappedindividuals
livinginurbanareaswilllikelyfrequentindustryestablishmentstosavetimeoncooking.Theurbanpopulationis
expectedtoincreasein2022,representingapotentialopportunityfortheindustry.
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TheFastFoodRestaurantsindustryhasexperiencedsteadyrevenue
growthovermostofthefiveyearsto2022,asconvenientandaffordable
foodremainspopularwithconsumers.
Whilethestereotypicallylowpricepointofindustryproductstypicallygivesfastfoodrestaurantsacompetitive
advantageoverothersegmentsofthefoodservicessector,risinghouseholdincomelevels,whichhavespurreda
greateramountofspendingondiscretionaryitems,haveincreasedcompetitionoverall.Furthermore,withtheriseof
fast-casualandindependentchainsrapidlygainingmarketshare,majorindustryoperatorshavehadtoaltertheir
menuofferingstoeffectivelycompete.Overthepastfiveyears,theindustry'sresponsetochangesinconsumer
preferenceshashelpedspurdemandinthesenewfast-casualindustryentrants.However,industryrevenuegrowth
contendedwithchallengesstemmingfromtheonsetoftheCOVID-19(coronavirus)pandemic,whichforcedmost
industryestablishmentstotemporarilycurtaildine-inoperations.Moreover,theshelter-in-placeorderimposedin
early2020alsocontributedtoanunprecedentedslumpinindustrydemand,causingindustryrevenuetodecline
2.8%in2020alone.Nonetheless,industryrevenuehassincerecoveredasthegovernmentgraduallylifted
coronavirusrestrictions,enablingindustryestablishmentstoreopenfordine-inservices.Overall,industryrevenueis
expectedtoincreaseatanannualizedrateof2.8%to$331.4billionoverthepastfiveyears,includinganincreaseof
2.9%in2022alone.
SHIFTINGTRENDS
Theindustrycomprisesestablishmentswhereconsumerspayforquick-
servicefoodproductsthatareconsumedon-site,takenoutordelivered.
Asaconsumer-focusedindustry,fast-foodrestaurantsrelyheavilyonlevelsofconsumerspendingandconfidence.
Consumerspendinghasincreasedatanannualizedrateof2.5%overthepastfiveyears,enablingconsumersto
flocktofast-foodrestaurantsduringtheperiodastheyprovideconvenientmealsatcompetitivepricepoints.
However,asconsumerspendinghasincreased,consumershavealsoincreasedvisitstofull-servicerestaurants
andotherindustryalternatives,temperingindustrygrowthsomewhatoverthepastfiveyears.Moreover,consumers
havebecomeincreasinglyhealth-conscious.Thishasdrivenmanyconsumerstoseekoutalternativesto
traditionallyunhealthyfast-foodestablishments.Nonetheless,severalmajorfast-foodretailershaverespondedby
expandingthenumberofhealthyoptionsontheirmenuswhilemanynewindustryoperatorshaveenteredthe
industrywithaprimaryfocusonsaladsandothernutrition-focuseditems.Forvariousfast-foodchains,thishas
becomeamarketingstrategycornerstone,enablingthemtotargetanewsegmentofthemarketandrenewinterest
intheirproducts.
Additionally,fast-foodoperatorshaveperformedwithvaryingdegreesofsuccessdependingontheproductsthey
offerandtheirmethodofservice.Fast-casualrestaurantsthatdonotoffertableservicebutprovideahigherquality
offoodandambiancecomparedwithtraditionalfast-foodrestaurantshavebeenexperiencingparticularlystrong
growthoverthepastfiveyears.Forinstance,fast-casualrestaurants,suchasChipotleandSweetgreen,whichoffer
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customizable,higher-endmeals,havetakenmarketshareawayfromrestaurantssuchasMcDonald'sandBurger
King.Asaresult,majorplayershaveintroducedtheirownfast-casualconcepts.Tocapitalizeonthistrend,new
playershaveenteredtheindustryoverthepastfiveyears.Overall,thenumberofindustryoperatorsgrewrobustly
formostofthefive-yearperiodbeforetakingahitin2020.AccordingtotheNationalRestaurantAssociation,an
estimated3.0%ofrestaurantsintheUnitedStatespermanentlyexitedtheindustrybecauseofcoronavirus.
Consequently,thenumberofindustryoperatorsisexpectedtoincreaseatanannualizedrateof0.6%to197,163
companiesoverthepastfiveyears.
Nonetheless,evenasconsumerspendinghasimprovedoverthepastfiveyears,someconsumershaveremained
lesswillingtospendonmealsoutsideofthehome.Instead,aconfluenceoffactorsrangingfromvolatilefoodprices
increasedinternalandexternalcompetitionandchangesinconsumerpreference,haveallworkedtoweakenfoot
trafficandoverallsalesformanyoperators.AccordingtotheBureauofLaborStatistics,theConsumerPriceIndices
forfoodconsumedawayfromhomeandfoodconsumedathomehaveincreased4.5%and3.5%,respectively,in
2021(latestdataavailable).Thishascompelledmanyconsumerstoseekalternativestoeatingatindustry
establishmentsandsearchforotherdeals.Thispriceincreasehasalsocontributedtotheriseinthepopularityof
preparedfood.Consequently,moreconsumers,particularlytime-poorconsumers,haveshownapreferencefor
otherlow-costconcepts,suchastheincreasedofferingsfromoperatorsintheConvenienceStoresindustry
(IBISWorldreport44512)andtheSupermarketsandGroceryStoresindustry(44511).Lastly,boxedmealdelivery
services,suchasHelloFresh,thatfacilitateconsumerspreparingtheirownmealshavealsochallengedindustry
demand.Theseservicesprovideawidearrayofgourmetoptionstoconsumerswhostillseekconvenienceyet
prefernottoeatawayfromhome.Thisincreasedcompetitionhasplacedincreasedpricingpressureonindustry
operators,especiallytraditionalindustryoperatorsthataregenerallyknownfortheiraffordablemenuoptions.
CORONAVIRUS
Whileindustryplayerswerepermittedtoremainopenamidthe
coronaviruspandemic,alldiningareaswererequiredtotemporarilyclose
tocurbthespreadofthevirus.
Consequently,delivery,takeoutanddrive-thruserviceshavebecomethenewlifelineoffast-foodrestaurants.
Nonetheless,theshelter-in-placeorderimposedinearly2020ultimatelyreducedthenumberofcustomerswillingto
traveltotherestaurants,causingfastfoodrestaurantstorelymoreheavilyondeliveryservicestogeneratesales.
Moreover,ashifttowork-from-homearrangementsreduceddemandforbreakfastmealsofferedbyindustry
operators.Asasignificantnumberofemployeescontinuetoworkfromhomein2022,demandforbreakfastmeals
hasstruggledtorecovertopre-pandemiclevels.
Theeffectsofthecoronaviruspandemicontheindustrywereasymmetricalbetweenindustryoperators.For
instance,McDonald'sCorporationreportedthatitsUSsame-storesaleswereflatinthefirstquarterof2020while
thatofPopeyesLouisianaKitchenInc.grew29.2%duringthesameperiod.Popeyes'ssaleshavebeenstrongsince
theintroductionofitspopularchickensandwich,andtheproductaloneisexpectedtohelpthecompanysuccessfully
combatdecliningin-storesales.Besides,otherlargefast-foodchainsalsoexperiencedaspikeindeliveryordersas
customersrefrainedfromtravelingtothestores.Forinstance,ChipotleMexicanGrillInc.'ssalesgrew7.8%inthe
firstquarterof2020,drivenprimarilybyan80.8%increaseinonlinesales.Tomitigatedecreasesindine-insales,
thecompanypartneredwithUberEatstoofferfreedeliverystartingMarch15,2020.Overall,largefast-food
restaurantchainshaveincreasinglyreliedononlineordersanddrive-thruservicestominimizelosses,withsome
operatorsgraspingtheopportunitytoboostsales.Specifically,operatorsthathaveestablishedbrandnamesand
strongcustomerloyaltyareanticipatedtocontinuetoperformbetterattheexpenseofsmalleroperators.Overall,
industryemploymentisexpectedtogrow2.5%to5.1millionworkersoverthepastfiveyears.
Totheindustry'sdetriment,profitfellin2020duetosupplychaindisruptions,risinginputcostsandunevendemand.
Amidfiercepricecompetition,industryoperatorslikelyabsorbanyhikesininputcostsbecauseraisingpriceswill
lurecustomersaway.Consequently,industryprofit(measuredasearningsbeforeinterestandtaxes)isexpectedto
accountfor5.1%ofrevenuein2022,downslightlyfrom5.2%in2017.
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HistoricalPerformanceData
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
Consumer
spending
($b)
2013
233,700
78,495
263,380
182,646
3,807,083
N/A
N/A
60,266
N/A
11,212
2014
241,429
82,298
265,226
183,191
3,930,463
N/A
N/A
62,259
N/A
11,515
2015
260,792
90,223
269,816
185,650
4,079,581
N/A
N/A
67,273
N/A
11,893
2016
275,993
97,311
273,361
186,795
4,262,841
N/A
N/A
71,644
N/A
12,188
2017
288,382
100,274
285,382
191,735
4,484,227
N/A
N/A
75,473
N/A
12,484
2018
299,160
105,139
287,996
193,127
4,663,514
N/A
N/A
80,308
N/A
12,845
2019
310,207
107,535
288,754
193,222
4,694,299
N/A
N/A
82,365
N/A
13,126
2020
301,490
104,984
285,296
191,328
4,695,406
N/A
N/A
80,493
N/A
12,630
2021
322,047
111,367
290,221
194,429
4,932,426
N/A
N/A
84,842
N/A
13,625
2022
331,405
114,603
294,478
197,163
5,065,599
N/A
N/A
87,167
N/A
14,157
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IndustryOutlook
TheFastFoodRestaurantsindustrywilllikelycontinuetoplayan
influentialroleinthefoodservicesectoroverthefiveyearsto2027.
Inthecomingyears,theindustry'sabilitytoprovideconvenientfoodatalowpricewilllikelyremainpopularas
consumerscontinuetoseekaffordableandconvenientfoodoptions.Furthermore,asfast-casualrestaurants
becomemorepopular,industryrevenuewilllikelyexperiencecontinuedgrowththroughthatsegment.However,the
industrywilllikelyremainhighlycompetitive,forcingfastfoodchainstocompeteonpriceandservice,whichis
expectedtorestrictgreaterrevenueandprofitgrowth.Consequently,industryrevenueisanticipatedtorise,
increasinganannualized2.3%to$371.9billionoverthenextfiveyears.
MACROECONOMICINFLUENCE
Fast-foodrestaurantswilllikelybenefitastheeconomyrecoversoverthe
nextfiveyears.
Thenationalunemploymentrateisexpectedtodeclinewhileconsumersentimentisanticipatedtostrengthen.
Thesetrendsareexpectedtobolsterdemandforindustryoperatorsasconsumersbecomemoreoptimisticintheir
long-termoutlook.Furthermore,consumerspendingisestimatedtoincreaseatanannualizedrateof2.1%overthe
nextfiveyears.Steadygainsinconsumerspendingareexpectedtomitigateanyseveredecreasesinspendingat
industryestablishments,asmoremoneyinconsumers'walletsisexpectedtoencouragegreaterspending,
particularlyfortime-poorconsumers.Additionally,fast-foodrestaurantsareexpectedtocontinuetoexpandmenu
optionstocatertochangingconsumerpreferences.Productinnovationwilllikelyplayalargepartinrevenuegrowth
movingforward.
Nevertheless,despitecontinuedgrowthinindustryrevenue,intensecompetitionwilllikelypersistoverthenextfive
years.Fierceprice-basedcompetitionfromfastfoodandfast-casualrestaurantsisexpectedtoplaceincreased
emphasisonproductdevelopment.Furthermore,asfoodpricesincrease,consumersmayswitchtofrequent
restaurants.AccordingtodatacollectedbytheUSDepartmentofAgriculture,consumersspentmoreongroceries
thanatrestaurantsin2018(latestdataavailable).However,thistrendisexpectedtoreverseasthepriceoffoodis
forecasttoincreaseoverthenextfiveyears,contributingtoanexpectedriseinrestaurantsales.Asaresult,
industryoperatorswilllikelyneedtocontinuallyinnovatemenusandserviceofferingstocompeteforthisgrowthin
demand.
