Americans' increasing taste for Mexican food will drive sales and store expansion
Los Angeles, CA (PRWEB) November 20, 2012
In response to an expanding immigrant population, restaurants are adapting to increasing demand for ethic foods, particularly for Mexican cuisine. According to IBISWorld industry analyst Agata Kaczanowska, “Mexican-style food has been introduced into mainstream American culture through rapid growth in brands like Chipotle Mexican Grill.” Exemplifying the boom in demand for this market, Chipotle's revenue is has surged at an average annual rate of about 20.5% over the past five years, including a 21.5% leap in 2012 alone. As the market for Mexican food has expanded since 2007, revenue for the Mexican Restaurants industry as a whole has grown at an estimated 1.4% annualized five-year rate to $30.7 billion; this rate includes a 1.5% revenue boost in 2012 driven by rebounding consumer spending.
Primarily due to the recession, consumer spending has risen only 0.7% annually on average since 2007, though it is anticipated to grow by 1.9% in 2012, enabling industry operators to implement price increases. Such price increases are not only expected to boost revenue but also profitability, which is expected to total 3.5% of 2012 revenue. Although this is below the 3.6% margin that the average industry operator earned in 2007, it represents a strong recovery from the 2.2% margin in 2009. “Volatile input costs, represented by the agricultural price index, have been largely responsible for profit pressures during the past five years,” says Kaczanowska. The index declined by as much as 12.3% in 2009 only to skyrocket 25.8% in 2011, followed by an expected 6.8% increase in 2012.
Although specialized small-business operators that employ fewer than 9 individuals represent a significant portion of the Mexican Restaurants industry’s establishments, the top four players alone, including Yum Brands and Brinker International, control a similar proportion of the available market share. These operators are mainly fast-food or chain restaurants that sell mainstream Mexican food. Nonetheless, Americans' growing taste for Mexican food has resulted in increasing patronage at industry establishments across the board. In response, operators have been opening new locations at a steady rate over the past five years. Because tight credit conditions prevented some businesses from expanding during the period, IBISWorld projects that this number will rise at a faster rate through 2017.
Expansion will be largely underpinned by further market acceptance of Mexican food in the five years to 2017. In addition, rising consumer spending will continue to support revenue growth, as will rising employment by reducing free time for consumers to cook their own meals. Consequently, the Mexican Restaurant industry's revenue is forecast to continue increasing steadily over the next five years, though the industry’s chain restaurants will likely grow at a much faster pace than small independent operators. For more information, visit IBISWorld’s Mexican Restaurants in the US industry report page.
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IBISWorld industry Report Key Topics
This industry is composed of restaurants that primarily serve Mexican-style (including Tex-Mex) food to patrons. It encompasses single-location, chain and franchised enterprises, as well as full-service and fast-food operators. These restaurants also sell alcoholic and other beverages. However, street and food-truck vendors are excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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