Global expansion and healthier menus will support future revenue growth
Los Angeles, CA (PRWEB) April 06, 2012
The Chain Restaurants industry experienced a major slowdown during the recession due to reduced consumer spending amid a struggling economy. “In the battle over consumers' shrinking budgets, restaurants were increasingly losing to home-cooked meals or fast-food restaurants,” says IBISWorld industry analyst Nima Samadi. On average, consumers were spending less on luxuries like eating out and were purchasing lower-priced items when they did eat out. Consumers are also becoming increasingly health conscious. While major restaurants have responded by expanding the number of nutritious options on their menus, the general trend toward better eating has hurt many of the less healthy chain restaurants. As a result, IBISWorld estimates industry revenue has fallen at an average annual rate of 0.1% to $54.6 billion over the five years to 2012.
Stronger operating conditions are in sight, though, as consumer expenditure rebounds. After revenue declined 6.8% to $50.0 billion over 2009, it picked back up with growth of 1.6% in 2010 and 2.8% in 2011 and an expected increase of 4.5% in 2012. While the Chain Restaurants industry is currently experiencing stronger operating conditions, “firms will still need to contend with customers who are hesitant to part with their money,” Samadi says. Operators that meet these challenges will be in a stronger position as economic growth approaches prerecession levels. Most major chains are also investing in international growth as part of their long-term strategies. For example, in October 2010, Darden Restaurants signed an area-development agreement with one of the Middle East's largest restaurant franchising companies, which is Darden's first foray outside of North America. Many of these foreign markets have huge potential for growth and long-term profitability.
In 2012, the industry is deemed to have a low level of concentration based on the total market share of the top four companies. The concentration level is due to the vast array of chain and franchised restaurant operators and food concepts, as well as the extensive number of sites they operate. The industry is made up of a number of very large chain and franchised operators that have establishments spread nationally and even internationally. Including Darden, other major companies include CBRL Group Inc., Brinker International Inc., Bob Evans Farms Inc. and DineEquity Inc. Given the industry's nature, particularly its fragmentation by food types, the level of industry concentration is not expected to change in the near future. For more information, visit IBISWorld’s Chain Restaurants report in the US industry page.
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IBISWorld industry Report Key Topics
The industry comprises chain and franchised restaurants that provide food services to patrons who order and are served while seated (i.e. waiter or waitress service) and pay after eating. These establishments may provide this type of food service to patrons in combination with selling alcoholic and other beverages.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.