ORGANICANDALTERNATIVEGROWTH
Theindustrycompetitionwilllikelyintensifyoverthenextfiveyears.
Thiswilllikelyinvolvesignificantprice-basedcompetitionandagrowingemphasisontheregularintroductionofnew
products.Mostfast-foodchainsareexpectedtointroducenewhealthyfoodalternativesandexpandtheircurrent
productlines.Someoperatorswilllikelycontinuetopartnerwithoutsidebrandsthatproduceandsellmeat
alternatives.Thesetypesofpartnershipsareexpectedtoexpandoverthenextfiveyears,revitalizingconsumer
demandforfastfood.Operatorswillalsolikelycontinuetodiversifyintonewareas,suchascafesandfull-service
restaurants,anddobusinessunderdifferentnamesatnewlocations.Moreover,aftertheperiodofsurgingdemand
fortakeoutduringthepandemic,industryoperatorswilllikelydeveloporemphasizetheirownonlinechannels.Amid
thepandemic,thisrevenuestreamhashelpedmanyfast-foodrestaurantstostayafloat;andthistrendisexpected
tocontinueoverthenextfiveyearsascustomersbecomeincreasinglytime-strappedandmorecomfortableordering
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foodonline.
Lastly,industryoperatorsareexpectedtofurtherinvestininnovationsandtechnologytoimproveserviceand
updateaestheticswithintheirfacilities.Forexample,McDonald'sCorporationrecentlyannouncedmajortechnology
initiatives,includingtherolloutofself-servekiosksinallofitsUSlocations,deliveryserviceandthedevelopmentof
amobileorderingsystemthatconsumerscanusethroughthecompany'smobileapp.Mostsignificantly,the
companyannouncedtheintroductionoftableserviceinallofitsUSlocations,althoughithasyettoprovidea
timelineforimplementation.Whileseeminglyantitheticaltotheconceptofquickservice,thecompanybelievesthat
morepoint-of-saleoptions,coupledwithincreasedcustomerservice,areexpectedtolowerleadtimesandimprove
overallcustomersatisfaction.
Overthenextfiveyears,industryprofitisexpectedtostagnate,asdomesticcompetitionremainsvigorous,
operatorsthatexperiencestagnantdomesticprofitwilllikelyincreasefocusoninternationalexpansiontogrow
company-wideprofit.Companieswillalsolikelytrytoexpandfoodandbeverageoptionswhichwilllikelyoffera
quickwayforcompaniestoincreaserevenue.
INDUSTRYLANDSCAPE
Asthedomesticeconomyisprojectedtogrowoverthenextfiveyears,
companiesthatofferunique,customizableandhealthyfoodproductsare
expectedtoexperiencestrongestablishmentgrowth.
Moreover,thenumberofestablishmentswilllikelyincreaseascompaniespursueafranchise-onlystrategysince
chainsarelessrestrictedbythelargecapitalinvestmentrequiredtoopenanewrestaurant.Thenumberofindustry
locationsisexpectedtoincreaseanannualized1.2%to312,184establishmentsoverthenextfiveyears.Following
suit,industryemploymentisforecasttogrowanannualized2.2%to5.6millionworkersduringthesamefive-year
period,however,thiswilllikelybepartlyinflatedbytheincreasinguseofpart-timeemployeestomeetpeak
customerserviceperiods.
PerformanceOutlookData
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
Consumer
spending ($b)
2022
331,405
114,603
294,478
197,163
5,065,599
N/A
N/A
87,167
N/A
14,157
2023
338,758
117,237
298,496
199,755
5,178,862
N/A
N/A
89,113
N/A
14,528
2024
348,194
120,351
302,757
202,515
5,309,587
N/A
N/A
91,409
N/A
14,856
2025
356,271
122,898
305,782
204,496
5,420,176
N/A
N/A
93,356
N/A
15,150
2026
364,070
125,374
308,830
206,499
5,525,829
N/A
N/A
95,221
N/A
15,437
2027
371,858
128,001
312,184
208,715
5,634,899
N/A
N/A
97,132
N/A
15,722
2028
378,078
130,255
316,346
211,480
5,736,287
N/A
N/A
98,855
N/A
15,870
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Thelifecyclestageofthisindustryis Mature
LIFECYCLEREASONS
IVAisexpectedtogrowatahigherratecomparedwithUSGDP
Theindustryhasexperiencedahighrateofnewproductintroduction
Thereisheavyprice-basedcompetition
TheFastFoodRestaurantsindustryisentrenchedinthematurestageofitslifecycle.Industryvalueadded(IVA),
whichmeasuresanindustry'scontributiontotheoveralleconomy,isforecasttogrowatanannualizedrateof2.5%
overthe10yearsto2027.ThisiscomparablewiththeUSGDP,whichisestimatedtogrowanannualized2.0%
duringthesameperiod.Thus,theindustryhasexhibitedsteadylong-termgrowth,atasimilarpacewiththe
economyasawhole.Moreover,itexhibitsotherqualitiesofamatureindustry,suchasmarketsaturationand
acceptance.Duetothissteadygrowth,industryoperatorsarelikelytoexpandtheirfootprintandincreasethe
numberofdomesticoperations.Thenumberofestablishmentsisexpectedtogrowatanannualizedrateof0.9%
overthe10yearsto2027,whichisfairlymoderateduetotheincreasedmarketsaturationofindustry
establishments.
Significantshiftsinconsumerpreferenceshavealsohadaneffectontheindustryoverthefiveyearsto2022.For
example,demandforhealthyfoodshasincreasedbecauseconsumershavebecomemorehealth-consciousin
recentyears.Inanattempttomaintainconsumerinterestinthefast-foodmarket,operatorssuchasMcDonald's
CorporationandWendy'sCompanyhaveintroducedarangeofhealthyoptionstotheirmenus.Furthermore,fast-
casualrestaurantsthatdonotoffertableservice,butprovideahigherqualityoffoodandambiancecomparedwith
traditionalfast-foodrestaurants,havebeenexperiencingparticularlystronggrowthoverthepastfiveyears.
Operators,suchasChipotleMexicanGrillInc.,SweetgreenandMeltShop,thatoffercustomizable,freshandhigher
qualitymealshavestolenmarketshareawayfromtraditionalfast-foodoperators.
Nonetheless,theCOVID-19(coronavirus)pandemicadverselyaffecteddemandforfastfoodin2020.Asindividuals
shiftedtoworkandstudyfromhome,theirdemandforfoodawayfromhomefell,dampeningindustryrevenue.
Conversely,industryoperatorsthatofferdeliveryservicesbenefitedasmanycustomersoptedtoorderfoodonline.
Therateoftechnologicalchangewithintheindustryismoderate,butanynewtechnologyisnotlikelytoreturnthe
industrytothegrowthphaseofitslifecycle.Nonetheless,therapidincreaseininternetpenetrationandsmartphone
usageoverthepastfiveyearshaspresentedfast-foodrestaurantoperatorswiththeopportunitytoengagewith
customersonseveralnewlevels.Manysmallfast-foodoperatorshaveusedonlineadvertising,informativeand
interactivecompanywebsitesandsocialmediatoincreasebrandrecognitionandrevenue.Furthermore,technology
hasalsobeenusedtoboostprofit,improveservicelevelsandhelpminimizelaborcosts,reducingfoodwaste,
improvingbusinessprocessesandimprovingmealexperiences.Forexample,newsystemsandtechnologyare
designedtoensurequalityserviceandreducecustomerwaitingtime,suchaselectronicorderingsystemslinking
thefrontcounterwiththekitchenasordersaretaken.
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Products&Markets
KeyBuyingIndustries
1stTier
ConsumersintheUS
KeySellingIndustries
1stTier
GroceryWholesalingintheUS
FrozenFoodWholesalingintheUS
DairyWholesalingintheUS
Egg&PoultryWholesalingintheUS
Beef&PorkWholesalingintheUS
ConfectioneryWholesalingintheUS
SoftDrink,BakedGoods&OtherGroceryWholesalingin
theUS
Restaurant&HotelEquipmentWholesalingintheUS
Computer&PackagedSoftwareWholesalingintheUS
2ndTier
FrozenFoodProductionintheUS
DairyProductProductionintheUS
SodaProductionintheUS
BreadProductionintheUS
BakingMix&PreparedFoodProductionintheUS
MajorHouseholdApplianceManufacturingintheUS
ComputerManufacturingintheUS
SugarProcessingintheUS
TheFastFoodRestaurantsindustryissegmentedbasedonthemaintype
offoodserved.
Thediversenatureoftheindustrymeansmanyrestaurantsdonotfitneatlyintoonecategory.Forexample,many
predominantlyburger-focusedchainsalsoservechickenorMexican-baseddishes.Fusioncuisine,whichcombines
elementsofdifferentculinarytraditions,hasbecomeincreasinglypopular.Thisisincreasinglythecaseasfastfood
operatorschaseincreasinglyfragmentedconsumersegments.Also,breakfasthasbecomeanincreasinglylucrative
segmentoftheindustryasoperatorscontendwithstagnantsalesinthelunchanddinnertimeslots.Giventhese
considerations,IBISWorldhassegmentedfastfoodrestaurantsbasedoncoreofferings.
BURGERS
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Burgersarealmostsynonymouswithfastfoodandthetop50fastfood
chainsaredominatedbyrestaurantsspecializinginburgers.
BurgersareheavilyimmersedinUScultureandhavethereforebeenamajordriveroftheindustry'sgrowthoverthe
pasthalf-century.Overthepastfewdecades,USrestaurantshaveincreasedtheirholdoftheentirefood-service
marketduetothegrowthofchainssuchasMcDonald's,Wendy'sandBurgerKing.However,overthefiveyearsto
2022,manytraditionalburgerchainshavestruggledwithflatordecliningsalesasconsumersmoveawayfrom
genericbrandstowardnicheorgourmetofferings.The“betterburger”trend,whichincludesoperatorssuchasFive
GuysEnterprisesLLCandIn-N-OutBurgerandemphasizesfoodqualityandcustomizableburgers,hasbeenthe
bestperformingpartofthissegmentoverthepastfiveyears.
Totheindustry'sdetriment,salesgeneratedfromburgerscontendedchallengesstemmingfromtheCOVID-19
(coronavirus)pandemicin2020.Specifically,McDonald'sCorporation,whichaccountsfornearlyhalfofthis
segmentrevenue,reportedthatitsrevenuedeclinedamidtheimpositionoftheshelter-in-placeorderandashiftto
thework-from-homearrangement.Muchofthislosscanbeattributabletotheplummetingbreakfastsalessincethe
pandemichit.Similarly,ShakeShackInc.'ssalesfell28.5%inthefirstquarterof2020,contributingtotheoverall
declineofburgers'shareofrevenue.In2022,burgersareestimatedtoaccountfor33.2%ofindustryrevenue.
CHICKEN
Chickenhaslongbeenapopularfastfoodmenuitemandthemajorityof
nonchickenchainsnowdedicategrowingmenuspacetochickenitems
duetoitsperceivedhealthbenefits.
Chickenwrapsandchickensaladshavebeenusedbymajorburgerchainsasawaytocombatconsumerconcerns
regardingunhealthyfastfood.ThebiggestchainsinthechickensegmentareChick-fil-A,KFCandPopeyes.Chick-
fil-AhasrecentlysurpassedKFCasthetopfastfoodrestaurantchaininthissegmentwithjustafractionofthe
restaurants,partlyduetoitsgreaterfocusonbreakfastanddifferentiatedmenusthatincludeagreaterarrayof
milkshakes,icecreamandwraps.Thissegmentexperiencedsubstantialgrowthduringthelatterhalfoftheperiod
duetothechickensandwichwars.AfterPopeyesreleasedtheirchickensandwich,otheroperatorsbeganto
competeheavilyonthequalityofthechickensandwiches.Specifically,Popeyes'sfamouschickensandwichhas
bolsteredthecompany'ssalessubstantiallysinceitsintroduction.Moreover,thisproductaloneshieldedthe
companyfromthenegativeeffectsoftheCOVID-19outbreak,boostingthecompany'ssame-storesalestogrow
29.2%inthefirstquarterof2020.Ultimately,thelaunchofthechickensandwichhasdrivenconsumersto
participateintheso-calledchickenwarsbydiningoutatmorechicken-basedestablishments.Overthepastfive
years,thissegment'sshareofrevenuehasincreasedandaccountsforanestimated12.2%ofindustryrevenuein
2022.
