Healthier menus and recovering disposable income will support future revenue growth.
Los Angeles, CA (PRWEB) November 03, 2013
The Chain Restaurants industry experienced a slowdown during the recession due to reduced consumer spending. In the battle for consumers' shrinking budgets, restaurants increasingly lost out to home-cooked meals or quick-service restaurants that offered cheaper options. On average, consumers cut spending on small luxuries like eating out, and when they did eat out, they opted for less expensive items. During the past five years, consumers have also become increasingly health conscious. According to IBISWorld Industry Analyst Andy Brennan, “Although 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 that industry revenue has grown at a muted average annual rate of 1.5% in the five years to 2013.
After revenue declined 3.4% to $77.5 billion in 2009, it began to rebound in 2010 as consumer confidence improved and spending picked up. Over the past two years, industry growth has returned to prerecessionary levels. Major chains are again expanding rapidly, opening new stores and investing in labor-saving technology to cut down on costs. The industry is expected to grow an additional 3.8% in 2013, pushing revenue to $86.6 billion, well above prerecession highs. Nevertheless, the Chain Restaurants industry has a low level of market share concentration. The industry is made up of a vast array of chain and franchised restaurant operators and food concepts, as well as the extensive number of sites they operate.
In the five years to 2018, many major chains are expected to continue their push overseas as potential from domestic growth becomes sparse. Fast food restaurants such as McDonald's and Yum! Brands (owner of KFC) initially beat full-service restaurants to the overseas chase. However, “most full-service chains now have a significant international presence and are earning a greater percentage of revenue through their overseas segments each year,” says Brennan. For example, in October 2010, Darden Restaurants signed an area-development agreement with one of the Middle East's largest restaurant franchising companies. This agreement marked Darden's first foray outside of North America. Many of these foreign markets have huge potential for growth and promise long-term profitability.
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IBISWorld industry Report Key Topics
The Chain Restaurants 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
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