As incomes and corporate profit declined, spending at premium steakhouses fell
Los Angeles, CA (PRWEB) October 10, 2013
The Premium Steak Restaurant industry continues to recover from a period of volatility caused by the recession. Demand dropped significantly in 2008 and 2009 as even wealthy individuals felt the economic pinch and curbed their restaurant spending. Business spending at premium steak restaurants also took a tumble due to declines in corporate profit, causing companies to reign in their budgets. As the economy has entered recovery mode since 2010, consumers have returned to restaurants to purchase high-end meals. Over the five years to 2013, industry revenue is expected to grow at an average annual rate 0.4% to $5.7 billion. Revenue is projected to grow by 1.2% in 2013, mainly a result of increased spending by wealthier consumers and companies returning to their business lunches.
According to IBISWorld Industry Analyst Andy Brennan, “In addition to fluctuating revenue, this industry has had to weather higher beef costs and changes in consumer preferences toward organic and locally produced goods.” Both trends affected the way companies conducted business in this industry. Major restaurants have expanded the number of healthy options on their menus and have begun to source more of their ingredients from local providers. Some steakhouses have made the healthy factor a core component of their marketing strategy, enabling them to target new segments of the market. As the cost of beef directly affects profit margins, many companies have increased menu prices to offset higher food costs.
In the five years to 2018, revenue for the Premium Steak Restaurants industry is expected grow strongly as personal incomes rise and consumers increase their spending on discretionary items such as expensive meals. Companies will also increase their spending on the industry's products and services as corporate event and dining activities rebound. Despite this growth, steakhouses will continue to face high beef prices and changing consumer preferences, resulting in some companies adjusting the way they do business. “As revenue continues to grow for this industry in the next five years, more companies are expected to enter,” says Brennan.
The industry has a low concentration of ownership. The industry has a fragmented structure and most firms operate within a narrow geographic market. Despite the presence of a handful of nationally recognized chains, concentration is brought down by the vast number of single, owner-operated establishments that are not part of a chain or franchise operation. Because of its fragmented nature, the level of industry concentration is not expected to change in the near future.
For more information, visit IBISWorld’s Premium Steak Restaurants industry report page.
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IBISWorld industry Report Key Topics
The industry includes chain, franchised and single-location restaurants that provide premium steak to consumers. Customers order and are served by waiters or waitresses while seated, and they pay after eating. These establishments may provide food services 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
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