SANDWICHES
Asasimple,tastyandgenerallyhealthyfoodoption,sandwich-centered
restaurantshaveremainedalargeportionofindustryrevenue,accounting
foranexpected9.4%ofrevenuein2022.
Growingchains,suchasJimmyJohn'sandJerseyMikes,havehelpedthissegmentsubstantially,enablingitto
remainafocalpointfortheindustry.Anotherreasonforthedominanceofthissegmentisitsrelativelylowinput
costsandcookingknowledgeandexpertise,makingthemeasyentrypointsfornewindustryoperators.Delimeats,
rollsandothertoppingsarecomparativelylessexpensiveandcommonplace,limitingoverheadfoodcosts.The
easeofassemblingasandwichalsohelpstoreducemoneyonlabor,asoperatorsinthissegmentdonotneedto
hirespecializedworkersforgrills,stovesorflat-tops.However,similartoburgers,sandwichsaleshavebeenona
downwardtrendsincethecoronavirushittheUnitedStates.Therefore,tocombatfallingsales,sandwichchains
suchasSubwayandPaneraBreadhaveswitchedtosellgroceriesatsomeoftheirlocations,generatingalarger
shareofrevenuethroughnon-industry-relevantactivities.Asaresult,thissegmentisexpectedtocontractasa
shareofindustryrevenueoverthepastfiveyears.
GLOBALFOOD
GlobalfoodstypicallyconsistofAsianandMexicanfoodestablishments,
whichaccountforananticipated9.1%ofindustryrevenuein2022.
Theadoptionandacceptanceofglobalfoodshaveincreasedoverthepasthalf-centuryastasteshavedeveloped
andpeoplehavebecomemoreadventurousintryingothercuisines.Higherratesofglobaltravelandincreased
exposuretonewcultureshavealsodrivengrowthinthepopularityofglobalcuisine.
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Asianfoodisadiversecategorythatcanbebrokendownintomanyregionalstylesbasedonthepeoplesand
culturesofthoseregions.ThemainbroadtypesincludeEastAsian,suchasChinese,JapaneseandKorean
restaurants;SoutheastAsian,includingVietnamese,ThaiandMalaysianrestaurants;andSouthAsian,including
Indian,SriLankanandBangladeshirestaurants.Othervariations,suchasMiddleEasternandCentralAsian
cuisines,arenotincludedinthissegment.Thereareestimatedtobeover40,000ChineserestaurantsintheUnited
States,withthemajorityofthesefast-foodrestaurantsthatpayforquick-servicefoodproductsbeforeeating.
However,unlikeotherfoodtypes,therearerelativelyfewAsianchainrestaurants.PandaExpressisthelargest
Asianfast-foodchainintheUnitedStates,withjustover1,500locations.ThebusinessmodelofAsianfast-food
restaurants,whichoftenrelyonfamilylabortofulfillcookingandservingduties,doesnotsuitthefranchisemodel
thatotherfast-foodrestaurantsrelyon.Also,mostofthepublicequatesChinesefoodwitheconomicalpricing,
whichmakesitdifficultforchainstoraiseprices.
StaplesofMexicancuisineincludecorn,beansandchilipeppers.Mexicanrestaurantsareknownfortheirintense
andvariedflavorsandvarietyofspices.MexicancuisinehashadalargeinfluenceontheSouthwestoftheUnited
States.InstatessuchasTexas,wherevariationssuchasTex-Mexhavebeenadopted,Mexican-stylerestaurants
canaccountforover20.0%ofallestablishments.GrowingimmigrationhascontributedtoariseinMexicanfood
consumptionoverthepastfiveyears,driveninpartbyariseintheHispanicpopulation,whichnowaccountsfor
over18.0%ofthepopulationintheUnitedStates.ThetraditionalMexicanfoodheavyweighthasbeenTacoBell.
However,overthepastfiveyears,ChipotleMexicanGrillInc.(Chipotle),whichoffersquickservicewhileproviding
customizableandhigher-qualityfood,hasbeenthebestperformingfastfoodrestaurantintermsofsales.Chipotle
hasbeentheenvyoftheindustry,asithasbeenabletogrowquicklydespitestagnantsalesacrosstherestofthe
industry.Further,Chipotlerecordedan80.8%jumpinonlinesalesinthefirstquarterof2020amidthecoronavirus
outbreakwhereasTacoBell'ssalesslipped30.0%duetofalteringsalesofbreakfastandlate-nightdinnerasfewer
peopleleavehome.
PIZZAANDPASTA
Pizzarestaurantstypicallyserveamenuofhouseandcustompizzas
alongsidepasta,saladandotherItalian-influencedcuisines.
DuetothewideinfluenceofItalianimmigrantsinUScultureoverthepastcentury,manyregionalformsofpizza
havedeveloped.Duetoitsproducts'generalpopularityandaffordability,thissegmenthasbecomeincreasingly
definedasacarryoutordeliveryfoodforoffices,birthdaypartiesorotherlargegatheringsofpeople.Pizza
franchises,suchasDominosandPizzaHut,nowlargelyfocusoncarryoutordeliveryservicesandhavebeenable
toaccesshigherprofitthroughthisbusinessmodel.DuringtheCOVID-19epidemic,demandforpizzafaredbetter
thanothersegmentsasitssalesarelessdependentondine-inservices.Asaresult,overthepastfiveyears,this
segment'sshareofrevenuehasincreased,accountingforanestimated8.9%ofindustryrevenuein2022.
OTHER
Establishmentsoutsideoftheaforementionedproductsegments
comprisearangeofdifferentfoodoptions,performingwithvarious
degreesofsuccessoverthepastfiveyears.
Restaurantsinthisproductsegmentincludefast-casualconcepts,traditionalquick-servicerestaurantsand
establishmentsservingoneitemthatmayhavelocalorregionalpopularitybutdoesnottranslatewelltoanational
audience.Forexample,seafoodconceptsareprominentincoastalregionswherefreshseafoodisamplyavailable,
andwhereseafoodfactorslargelyintoconsumers'dailydiets.Fast-casualconceptssuchasthoseservinghighly
specificofferings,suchassalad,arealsoincludedintheothercategoryandhaveperformedwellduringtheperiod
duetothedomesticincreaseinhealthconsciousness.Lastly,quick-serviceconceptsthatdonotfallunderany
specificcategory,suchasthosethatofferarangeofsandwichesandotheritems,arealsoincludedinthissegment.
Thissegmentaccountsfortheremaining27.2%ofrevenuein2022.
TheFastFoodRestaurantsindustryissensitivetofactorsthataffectthe
growthinhouseholddisposableincome,whichgivesconsumersthe
abilitytospendmoneyonout-of-homedining.
Householddisposableincomeissensitivetochangesinlabormarketgrowth,suchastheunemploymentrate,and
movementsintaxandinterestrates.Highgaspricesalsonegativelyaffectdisposableincomes.
Demographictrends
Thechangingagestructureofthepopulationisinfluencingchangewithintheindustry.Babyboomersareamajor
groupthatinfluencesindustryrevenuegrowth.Notonlydoesthisagesegmentcompriseasignificantpercentageof
thepopulation,italsogenerallyhasthehighestamountofdisposableincometospendonrestaurantmeals.Bureau
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ofLaborStatistics2020householdexpendituredataindicatesthathouseholdswithincomesofmorethan$50,000
accountfor73.8%ofthetotalpersonalexpenditureonfoodeatenoutsideofthehome.Withinthisgroup,
householdswithincomesover$100,000provideanestimated47.2%ofthetotalaway-from-homefoodexpenditure.
Themostimportantfactordrivingthehighesthouseholdincomegrouptospendinrestaurantsisthepressureof
workandlackoftime.
Healthconsciousness
RisinghealthconsciousnesshasadirecteffectonindustryoperatorsasUSconsumersbecomeincreasingly
concernedaboutfatcontent,friedfoodsandsaltcontent,especiallywhendiningout.Asaresult,risingconcerns
overthenutritionalvalueofrestaurantmealsarelikelytoinfluencedemandforcertainfoodsonmenus,thus
encouragingindustryplayerstoaltertheirproductmix.Itisalsoexpectedtoaffectoverallperformanceforindustry
playersbyrewardingoperatorsthatexpandtheirmenuchoicestoincludearangeofhealthymealoptionsamong
othermoreindulgentfooditems.
Convenience
Convenienceandvalueforone'smoneyandtimeareotherimportantdemanddeterminants.Recentsocialtrends,
suchasbusierlifestyles,heavierworkloadsandlongerworkinghours,havehelpedboostdemandforrestaurant
servicesandconveniencefoodastime-poorconsumersseektocutdowncookingtimeandmakebetteruseoftheir
sparetime.Moreover,restaurantshavebecomemoreofaplaceforfamilyget-togethers,specialoccasionsand
socialmeetingsforcash-richandtime-poorconsumers.
ThemajormarketsintheFastFoodRestaurantsindustrycanbe
segmentedbasedonseveralfactors,includingincome,age,geographic
locationandfamilystructure.
Consumptionpatternsoffastfooddifferfromfull-servicerestaurantswhereincomeisamoreimportantdeterminant
ofdemand.Consumersoffastfoodaretypicallybudget-consciousandexperiencetheconvenienceoffastfood
comparedwithsit-downrestaurants.AccordingtotrendsindataprovidedbytheBureauofLaborStatistics'
ConsumerExpenditureSurvey,people'svisitstofastfoodrestaurantsincreasewiththeirincomesuptoacertain
point.Theindustry'smajormarketdistributionhasnotchangeddramaticallyoverthefiveyearsto2022asspending
patternswithinincomebracketsarerelativelyestablished.Asindustryoperatorshaveincreasinglysoughttoprovide
healthierandmorenutritiousitemswhileremainingatareasonablepricepoint,theyhavebecomemorepopular
withmiddle-classhouseholdsoverthepastfiveyears.However,thecorrespondingdeclineinspendingbythe
lowestincomehouseholdshasmeantthatthedistributionbetweenincomedemographicsremainedrelativelysteady
overthepastfiveyears.Thistrendisexpectedtocontinueoverthefiveyearsto2027.
HOUSEHOLDSEARNINGMORETHAN$100,000
In2022,householdsearningbetween$100,000and$149,999areestimated
torepresent20.3%ofindustryrevenue,andhouseholdsearningbetween
$150,000and$199,999representananticipated11.0%ofrevenue.
Householdsthatearnmorethan$200,000accountforanexpected16.0%ofrevenuein2021.Theseindividuals
spendmoreeatingawayfromhomecomparedwiththoseinlower-incomebrackets,whichincreasestheiroverall
spendingatfastfoodrestaurants.However,ashouseholdincomereachesbetween$100,000to$150,000,visitsto
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fastfoodrestaurantsdeclineandarereplacedbyfull-serviceandsit-downdiningathigherprices.Forthisreason,
thebiggestconsumersoffastfoodintheUnitedStatesarelower-middleandmiddle-middleincomehouseholds.
Thesesegmentshavedecreasedasashareofrevenueoverthepastfiveyears.
HOUSEHOLDSEARNINGBETWEEN$50,000AND$99,999
Householdsinthisincomebracketmakeupanestimated26.6%of
industryrevenuein202w.
Consumersinthisincomebrackethaveahigherannualincomethanthelow-incomegroupbutremainprice-
consciousastheystillhaveafixedlevelofdisposableincome.Duetothis,fast-foodoperatorsarerelatively
inexpensiveoptionswhenindividualsdecidetoeatawayfromhome.Thissegmenthasincreasedasashareof
revenueoverthepastfiveyears.
HOUSEHOLDSEARNINGLESSTHAN$50,000
Householdswithanannualincomeoflessthan$30,000canfindit
challengingtoeatoutoftenatfastfoodrestaurantswherepricesmaybe
unaffordable.
Therefore,manyofthesehouseholdsrelyonprogramssuchastheFoodandNutritionalService'sSupplemental
NutritionAssistanceProgram,commonlyreferredtoasSNAP,whichdoesnotpermitfoodstampstobeusedfor
restaurantpurchases.However,householdsearninglessthan$50,000representasignificantshareofrevenuedue
tothelowpricepointofindustryoperators.Thissegmentaccountsfor26.1%ofindustryrevenuein2022.This
segmenthasdecreasedasashareofrevenueoverthepastfiveyears.
Exportsinthisindustryare LowandSteady
Importsinthisindustryare LowandSteady
Asaserviceindustry,theFastFoodRestaurantsindustryisnotengagedinimportingorexportingproducts,so
internationaltradeisnotrelevanttotheindustry.However,someindustryplayershaveoverseasoperationsand
earnasignificantportionoftheirrevenueoverseas.Manylargeoperatorshaveestablishedfranchisedoperations
internationally.Giventhematurestageofthisindustry'slifecycleinthedomesticmarket,withchangesincustomer
profilesandtastes,manymajoroperatorshavesoughttoincreasetheirgrowthinrevenueandearningsthrough
furtherglobalexpansion.Inrecentyears,largefast-foodchainshaveearnedanincreasingamountoftheirrevenue
outsideoftheUnitedStates.
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Business
Locations
ThebusinesslocationsintheFastFoodRestaurantsindustryarelargelydistributedaccordingtopopulation.Sincetheindustry
providesquickmealstoconsumers,successfuloperatorsneedtobelocatedincloseandconvenientproximitytotheircustomer
base.Asaresult,theSoutheastishometothehighestconcentrationoffranchisedestablishmentsandpopulation,accountingfor
25.4%and25.8%,respectively,in2022.Thisareaisalsoknownforhavingvariouslargecitiesthatarespreadacrosstheregion.
Additionally,therearemanyinterstatehighwaysinthisregion.Theconcentrationofdomestictravelbycarincreasesconsumer
needsforquickandconvenientfoodoptions.Severalindustryestablishmentsarelocatedinhighlypopulatedareasandalong
interstatehighways,increasingconcentrationinthisarea.
TheWestfollowsasthesecond-highestconcentrations,representing17.5%ofestablishmentsin2022.Thisregion's
concentrationisdominatedanddrivenbyCalifornia.DuetoCalifornia'ssizeandpopulationconcentration,itrepresents12.6%of
industryestablishmentsin2022.Californiaisastateknownforitshighwaysandtraffic.SimilartotheSoutheast,thisisattributed
tohigherdemandandavailabilityforindustryestablishments.TheMid-Atlanticisalsodominatedbyasinglestate.NewYork's
largepopulationconcentrationlendsittobethethird-largeststatebyestablishments,accountingfor6.9%ofestablishments,while
thetotalMid-Atlanticaccountsfor16.2%ofindustryestablishmentsin2022.ThisisslightlyhigherthantheMid-Atlantic'sshareof
thepopulation,whichaccountsfor15.2%ofthepopulationin2022.Thedisproportionallyhigherconcentrationcanbeattributedto
thelargecitiesinthisregion,suchasNewYork,Washington,DCandPhiladelphia,thathavetofeedaverylargeconsumerbase.
Thesecitiesarealsoallconnectedbycomplexhighwaysystems.
Variousacademicstudieshaveacknowledgedthatfastfoodrestaurantsaremoreprevalentinlow-middleandmiddle-income
neighborhoodsandhavebecomelessprevalentinhigh-incomeneighborhoods.Thisdistributionisreflectedintheindustry'smajor
markets,wherethesedemographicsaretheindustry'slargestconsumers.High-incomeareastendtohaveagreater
concentrationoffull-servicerestaurantsasopposedtofastfoodestablishments.
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CompetitiveLandscape
Concentrationinthisindustryis Low
ThetopfourplayersintheFastFoodRestaurantsindustryareexpectedtoaccountforlessthan10.0%ofthe
marketsharein2022,givingthisindustryalowlevelofconcentration.Giventhediversityoffoodstylesand
operations,nearly41.6%ofindustryestablishmentsaresmall-businessoperatorsthathavenineorfewer
employeesin2021.Anadditional58.0%ofestablishmentshavebetween10and99employees,with94.2%of
establishmentshavingfewerthan50employeesin2021.Overtime,industryconcentrationhasdecreased,primarily
asindustryoperatorstransitiontofranchisingastheirmethodforgrowth.Franchisesarenotincludedaspartof
corporaterevenue,andtherefore,ascompaniesswitchtobeingfranchise-focused,theirrevenuedeclinestothe
feesandroyaltiestheycollectfromfranchiseesinsteadofrevenuefromphysicalrestaurantoperations.Overthefive
yearsto2022,therehasbeenanincreasingtrendforthemajorchainoperatorssellingtheircompany-operated
storestofocusonfranchising.Thelowercapitalrequirementsandlessriskassociatedwithsellingfranchiseshave
helpedchainsgrowdespiterelativelyflatrestaurantsales.Duetothistrend,concentrationamongoperators
regardingsystem-widesalesismuchhigherandhasincreasedoverthepastfiveyears.Marketshareconcentration
oftheindustry'slargestoperatorsbasedonsystem-widesalesisestimatedtoreachnearly40.0%ofthemarketin
2022.Whilethisisnotanaccuratedepictionofmarketsharefortheindustryasawhole,itexemplifiesthenumber
offranchisesthatarebeingopenedundertheumbrellaoflargeandestablishedbrands.Additionally,manyofthe
olderstalwartsarelosinggroundtoup-and-comingconcepts,suchassmallerchains,includingChick-fil-A,andfast-
casualconcepts,suchasShakeShack.Thesenewcompaniesaregainingground,whichhascausedsalestofalter
forlargercompetitors.Consumersareincreasinglyseekingtotrynewfoodconcepts,especiallythosewithhealthier
optionsorqualityingredients.Industryconcentrationisexpectedtocontinuedecreasingoverthefiveyearsto2027
assmallerindustryoperatorsexpand,takingmarketsharefromcurrentmajorplayers.
IBISWorldidentifies250KeySuccessFactorsforabusiness.Themostimportantforthisindustryare:
Businessexpertiseofoperators:
Businessexpertiseisrequiredasthisindustryhashighturnover,butlowprofit,andthus,lossesareeasilymade.
Havingaclearmarketposition:
Clearmarketpositioninggivesoperatorsacompetitiveadvantageovercompetitors.
Effectivecostcontrols:
Costcontrolsareimportantinthislow-marginindustry,particularlyrelatedtominimizingfoodwaste.
Abilitytofranchiseoperations:
FranchisingbothintheUnitedStatesandoverseasisnowasignificantcomponentofthisindustryandcanprovide
necessarysupporttoowners.
Productissoldathighprofileoutlets:
Havinghigh-profilelocationsforstores,witheasyaccess,parkinganddrive-throughservicesincreasesconvenience
forcustomers.
Accesstomultiskilledandflexibleworkforce:
Industryoperatorsneedaccesstoagoodsupplyofskilled,casualworkerstomeetpeakservicedemandperiods.
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Profit
Industryprofitvariesamongplayersdependingonthesizeofthe
operator,withlargeroperatorsbenefitingfromeconomiesofscale.For
largeplayers,suchasMcDonald'sCorporation(McDonald's),profitat
company-operatedrestaurantscanbeashighas17.6%duetothe
largeeconomiesofscaletheorganizationhasaccessto.However,the
profitofasmallenterprisethatoperatesonlyafewrestaurantswill
likelybemuchlower.IBISWorldestimatesthatindustryprofit,
measuredasearningsbeforeinterestandtaxes,willaccountfor5.1%
ofrevenuein2022.Profithasmarginallydeclinedasashareof
revenueoverthepastfiveyears.Thisdecreasecomesduetothe
slowdownoftheUSeconomyduringtheCOVID-19(coronavirus)
pandemic.Moreover,manyoperatingcosts,suchaswageshave
increasedduringthefive-yearperiod.Anoperator'smajorcostsare
foodandbeveragespurchasedforsaleandwagespaid.In2022
industryprofitabilityisexpectedtocontinuetobepressuredby
fluctuatinginputpricesresultingfromsupplychaindisruptionsaswell
asrisingwages,asmanyoperatorshaveincreasedemployeesalaries
tocompeteinahotlabormarket.Moreover,industryoperatorshave
takenvariouscost-cuttingmeasurestopreventprofitfromdeclining
further.
Wages
Industryoperatorshavehighwagecostsduetothelabor-intensive
natureoffoodpreparation,cooking,servingandcleaningup.Overthe
pastfiveyears,laborcostshaverisenslightlyasashareofrevenue
duetowagedisputesandhigherminimumwagebenchmarksnegating
otherproductivitygainsbytheindustry'slargestemployers.These
costsincludewagesandbenefits,suchashealth,workers'
compensationandunemploymentinsurance.Wagecostsaccountfor
anestimated26.3%ofrevenuein2022.Thisrepresentsanincrease
overthepastfiveyearsasoperatorshavebeenforcedtoofferhigher
startingwages.
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Purchases
Foodandbeveragesareusuallypurchasedfromwholesalers,
particularlyfromoperatorsthatcanguaranteepromptdeliveryand
quality.Fluctuationsinthecostoffoodandbeveragessignificantly
influenceindustryrevenueandprofit.Intheshortterm,manyofthese
costincreasescannotbepassedontotheconsumerorclient.
Therefore,menus,portionsizesandotherinputsintofoodservicemust
becontinuallymonitored.Amajorsourceofinefficiencyiswastagedue
tofluctuationsindemand,whichmayleadtoanoversupplyofmealsor
excessingredientsthatcannotbeusedandsubsequentlyspoil.
IBISWorldforecaststhatpurchasecostswillaccountforanestimated
42.8%ofrevenuein2022.Thisisdownonlyslightlyfrom2017levels
despitehigherglobaldemandforfoodforcingpricesofsomeinputs
higher.
Marketing
Marketingcostsoftenvarysignificantlyamongindustryoperatorsas
somenationalbrandsspendasignificantlylargeramounton
advertisingthanlocalorregionaloperators.Thiscancauseextreme
differencesinmarketingasashareofrevenue.However,marketing
expensesareestimatedtoaccountfor2.0%ofindustryrevenuein
2022.
Depreciation
Industryoperatorsaresubjecttodepreciationexpensesaswell.
Comparedwithotherindustries,depreciationexpensesarelow,asfast-
foodrestaurantsareprimarilyservice-based.Depreciationcostsare
estimatedtoaccountfor3.2%ofindustryrevenuein2022,representing
aslightdecreasefrom2017.Althoughdepreciationcostsdeclinedasa
shareofrevenue,industryoperatorsimplementednewtechnologies,
suchastouchscreenkiosks,intomanyindustryestablishmentsduring
thefive-yearperiod.
Rent
Rentcostscanbesignificantforanoperatorduetotheneedtobe
situatedinahigh-trafficlocationtoattractpassingfoottraffic.Many
businessesthatoperateunderfranchiseagreementspayrentdirectly
tothefranchiserorlandlordthatownsthebuilding.Rentcostscanalso
varydependingonthesizeandlocationofanestablishment.Overall,
rentcostsareestimatedtoaccountfor6.2%ofindustryrevenuein
2022.
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Utilities
Utilitycostsarealsosubstantialduetotheenergy-intensivenatureof
cooking,storing,coolingandcleaning.Utilitycostsareestimatedto
accountfor1.9%ofindustryrevenuein2022.Astechnologybecomes
increasinglyefficient,operatorsarelikelytoreducetheirutilitycosts
slightlyinanefforttoexpandprofit.
OtherCosts
Industryoperatorsaresubjecttoarangeofothercosts,including
professionalfeesandadministrativecosts.Duetothehighnumberof
franchisedbusinessesoperatingintheindustry,franchiseroyaltiesand
otherfeescanaccountforasignificantproportionofindustryrevenue.
Franchiseagreementstypicallylastforabout20yearsandrequire
potentialfranchiseestopayupfrontfranchisefees,whicharegenerally
$50,000.Theseagreementsprovideupwardto$1.0millioninliquid
capital,ontopofinvestmentfundingtobeapproved.Franchiseesalso
generallypayanannualroyaltyfee,whichistypicallypeggedtoafixed
percentageoftotalsales,averaging10.0%to12.0%.Franchise
royaltiesareexpectedtocomprisealargershareofrevenuemoving
forward.Tomitigateriskfromshiftingconsumertrendsandtoreduce
theevery-dayadministrativeandoperativeresponsibilitiesofmanaging
anindustrialestablishment,manylargerplayershavebeenmoving
towardanearly100.0%franchise-onlymodel.Forexample,inthelong
term,McDonald'scurrentlyfranchisesanestimated90.0%ofitsstores
worldwide.Anadditionalmarketingfeeissometimespaidtothe
franchiseraswell.In2022,othercostsaccountfor12.4%ofindustry
revenue.
Competitioninthisindustryis HighandthetrendisIncreasing
TheFastFoodRestaurantsindustryexhibitsahighlevelofcompetition.
Restaurateursarerequiredtocompetewitheachotherandwithotherindustriesinthebroaderfoodservicesector,
suchasfull-servicerestaurants,whichencompassescasualandfinedining,coffeeshops,barsandhotels.
INTERNALCOMPETITION
Fastfoodrestaurantscompetewitheachotheronthebasisofpriceand
quality.
Asaresultofthehighlevelofcompetitionwithintheindustry,pricesaredrivendowntoremaincompetitive.This
causesprofittobelowformostindustryoperators,necessitatingstringentcostandqualitycontrolstomaintain
efficiencyandminimizewastage.Operatorsalsoexperiencestrongcompetitionbasedonqualityandconsumer
trends.Asconsumersbecomeincreasinglyhealth-conscious,industryoperatorsthatfailtoaccommodatethose
preferenceswilllikelyexperiencehighcompetition.Premiumingredientsandwell-presentedmealsarehighly
regardedandcanmakethedifferencetoconsumers,whooftenjudgeafast-foodrestaurantbyhowitcompares
withothers.
Restaurantsalsocompeteonthebasisoflocation,style,ambiance,hospitalityandservice.Morethanever,
restaurantsaresellingandmarketingamealexperiencetopotentialcustomers.Asaresult,itisimportantthatthe
operatorunderstandsthepositioningoftherestaurantinthemarketplaceandtheclienteletheyareattractingor
wantingtoattract.Manyrestaurantsareundergoingupgradestotheirlocationstomakethemtrendyandmore
attractivetotheircustomers.Significantly,therestaurantmustconsistentlydeliveroncustomers'product
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expectations.Thelocationoffast-foodrestaurantscanalsoprovetobestrategicforcompetition.Manyoperators
tendtobelocatedonthesamestreetorgeneralareaofcityortownduetothatarea'sproximitytoalarge
population,shippingareaormajorhighway.Aspeoplerunerrandsortakelongroadtrips,operatorswiththemost
convenientlocationswilllikelyprovetobesuccessful.
EXTERNALCOMPETITION
Externalcompetitionarisesfromthebroaderfoodservicesector.
Thisincludeschainrestaurantsandindependentrestaurantsthatofferdiningandtake-outservices,andother
retailersthatservefood,suchasconveniencestoresandsupermarkets.Thesecompetitorsoffersimilarfood
products,luxuryfoodproductsanddifferentdiningexperiencesforconsumers.Wheneconomicconditionsare
gloomy,consumersaremorelikelytotradedownfromdine-inrestaurantstolesscostlyfoodoptions.However,in
goodeconomicconditions,consumersmayincreasinglychoosetospendmoreonadine-inexperiencewheneating
awayfromhome.
Additionally,externalcompetitionarisesfromconsumers'propensitytocooktheirownmealsandeatathome.With
therisingpopularityofweeklymealpreparationandboxedmealdeliveryservices,fewerconsumersmayeataway
fromhome,limitingtheamountspentatindustryoperators.Overthefiveyearsto2022,boxedmealdelivery
services,suchasBlueApronandHelloFresh,havebecomeincreasinglypopular.Theseservicesprovidetheability
tocookamealfromhome,whilenotneedingtoworryaboutgettingallthecorrectingredientsormeasuring.
Furthermore,thegrowingpopularityofgrocerydeliveryservicesfromAmazonFreshandFreshDirectandother
providershasincreasedaswell,havemadeitmoreconvenientforpeopletocookathome.
BarrierstoEntryinthisindustryare LowandthetrendisIncreasing
GiventhefranchisecomponentoftheFastFood
Restaurantsindustry,barrierstoentryaretypicallylow,
giventhatanoperatorcanleasepremises,equipment,
furnitureandfittingsfromthefranchisor,whichcutsdown
theinitialcapitalcosts.Also,franchisorsprovidetraining,
foodandbeveragesandsomefinancialandaccounting
functionsforaproportionalshareofrevenuefromtheir
franchisees.Theseprovisionsloweroperationalcostsand
canalsominimizesomerisks,especiallyfor
inexperiencedhospitalityindustrypersonsenteringthe
industry.Still,individualfranchiseescarrymuchofthe
day-to-dayoperationalandmanagementrisksassociated
withtheirownbusiness.
Industryconcentrationislowtomoderate,withthetop
fourplayersexpectedtogarnerlessthan10.0%ofthe
availablemarketsharein2022.Thislowconcentrationis
anindicationofthearrayoffoodconceptsandstyles
availableinthisindustry,withnoindividualmajorplayer
beingdominant.Additionally,ithighlightsthe
fragmentationthatiscreatedbythemajorplayers
increasinglyfranchisingtoexpandtheirbrandand
concepts.Whileindustryconcentrationishighamongthe
topbrandswithintheindustry,theexpansionof
franchisingenablesnewoperatorstoeasilyenterthe
industryusingthebenefitsofthelargebrand.Therefore,it
isnotextremelydifficultforanoperatortoenterthe
industrywithaneworexistingfoodconcept.
Industryregulationandlicensingaresignificant,from
healthandfoodserviceregulationstolicensingforliquor
salesandgeneraloccupationalhealthandsafetyissues,
particularlyinrelationtosafetyinkitchenoperations.
Regardless,theseissuesdonotcreateany
insurmountablebarrierstoeitherenteringoroperatingin
thisindustry,ascomplyingwiththeseregulationsarenot
excessivelycostly.Furthermore,theseregulationsare
oftenveryclearandgenerallyeasytoreachasall
restaurantsandfoodserviceoperatorsmustcomplywith
them.
BarrierstoEntryChecklist
Competition
High
Concentration
Low
LifeCycleStage
Mature
TechnologyChange
Medium
Regulation&Policy
Medium
IndustryAssistance
Low
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Globalizationinthisindustryis LowandthetrendisSteady
TheoveralllevelofglobalizationfortheFastFoodRestaurantsindustryislow.Themajorityofenterprisesaresmall
businessesthatarelocallyownedandserveadomesticcustomerbase.However,thereisasignificantglobal
componenttotheindustry,namelythelargechainsthathaveconsiderableoverseasoperations.Thetrendtoward
internationalexpansionhasincreasedoverthefiveyearsto2022duetotheslowergrowthrateofthedomestic
industrycomparedwithhigh-growthemergingeconomies.Manybrandsareopeningupmorerestaurantseveryyear
inChina,agrowingandsubstantialmarketforUSfast-foodchains.BothMcDonald'sCorporationandYum!Brands
Inc.earnnearly60.0%ofitssalesoverseas,whileananticipated40.0%ofBurgerKingCorporation'ssalesare
derivedfrominternationalmarkets.
TherearealsomanyinternationallyownedchainsthatoperateintheUnitedStates,addingtothelevelofindustry
globalization.Overthepastfiveyears,chainssuchasYO!Sushi,Wagamama,PretAManger,allbasedinthe
UnitedKingdom;Nando's,basedinSouthAfrica;PieFace,basedinAustralia;andGiraffas,basedinBrazil,haveall
expandedtheirpresenceintheindustry.ThishasoccurredastheUSconsumerhasbecomeincreasingly
enthusiasticaboutethniccuisine.Internationalchainstypicallytargetaffluentormiddle-classcustomersinurban
markets,suchasNewYork,Chicago,Washington,DCandLosAngeles.Manyinternationalchainsofferslightly
differentbentsontraditionalAmericanconcepts.Forexample,PolloCampero,aGuatemalanchainwithover70
locationsintheUnitedStates,offersamoreLatinAmerican-focusedchickenmenu,ratherthantryingtocompetein
thecrowdedSouthernFriedChickenspace.
Theindustrywillbesubjecttoincreasingglobalizationoverthecomingyears.IBISWorldanticipatesthatUS
operatorswillcontinuetoentertheinternationalmarket,particularlyintheregionsofAsiaandSouthAmerica.
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MajorCompanies
MarketShareOverview
RelatedCompanies
Competitors
CompanyType
EmployeeSegment
Revenue($m)
MarketShare(%)
Profit($m)
ChipotleMexicanGrill, inc.
AllStar
500+Employees
6,964.4
2.24
594.9
Chick-Fil-A,Inc.
Disruptor
500+Employees
5,013.1
1.79
316.7
Mcdonald’s Corporation
RisingStar
500+Employees
2,785.8
0.9
333.9
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Companieswith5.0%industrymarketsharearedisplayedinthePDFversionofthisreport.Youcanviewinsightsforallcompaniesassociated
withthisindustryonmy.ibisworld.com
ChipotleMexicanGrill, inc.
CompanyOverview
Chipotle
ChipotleMexicanGrill,inc.isapubliccompanyheadquarteredinCaliforniawithanestimated45,200employees.In
theUS,thecompanyhasanotablemarketshareinatleastoneindustry:MexicanRestaurants,wheretheyaccount
foranestimated10.7%oftotalindustryrevenueandareconsideredaRisingStarbecausetheydisplaylower
marketshare,butdisplayingstrongerprofitandrevenuegrowththansomeoftheirpeers.
COMPANYTYPE
PublicCompany
TOTALCOMPANY
REVENUE
$7.0bn
EMPLOYEES
45,200
MexicanRestaurants
Onlinesalessurgeduringthepandemic
AmidtheCOVID-19(coronavirus)pandemic,Chipotle'sonlinesalessurgedasconsumerssoughttakeoutand
contact-freefoodoptions.Inparticular,thecompanyhasleveragedthesuccessofitrewardsprogramduringthe
pandemic.Theprogramnowincludesnearly24millionmembers,representingabout25.0%ofthebrand’s
customers.Thishasallowedthecompanytopivottoserveanalmostcompletelydigitalcustomerbase.Unlike
manyotherrestaurants,Chipotledidnothavetopivotsignificantlyasdigitalinnovationsalreadyanintegralpartof
theirtechnologystrategy,includingdarkkitchensinalloftheirrestaurants,thecreationoftheChipotlanespickup-
onlydriveandwalk-thrurestaurants.
COVID NewActivity
Serioushealthscaresunderminecompany’simage
Regardedasabastionofresponsiblesourcingandsuperioringredientswhencomparedwithitscompetitors,
ChipotleMexicanGrillInc.(Chipotle)experiencedsignificantdamagetoitsreputationfollowingastringofhealth
scares.In2015,thecompanyexperiencedanE.colioutbreak,whichspannedacrossrestaurantsin15states.The
companythenhadtwonorovirusoutbreaksin2017—onethatsickened135inSterling,Virginia,inJulyand
anotherthatmade28people,including11employees,illinLosAngelesinDecember.InJuly2018,nearly650
peoplegotfoodpoisoningafterdiningataChipotlerestaurantinPowell,Ohio.
COVID ESG NewActivity
Followinghealthscares,companytriestolurecustomersbackin
Thecompany’ssalesdeclinedsignificantlyasaresultofmultiplefoodborneillnesses.In2016,thecompany
initiallysoughttobringbackcustomerstoitsstoresviaavarietyoffreegiveaways,suchasallowingkidstoeatfor
freeeverySundayandperkslikefreesodasforstudents.In2018,thecompanypilotedandlateradoptedaloyalty
programin2019,whichrewardedeutomerswithpointsforpurchases,enablingthemtolaterconvertpointstofree
meals.Thecompanyhasexperiencedsuccesswithitsrewardsprogram,deeperlevelsofengagement.
NewActivity
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ChipotleMexicanGrill, inc.
CompanyOverview
MarketShare
2.24%
0.6%
CurrentYear
(2021)
AnnualGrowth
(2017–21)
IndustryRevenue
$7.0bn
14.3%
CurrentYear
(2021)
AnnualGrowth
(2017–21)
ProfitMargin
8.54%
3.2%
CurrentYear
(2021)
AnnualGrowth
(2017–21)
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Chick-Fil-A,Inc.
CompanyOverview
Chick-Fil-A,Inc.isaprivatecompanywithanestimated140,000employees.IntheUS,thecompanyhasanotable
marketshareinatleastoneindustry:FastFoodChickenFranchises,wheretheyaccountforanestimated38.9%of
totalindustryrevenueandareconsideredanAllStarbecausetheydisplaystrongermarketshare,profitand
revenuegrowthcomparedtotheirpeers.
COMPANYTYPE
PrivateCompany
TOTALCOMPANY
REVENUE
$5.0bn
EMPLOYEES
140,000
FastFoodChickenFranchises
System-widesalesincreasedespitemajorbusinessimplicationsamidthecoronaviruspandemic
Chick-fil-A’srestaurantoperationswereadverselyaffectedbythewidespreaddiningroomclosuresandother
socioeconomicrestrictionsimplementedduringtheglobalhealthcrisis.However,totalsystem-widesalesfor
Chick-fil-Agrew12.8%to$13.7billionin2020asmanyChick-fil-A’slocationsbenefitedfromanuptickindrive-thru
saleswhilediningfacilitiesremainedclosedforprolongedstints.Theorganizationalsocontinuestoinvestinits
digitalanddeliverycapabilitiestoengagecustomers.
COVID Structural
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Chick-Fil-A,Inc.
CompanyOverview
EstimatedIndustryMarketShare
1.79%Moderate
CurrentYear
(2020)
EstimatedIndustryRevenue
$5.0bnModerate
CurrentYear
(2020)
EstimatedProfitMargin
6.32%Weak
CurrentYear
(2020)
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Mcdonald’s Corporation
CompanyOverview
McDonald's
Mcdonald'sCorporationisapubliccompanyheadquarteredinIllinoiswithanestimated200,000employees.Inthe
US,thecompanyhasanotablemarketshareinatleastfourindustries:AccommodationandFoodServices,Fast
FoodBurgerFranchises,IntellectualPropertyLicensingandBurgerRestaurants.Theirlargestmarketshareisin
theAccommodationandFoodServicesindustry,wheretheyaccountforanestimated6.0%oftotalindustry
revenueandareconsideredanIncumbentbecausetheydisplaystrongmarketshare,butlowerprofitandrevenue
growththansomeoftheirpeers.
COMPANYTYPE
PublicCompany
TOTALCOMPANY
REVENUE
$2.8bn
EMPLOYEES
200,000
BurgerRestaurants
FastFoodBurgerFranchises
IntellectualPropertyLicensingintheUS
McDonald’scompletesacquisitionofDynamicYieldfor$300.0million
In2019,McDonald’scompletedtheacquisitionofDynamicYield,aleaderinpersonalizationanddecisionlogic
technology,for$300.0million.ThecompanyhasutilizedDynamicYield’stechnologytoprovideamore
personalizedcustomerexperiencebycustomizingdigitaldrive-thrumenustoshowdifferentfooditemsbasedon
thetimeofday,weather,restauranttrafficandtrendingandpopularmenuitems.McDonald’srolledthistechnology
outacrossitsdrive-thrurestaurantsintheUSin2019withplanstoexpandtointernationalmarkets.
M&A
Sustainablesourcesandhigh-qualityfoodservesaspillarsinMcDonald’ssustainabilitycommitments
McDonald’shasimplementedsustainablebusinesspracticesandqualitycontrolsacrosstheirdifferentfood
productsoverthepastfewyears.In2016,thecompanyachieveditsgoaltoonlysourcechickensintheUSnot
treatedwithantibioticsandshortlythereafter,in2017thecompanysetouttoeliminateantibioticsacrossitsglobal
chickensupplychain.McDonald’shasalsopartneredwithfarmers,suppliersandindustryexpertstocreateitsbeef
sustainabilitygoalstoimproveenvironmentalpracticesinhowbeefisproductsandimproveanimalhealthand
treatment.Furthermore,asof2017,54.0%ofallMcDonald’scoffeewassourcedsustainabilitythroughRainforest
Alliance,FairTradeInternational,FairTradeUSAandUTZ.
ESG M&A
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Mcdonald’s Corporation
CompanyOverview
MarketShare
0.9%
-2.2%
CurrentYear
(2021)
AnnualGrowth
(2017–21)
IndustryRevenue
$2.8bn
-22.8%
CurrentYear
(2021)
AnnualGrowth
(2017–21)
ProfitMargin
11.99%
0.5%
CurrentYear
(2021)
AnnualGrowth
(2017–21)
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OperatingConditions
Capital
Intensity
Thelevelofcapitalintensityis Low
TheFastFoodRestaurantsindustryexperiencesalow
levelofcapitalintensity.In2022,forevery$1.00spenton
wages,theaverageindustryoperatorwilllikelyspendan
estimated$0.12oncapital.Capitalintensityhasremained
relativelystableoverthefiveyearsto2022despitean
increaseinindustrywagesoverthepastfiveyears.
Particularly,someriseinlaborproductivitycanoccurfrom
investmentintechnology.Overthepastdecade,many
operatorshaveimplementedelectronicorderingsystems
thatarelinkedtothekitchen,helpingchefsmoreefficiently
processandprepareorders.Thisisespeciallytrueofchain
operations,whichcanbenefitfromeconomiesofscale.Itis
alsoincreasinglycommonforchainstomanagelaborcosts
withjust-in-timeschedulingwhichisbasedon
sophisticatedalgorithmsbuiltondataincludingthe
previousyear'ssalestrends,economicindicatorsand
changesinweather.Thesecomputerprogramsforecastin
advancewhendemandwillbehighorlowandenable
managerstoadjuststaffinglevels.Theseinitiativeshave
helpedsomeoperatorsimproveprofitandgrowrevenue.
However,themainbeneficiariesoftechnological
advancementsarelargechains.Smallerindustryoperators
findimplementingthesetechnologiesoverlyexpensiveand
receivelimitedbenefitsfromincreasedcapitalinvestment,
andthereforeprefertoconcentrateontrainingtheirstaffto
improvetheirservice.
Nonetheless,theindustryishighlydependentondirect
laborinputacrossallareasofoperation.Industryoperators
requirepersonnelascashiers,fordeliveryandfood
preparation,cleaningandoperationalmanagement.Dueto
theservicenatureoftheindustry,manyoftheselabor-
intensivefunctionscannotbesubstitutedbytechnologyor
machinery.Tomeetcustomers'expectationsandprovidea
qualityandhospitablediningexperience,awell-trained
staffisrequired.
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Technology&
Systems
PotentialDisruptiveInnovation:FactorsDrivingThreatofChange
Level
Factor
Disruptive
Effect
Description
VeryLow
Rateof
Innovation
Very
Unlikely
Arankedmeasureforthenumberofpatents
assignedtoanindustry.Afasterrateofnew
patentadditionstotheindustryincreasesthe
likelihoodofadisruptiveinnovationoccurring.
VeryLow
Innovation
Concentration
Very
Unlikely
Ameasureforthemixofpatentclasses
assignedtotheindustry.Agreater
concentrationofpatentsinoneareaincreases
thelikelihoodoftechnologicaldisruptionof
incumbentoperators.
High
EaseofEntry
Likely
Aqualitativemeasureofbarrierstoentry.
Fewerbarrierstoentryincreasesthe
likelihoodthatnewentrantscandisrupt
incumbentsbyputtingnewtechnologiesto
use.
Medium
RateofEntry
Potential
Annualizedgrowthinthenumberof
enterprisesintheindustry,rankedagainstall
otherindustries.Agreaterintensityof
companiesenteringanindustryincreasesthe
poolofpotentialdisruptors.
VeryLow
Market
Concentration
Very
Unlikely
Arankedmeasureofthelargestcoremarket
fortheindustry.Concentratedcoremarkets
presentalow-endmarketornewmarketentry
pointfordisruptivetechnologiestocapture
marketshare.
Theindustryisexperiencingalowlevelofboththerateofnewpatentsandtheconcentrationofpatentsintheindustry.
Thiscreatesanenvironmentwherethethreatofnewtechnologiesdrivingdisruptionislow.
Therelativeeaseofentryishigh,whichcansupportthepotentialforexternalinnovatorstoentertheindustrywitha
disruptivetrajectory.Despitethis,therateofentryofnewcompaniesisinlinewiththenationalaverage.
Majormarketsegmentsforindustryoperatorsarerelativelydiversified.Thespreadofmarketsegmentssuggeststhatthere
arelimitedentrypointsotherthanthosealreadyservedmyincumbentoperators.
TheFastFoodRestaurantsindustryhasadaptedtonewtechnologiesranging
fromonlineordering,paymentmethodsandloyaltyprogramstokiosksand
mobileapplications.
Changingconsumerpreferenceshavepushedindustryoperatorstochangethebusinessstrategybypromoting
partnershipswithonlinedeliveryplatformsinordertogainexposure.Consumersvisitindustryestablishmentsfora
convenient,affordableandtime-savingmeal.Asaresult,theyareincreasinglyorderingfoodonlinefordelivery.Operators
thathavetheirowndeliveryandonlineorderingplatformswilllikelyhaveanadvantage.Furthermore,consumersare
becomingincreasinglyhealthconsciousbyeatingfewerprocessedfoods.Incumbentoperatorshavehadtomodifytheir
menustokeepupwithchangingpreferences.
Theleveloftechnologychangeis Medium
OperatorsintheFastFoodRestaurantsindustryregularlyleveragetechnology
toreducelaborandfoodcoststoincreasesales.
Theyalsouseittoimprovebusinessprocesses,supportgrowth,maintaincurrentoperationsandimprovemeal
experiences.
Qualityofservice
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Themajorityoftechnologicaladoptionbytheindustryaimstoaddressnew
systemsandprocessesthataredesignedtopromotequalityserviceand
reducecustomerwaittime.
Suchinnovationsincludewirelesselectronicorderingsystemsthatlinkfront-of-the-houseorderstokitchenmeal
preparationandtouch-screenorderingsystemsforcustomers.Althoughthismayhelptoreducelaborcosts,itdoesnot
eliminatethem,asthissystemstillrequirescustomerstocheckoutataphysicalregister.Theincreasingsophisticationof
theinternetandmobiletechnologyhasalsodrivenindustryplayerstoreachwholesalersandsuppliersonline.Thishasled
toincreasedefficienciesincoordinatingsuppliesandotherpre-preparedfooditems.
Largerchainsalsousedatanetworkstosendandreceivebusinessdatatoandfromrestaurantstomonitorandanalyzeall
aspectsofthebusiness.Throughdataanalytics,operationalefficienciescanbeidentifiedandimprovedthroughouta
company'snetworkofstores.
Point-of-salesystems
Mostoperatorsnowhavepoint-of-sale(POS)systemsinstorestospeedup
service,whichleadstomorepurchasesonaverageandcutsdownonlabor
costs.
RetailersareincreasinglyacceptingcreditcardpaymentsthroughdevicessuchasSquare,whichconnectsdirectlytothe
store'stabletdeviceandfacilitateseaseoftransaction.Customerscansignwiththeirfingeronatouchscreenratherthan
withapenandhavethereceiptemailedtothem.Thishasalsoledtomanyindustryoperatorsaddingorderkiosksand
touchscreensystemstolimitlaborneededatthecountertotakeorders.Thishasgrownsubstantiallyinpopularityamong
industryoperators.ThesePOSsystemsareeasytoscaleandreducelinesandlaborcosts.Somerestaurantshave
adoptedmobiletechnology,enablingtheorderingoffooditemsviamobileapplicationsandonline.Mobileandonline
orderinghasbeenbeneficialforrestaurantsandconsumersbycreatingeaseofaccessanddelivery.However,by
removingdirectinteractionbetweentheconsumerandtherestaurant,thereislikelytobesomemiscommunicationinfood
availabilityandofferings.
Laborscheduling
Itisincreasinglycommonforchainstomanagelaborcostswithjust-in-time
schedulingwhichisbasedonsophisticatedalgorithmsbuiltondataincluding
lastyear'ssalestrends,economicindicatorsandchangesinweather.
Thesecomputerprogramsforecastinadvancewhendemandwillbehighorlowandletsmanagersadjuststaffinglevels.
Socialmedia
Technologyhasalsoaidedfastfoodrestaurantswithmarketing.
Socialmediahasenabledsavvyoperatorstoconnectdirectlywithcustomersandtailortheirbrand'smessagetotarget
fragmentedconsumersegments.Manyindustryoperatorshavemadepopularnewsheadlineswiththeirquickwitand
humordeployedonsocialmedia.
Revenue
Volatility
Thelevelofvolatilityis Medium
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TheFastFoodRestaurantsindustryhasalowtomoderatelevelofrevenue
volatility.
Overthefiveyearsto2022,theindustryhasgrownconsistently,priortotheonsetoftheCOVID-19(coronavirus)pandemic
in2020.Theindustrydependsonconsumertastes,preferencesandlevelsofdisposableincomeandconsumer
confidence.Restaurantspendingishighlydiscretionaryandeasilysubstitutedforlower-costoptions,suchashome-cooked
meals.Asaresult,changesinfactorsaffectingincomes,suchastaxesandunemploymentlevels,candirectlyaffect
industryrevenue.However,someconsumerswilllikelydowngradefromfull-servicerestaurantstolower-costfastfood
duringtimesofeconomicausterity.
Thediversityoffoodsservedbytheindustryhelpskeepanyvolatilityundercontrol.Theindustryconsistsofarangeoffood
products,fromAsianrestaurantstotraditionalUSrestaurantsandotherethniccuisines,meaningthatiftastesdeferfrom
onetypeoffoodtowardanother,theindustrystillcapturesrevenue.Whiledemandfortraditionalfast-foodoptionshighin
fat,saltandcalorieshasdeclined,thereareagrowingnumberofconvenient,affordableandhealthyfast-foodoptions
availabletoconsumers.
Regulation&
Policy
Thelevelofregulationis MediumandthetrendisIncreasing
TheFastFoodRestaurantsindustryissubjecttoamediumlevelofregulation
thatisincreasing.
Thereareregulationscoveringarangeofareas,fromfoodsafetyandhealthstandards,tolaborconditionsandfranchising
requirements.Mostregulationisenactedandenforcedatthestatelevel,butmanyfederallawsalsoapply.Operatorsalso
contendedwithadditionalregulationsrelatedtosocialdistancingandtheuseofpersonalprotectiveequipmentduringthe
COVID-19(coronavirus)pandemic.
FOODSAFETYANDSTANDARDS
Theindustryissubjecttolawsandregulationsrelatingtothepreparationand
saleoffood,includingregulationsregardingproductsafety,nutritional
contentandmenulabeling.
ThemainagencyresponsibleforprovidingguidanceandregulationistheUSFoodandDrugAdministration(FDA).The
FDA'sModelFoodCode,whichisabest-practiceguidetofoodhandlingandpresentation,appliestothisindustryandis
updatedeachyear.TheFDANutritionalValueappliesaswell.Since1996,theFDAregulationshavesetstandardsfor
nutritionalvaluesofindividualfoodsandmeals.Ifclaimslikelowfatorhearthealthyareonamenu,anownermustbeable
todemonstratetoofficialsthatthereisareasonablebasisfortheclaim.Forinstance,themealmaybebasedonarecipe
fromahealthassociationorarecognizeddietarygroup.
In2015,theFDAannounceditwillrequirethefoodindustrytograduallyphaseouttransfatsfromfoodinanattemptto
preventillnessanddeaths.Transfatsarecommonlyusedinprocessedfoodstoimprovethetasteorshelflifeoffoodsand
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arebelievedtocausesomehealthissues,includingheartdisease.Whiletransfatshavebeeneliminatedfrommanyfoods
overthepastdecadeduetostricterlabelingrequirements,manyfastfoodsstillcontainsmallamounts.Theplanprovideda
three-yearcomplianceperiodtoindustryoperators.
TheAffordableCareActrequiresrestaurantcompaniestodisclosecalorieinformationontheirmenus.TheFDAhas
proposedrulestoimplementthisprovisionthatwouldrequirerestaurantstopostthenumberofcaloriesformostitemson
menusormenuboardsandtomakeavailablemoredetailednutritioninformationuponrequest.Completenutritional
information,however,isnotrequiredtobeonmenus.
LABORRELATIONS
Theindustryemploysahighnumberofyoungandlow-skilledworkersat
hourlyratesand,therefore,issubjecttominimumwageandemployee
benefitsregulations.
WorkersintheUnitedStatesareentitledtobepaidnolessthanthestatutoryminimumwage,whichiscurrently$7.25per
hour.Eachstatealsoformulatesandregulatesitsownminimumwage,withsomestatesimplementingrateshigherthan
thefederalrate.
TheimplementationoftheAffordableCareActoverthefiveyearsto2027willlikelyhaveaminoreffectontheindustry.
Employerswith50ormoreemployeesthatwork30hoursaweekareexpectedtoberequiredtoprovidehealthcare
coverageorpayafine.However,thelargemajorityofoperatorsintheindustryemploylessthan50staff.Mostmajor
operatorsarecurrentlyreviewingthepotentialeffectsofthenewlawontheirbusinesses.
FRANCHISINGLAWS
Alargeproportionofindustryestablishmentsareoperatedunderfranchise
agreements.
Therearebothfederalandstatelawsgoverningfranchising,whichvaryfromstatetostate.Franchisingisregulatedatthe
federallevelbytheUSFederalTradeCommissionandappliedinanyregionwithintheUnitedStates.Atthestatelevel,
variousstateagenciesregulatefranchisesandlawsvarybetweenstates.Astate'sfranchiselawsusuallyonlyapplyifthe
saleofafranchiseismadeinthestateandthebusinessislocatedinthestate.Lawsgenerallyfallunderthreecategories,
whichincludedisclosurelaws,registrationlawsandrelatedlaws.
UndertheFTCFranchiseRule,therearethreeelementsofafranchise,whichincludethefranchisehasatrademarkunder
whichthefranchiseeisgiventherighttodistributegoodsandservices;thefranchisorhassignificantcontroloforprovides
significancetothefranchisee'smethodofoperation.Additionally,thefranchiseeisrequiredtopaythefranchisoratleast
$500.00withinthefirstsixmonthsofopeningforbusiness.
Industry
Assistance
Thelevelofindustryassistanceis LowandthetrendisIncreasing
AlthoughtheFastFoodRestaurantsindustryreceivesnoformalassistancein
theformofgovernmentaidormonetarycompensation,thereareindustry
associationsthathelptheindustryasawhole.
Forexample,theNationalRestaurantAssociationprovidesindustrynews,research,sponsoringevents,networking
opportunitiesandrepresentation,amongotherthings.Therearealsoorganizationsthatprovidethesameservicesona
morelocallevel.Oftenstateandmunicipalitiesalsohaveassociationstosupportrestaurantbusinessowners.
Additionally,operatorsthatparticipateintheindustrythroughfranchiseagreementsreceiveassistancefromthefranchise
ownerintheformofmarketing,supplychainmanagementandpurchasing.However,thiscomesatacostintheformofan
annualroyaltyormarketingfee.Formoreinformationonfranchiseagreements,refertoIBISWorldReport53311
IntellectualPropertyLicensing.Nonetheless,theseoperatorscanbenefitfromadditionalsupportfromfranchisespecific
organizationsaswell.
COVID-19response
TheU.S.CoronavirusAid,Relief,andEconomicSecurity(CARES)ActwhichwasintroducedandsignedintolawinMarch
of2020isa$2.0trillioneconomicreliefpackagedesignedtoprovidedirecteconomicassistanceforAmericanworkers,
familiesandsmallbusinessesaswellaspreservejobsforAmericanindustries.ThePaycheckProtectionProgram,which
wasestablishedbytheCARESActisimplementedbytheSmallBusinessAdministrationandprovidessmallbusinesses
withfundstopayuptoeightweeksofpayrollcostsincludingbenefits.Fundscanalsobeusedtopayintereston
mortgages,rentandutilities.TheCARESActandPaycheckProtectionProgramwillsupportindustryoperatorswithpayroll
andrentpayments.Furthermore,inDecember2020thegovernmentpassedanadditional$900.0billionCoronavirusrelief
bill.Thelegislationincludedanother$300.0billionforthePaycheckProtectionProgramandexpandedthekindsof
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businessesthatcanqualifyforforgivableloansandgrants.Lastly,inMarch2021athird,$1.9trillionCovidreliefplanwas
signedintolaw.Theplanprovides$15.0billiontotheEmergencyInjuryDisasterLoanprogram,whichprovideslong-term,
low-interestloansfromtheSmallBusinessAdministration.Moreover,thePaycheckProtectionProgramwillreceivean
additional$7.0billioninfundsunderthisreliefplan.
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KeyStatistics
IndustryData
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
Consumer
spending($b)
2013
233,700
78,495
263,380
182,646
3,807,083
N/A
N/A
60,266
N/A
11,212
2014
241,429
82,298
265,226
183,191
3,930,463
N/A
N/A
62,259
N/A
11,515
2015
260,792
90,223
269,816
185,650
4,079,581
N/A
N/A
67,273
N/A
11,893
2016
275,993
97,311
273,361
186,795
4,262,841
N/A
N/A
71,644
N/A
12,188
2017
288,382
100,274
285,382
191,735
4,484,227
N/A
N/A
75,473
N/A
12,484
2018
299,160
105,139
287,996
193,127
4,663,514
N/A
N/A
80,308
N/A
12,845
2019
310,207
107,535
288,754
193,222
4,694,299
N/A
N/A
82,365
N/A
13,126
2020
301,490
104,984
285,296
191,328
4,695,406
N/A
N/A
80,493
N/A
12,630
2021
322,047
111,367
290,221
194,429
4,932,426
N/A
N/A
84,842
N/A
13,625
2022
331,405
114,603
294,478
197,163
5,065,599
N/A
N/A
87,167
N/A
14,157
2023
338,758
117,237
298,496
199,755
5,178,862
N/A
N/A
89,113
N/A
14,528
2024
348,194
120,351
302,757
202,515
5,309,587
N/A
N/A
91,409
N/A
14,856
2025
356,271
122,898
305,782
204,496
5,420,176
N/A
N/A
93,356
N/A
15,150
2026
364,070
125,374
308,830
206,499
5,525,829
N/A
N/A
95,221
N/A
15,437
2027
371,858
128,001
312,184
208,715
5,634,899
N/A
N/A
97,132
N/A
15,722
AnnualChange
Year
Revenue
(%)
IVA
(%)
Establishments
(%)
Enterprises
(%)
Employment
(%)
Exports
(%)
Imports
(%)
Wages
(%)
Domestic
Demand
(%)
Consumer
spending(%)
2013
1.50
3.09
0.72
1.15
5.02
N/A
N/A
5.67
N/A
1.48
2014
3.30
4.84
0.70
0.29
3.24
N/A
N/A
3.30
N/A
2.70
2015
8.02
9.62
1.73
1.34
3.79
N/A
N/A
8.05
N/A
3.27
2016
5.82
7.85
1.31
0.61
4.49
N/A
N/A
6.49
N/A
2.47
2017
4.48
3.04
4.39
2.64
5.19
N/A
N/A
5.34
N/A
2.42
2018
3.73
4.85
0.91
0.72
3.99
N/A
N/A
6.40
N/A
2.89
2019
3.69
2.27
0.26
0.04
0.66
N/A
N/A
2.56
N/A
2.18
2020
-2.82
-2.38
-1.20
-0.99
0.02
N/A
N/A
-2.28
N/A
-3.79
2021
6.81
6.07
1.72
1.62
5.04
N/A
N/A
5.40
N/A
7.87
2022
2.90
2.90
1.46
1.40
2.69
N/A
N/A
2.74
N/A
3.89
2023
2.21
2.29
1.36
1.31
2.23
N/A
N/A
2.23
N/A
2.62
2024
2.78
2.65
1.42
1.38
2.52
N/A
N/A
2.57
N/A
2.26
2025
2.31
2.11
0.99
0.97
2.08
N/A
N/A
2.13
N/A
1.98
2026
2.18
2.01
0.99
0.97
1.94
N/A
N/A
1.99
N/A
1.89
2027
2.13
2.09
1.08
1.07
1.97
N/A
N/A
2.00
N/A
1.84
KeyRatios
Year
IVA/Revenue
(%)
Imports/
Demand
(%)
Exports/
Revenue
(%)
Revenueper
Employee
($'000)
Wages/
Revenue
(%)
Employeesper
estab.
(Units)
AverageWage ($)
2013
33.6
N/A
N/A
61.4
25.8
14.5
15,830
2014
34.1
N/A
N/A
61.4
25.8
14.8
15,840
2015
34.6
N/A
N/A
63.9
25.8
15.1
16,490
2016
35.3
N/A
N/A
64.7
26.0
15.6
16,807
2017
34.8
N/A
N/A
64.3
26.2
15.7
16,831
2018
35.1
N/A
N/A
64.2
26.8
16.2
17,221
2019
34.7
N/A
N/A
66.1
26.6
16.3
17,546
2020
34.8
N/A
N/A
64.2
26.7
16.5
17,143
2021
34.6
N/A
N/A
65.3
26.3
17.0
17,201
2022
34.6
N/A
N/A
65.4
26.3
17.2
17,208
2023
34.6
N/A
N/A
65.4
26.3
17.3
17,207
2024
34.6
N/A
N/A
65.6
26.3
17.5
17,216
2025
34.5
N/A
N/A
65.7
26.2
17.7
17,224
2026
34.4
N/A
N/A
65.9
26.2
17.9
17,232
2027
34.4
N/A
N/A
66.0
26.1
18.0
17,238
Figuresareinflationadjustedto2022
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IndustryFinancialStatement
HistoricalAverage
2017
2018
2019
2020
3-Year
5-Year
10-Year
7.4
5.1
4.7
4.6
4.8
4.8
5.1
10.6
8.2
7.9
7.9
8.0
8.0
8.4
9.2
11.9
12.4
12.3
12.2
12.9
12.2
2017
2018
2019
2020
3-Year
5-Year
10-Year
1.6
1.7
1.7
1.8
1.7
1.8
1.8
2017
2018
2019
2020
3-Year
5-Year
10-Year
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.1
98.0
97.3
96.6
97.3
97.4
97.5
59.7
58.4
57.2
56.4
57.3
57.8
58.6
40.3
41.6
42.8
43.6
42.7
42.2
41.4
13.7
13.6
14.1
14.4
14.0
13.9
13.4
1.2
1.4
1.5
1.5
1.5
1.4
1.4
1.7
1.6
1.8
2.0
1.8
1.9
1.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.5
1.5
1.3
1.2
1.3
1.2
1.4
2.8
2.7
3.0
3.2
3.0
3.1
2.8
0.7
0.8
0.8
0.8
0.8
0.7
0.7
0.0
0.7
0.7
0.7
0.7
0.6
0.4
2.1
2.0
2.2
2.3
2.2
2.1
2.1
3.4
3.0
3.1
3.1
3.1
3.3
3.1
1.6
1.7
1.7
1.8
1.7
1.8
1.8
0.1
0.8
0.8
0.8
0.8
0.8
0.5
0.6
0.8
0.9
1.0
0.9
0.9
0.8
1.1
0.7
0.8
0.8
0.8
0.7
0.9
4.8
2.1
1.6
1.3
1.7
1.5
1.9
2017
2018
2019
2020
3-Year
5-Year
10-Year
9.0
10.0
11.2
12.1
11.1
10.3
9.4
4.4
1.6
1.8
2.2
1.8
2.9
4.0
0.1
0.3
0.3
0.3
0.3
0.2
0.1
2.3
4.5
5.4
6.0
5.3
4.1
3.3
4.4
4.5
5.0
5.4
5.0
4.7
4.3
21.0
19.8
16.1
13.4
16.5
18.5
19.0
60.1
60.3
62.0
63.4
61.9
61.4
62.3
35.2
36.6
37.1
37.8
37.2
36.4
36.1
25.9
26.4
25.7
25.2
25.8
25.2
24.0
5.1
5.2
5.1
5.0
5.1
5.1
5.0
8.7
9.0
8.4
7.9
8.5
8.7
9.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
5.0
4.1
4.8
5.3
4.8
5.2
5.6
3.0
3.8
3.5
3.3
3.5
3.3
3.3
8.8
11.2
12.0
12.6
11.9
10.9
10.5
4.9
6.9
7.7
8.2
7.6
6.5
6.5
40.3
41.2
40.5
40.0
40.6
39.9
36.9
15.7
14.7
14.1
13.5
14.1
14.6
15.2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
4.1
5.5
5.7
5.9
5.7
5.2
4.8
22.1
27.2
26.2
25.6
26.3
24.5
22.1
0.1
0.1
0.1
0.1
0.1
0.1
0.3
16.7
1.0
-2.7
-4.9
-2.2
5.3
11.9
31.7
12.9
10.9
9.6
11.1
19.3
20.7
22.3
17.8
17.1
16.9
17.3
19.5
22.0
FastFoodRestaurantsintheUS
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2017
2018
2019
2020
3-Year
5-Year
10-Year
1.2
1.1
1.2
1.2
1.2
1.1
1.1
1.1
0.9
0.9
0.9
0.9
0.9
0.9
23.4
65.7
57.7
47.7
57.0
43.4
31.9
15.6
5.6
6.3
7.6
6.5
10.3
14.1
13.8
27.5
33.5
37.9
33.0
25.5
20.2
26.5
13.3
10.9
9.6
11.3
16.9
20.8
12.2
14.5
12.1
10.9
12.5
11.7
11.2
29.9
25.2
30.0
33.5
29.6
32.0
33.8
57.9
45.1
38.3
31.9
38.4
84.2
155.8
2017
2018
2019
2020
3-Year
5-Year
10-Year
681.2
390.0
333.5
294.5
339.4
361.7
396.5
0.1
0.1
0.2
0.1
0.1
0.1
0.1
2017
2018
2019
2020
3-Year
5-Year
10-Year
5.8
7.5
7.9
8.1
7.8
7.0
6.2
4.5
5.6
5.8
5.9
5.8
5.2
4.7
0.2
0.2
0.2
0.2
0.2
0.2
0.2
2017
2018
2019
2020
3-Year
5-Year
10-Year
34.1
29.5
28.4
28.2
28.7
25.9
24.1
7.6
5.2
4.9
4.8
5.0
4.9
5.2
1.0
1.0
1.0
1.0
1.0
1.0
1.0
10.6
8.2
7.9
7.9
8.0
8.0
8.4
7.4
5.1
4.7
4.6
4.8
4.8
5.1
2017
2018
2019
2020
3-Year
5-Year
10-Year
81.6
81.6
81.6
81.6
81.6
81.6
81.9
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-342.8
-342.8
-223.6
-342.8
-303.1
-319.0
-327.9
-12.4
-12.4
-26.7
-12.4
-17.2
-15.2
-14.2
-0.8
-0.8
-0.4
-0.8
-0.7
-0.7
-0.8
Source:IRSSOITaxStats;USCensusBureau;IBISWorld
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AdditionalResources
NationalRestaurantAssociation
http://www.restaurant.org
USBureauofLaborStatistics
http://www.bls.gov
USCensusBureau
http://www.census.gov
Nation'sRestaurantNews
http://www.nrn.com
EntrepreneurMagazine
http://www.entrepreneur.com
BABYBOOMERS
Consumersbornbetween1946and1964whoaccountforamajorproportionofthepopulation.
NETREVENUE
Revenuefromcompany-ownedstoresandfranchisefees,butnotfranchisedstores'totalsales.
POINT-OF-SALE(POS)
Thelocationwhereatransactionoccursataretailestablishmentorstore.
SAME-STORESALES
Aretailmeasureusedtoassessthetrueperformanceofretailoutletsbytakingouttheeffectofnewstoreopenings
andonlytakingintoaccountssalesgrowthofexistingstores.
SYSTEM-WIDESALES
Salesfrombothcompany-ownedormanagedandfranchisedorlicensedoutlets.System-widesalesexcludes
royaltiesandfranchisingrevenuefees.
BARRIERSTOENTRY
Highbarrierstoentrymeanthatnewcompaniesstruggletoenteranindustry,whilelowbarriersmeanitiseasyfor
newcompaniestoenteranindustry.
CAPITALINTENSITY
Comparestheamountofmoneyspentoncapital(plant,machineryandequipment)withthatspentonlabor.
IBISWorldusestheratioofdepreciationtowagesasaproxyforcapitalintensity.Highcapitalintensityismorethan
$0.333ofcapitalto$1oflabor;mediumis$0.125to$0.333ofcapitalto$1oflabor;lowislessthan$0.125of
capitalforevery$1oflabor.
CONSTANTPRICES
ThedollarfiguresintheKeyStatisticstable,includingforecasts,areadjustedforinflationusingthecurrentyear(i.e.
yearpublished)asthebaseyear.Thisremovestheimpactofchangesinthepurchasingpowerofthedollar,leaving
onlythe"real"growthordeclineinindustrymetrics.TheinflationadjustmentsinIBISWorld’sreportsaremadeusing
theUSBureauofEconomicAnalysis’implicitGDPpricedeflator.
DOMESTICDEMAND
SpendingonindustrygoodsandserviceswithintheUnitedStates,regardlessoftheircountryoforigin.Itisderived
byaddingimportstoindustryrevenue,andthensubtractingexports.
EMPLOYMENT
Thenumberofpermanent,part-time,temporaryandseasonalemployees,workingproprietors,partners,managers
andexecutiveswithintheindustry.
ENTERPRISE
Adivisionthatisseparatelymanagedandkeepsmanagementaccounts.Eachenterpriseconsistsofoneormore
establishmentsthatareundercommonownershiporcontrol.
ESTABLISHMENT
Thesmallesttypeofaccountingunitwithinanenterprise,anestablishmentisasinglephysicallocationwhere
businessisconductedorwhereservicesorindustrialoperationsareperformed.Multipleestablishmentsunder
commoncontrolmakeupanenterprise.
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EXPORTS
TotalvalueofindustrygoodsandservicessoldbyUScompaniestocustomersabroad.
IMPORTS
TotalvalueofindustrygoodsandservicesbroughtinfromforeigncountriestobesoldintheUnitedStates.
INDUSTRYCONCENTRATION
Anindicatorofthedominanceofthetopfourplayersinanindustry.Concentrationisconsideredhighifthetop
playersaccountformorethan70%ofindustryrevenue.Mediumis40%to70%ofindustryrevenue.Lowisless
than40%.
INDUSTRYREVENUE
Thetotalsalesofindustrygoodsandservices(exclusiveofexciseandsalestax);subsidiesonproduction;allother
operatingincomefromoutsidethefirm(suchascommissionincome,repairandserviceincome,andrent,leasing
andhiringincome);andcapitalworkdonebyrentalorlease.Receiptsfrominterestroyalties,dividendsandthesale
offixedtangibleassetsareexcluded.
INDUSTRYVALUEADDED(IVA)
Themarketvalueofgoodsandservicesproducedbytheindustryminusthecostofgoodsandservicesusedin
production.IVAisalsodescribedastheindustry'scontributiontoGDP,orprofitpluswagesanddepreciation.
INTERNATIONALTRADE
Thelevelofinternationaltradeisdeterminedbyratiosofexportstorevenueandimportstodomesticdemand.For
exports/revenue:lowislessthan5%,mediumis5%to20%,andhighismorethan20%.Imports/domesticdemand:
lowislessthan5%,mediumis5%to35%,andhighismorethan35%.
LIFECYCLE
Allindustriesgothroughperiodsofgrowth,maturityanddecline.IBISWorlddeterminesanindustry'slifecycleby
consideringitsgrowthrate(measuredbyIVA)comparedwithGDP;thegrowthrateofthenumberofestablishments;
theamountofchangetheindustry'sproductsareundergoing;therateoftechnologicalchange;andthelevelof
customeracceptanceofindustryproductsandservices.
NONEMPLOYINGESTABLISHMENT
Businesseswithnopaidemploymentorpayroll,alsoknownasnonemployers.Thesearemostlysetupbyself-
employedindividuals.
PROFIT
IBISWorldusesearningsbeforeinterestandtax(EBIT)asanindicatorofacompany’sprofitability.Itiscalculatedas
revenueminusexpenses,excludinginterestandtax.
REGIONS
West|CA,NV,OR,WA,HI,AK
GreatLakes|OH,IN,IL,WI,MI
Mid-Atlantic|NY,NJ,PA,DE,MD
NewEngland|ME,NH,VT,MA,CT,RI
Plains|MN,IA,MO,KS,NE,SD,ND
RockyMountains|CO,UT,WY,ID,MT
Southeast|VA,WV,KY,TN,AR,LA,MS,AL,GA,FL,SC,NC
Southwest|OK,TX,NM,AZ
VOLATILITY
Thelevelofvolatilityisdeterminedbyaveragingtheabsolutechangeinrevenueineachofthepastfiveyears.
Volatilitylevels:veryhighismorethan±20%;highvolatilityis±10%to±20%;moderatevolatilityis±3%to±10%;
andlowvolatilityislessthan±3%.
WAGES
Thegrosstotalwagesandsalariesofallemployeesintheindustry.
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