Companies in this industry provide food services in casual atmospheres to seated patrons who are served by wait staff and pay after eating. Major companies include Brinker International, Darden Restaurants, Dine Brands Global, and OSI Restaurant Partners (all based in the US), along with Recipe Unlimited (Canada), The Restaurant Group (UK), and Skylark (Japan).
Worldwide food service revenue, which includes revenue for casual restaurants and other types of dining establishments, totals more than $3 trillion a year, according to Technomic. The Asia/Pacific region, North America, and Western Europe are the largest food service markets, per Euromonitor International. Latin America and the Middle East/Africa region are leading growth markets for the food service sector.
The US full-service restaurant industry, which includes casual restaurants, comprises about 290,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $265 billion.
Casual restaurants are adopting new technologies and services to compete for consumers who increasingly value convenience. Mobile payments, online ordering, and home delivery are becoming more commonplace. Pricing is also becoming a more important issue as customers are able to choose from a growing variety of dining options, including pre-packaged meals from outlets such as grocery stores, convenience stores, and coffee shops. Full-service restaurants also compete with fast-food and other limited-service restaurants, fine-dining establishments, and specialty eateries. Emerging competitors such as providers of subscription meal kits could further disrupt the industry in the future.
Factors that can influence global competition in the restaurant industry include reliable access to infrastructure, stable relationships with ingredient suppliers, and the ability to adapt menus to suit local tastes. Some restaurants rely heavily on imports of fresh produce and other ingredients, which can make them vulnerable to trade disruptions.
Demand for casual dining is driven by personal income, consumer tastes, and demographic trends. The profitability of full-service restaurants depends on effective marketing and sales of high-margin items. Large companies have advantages in marketing, purchasing, and access to capital. Small companies can compete effectively by offering superior food or customer service. The US full-service restaurant industry is highly fragmented: the 50 largest companies account for about 20% of revenue.
Trendy Menus – Restaurants that continually adapt their menus in response to changing consumer tastes often stand out from competitors that stick to more traditional fare. For example, establishments have increased sales in recent years by adding healthier items such as vegetable dishes to their menus in response to rising customer demand.
Premium Selections – Full-service restaurants are benefiting from rising consumer interest in gourmet foods, craft beers, and premium spirits, which can be sold at higher margins than traditional fare. Many establishments have expanded their food and beverage selections to compete for patrons who are willing to pay more to try something new and unique.
Focus on Convenience – Casual restaurants are investing in mobile technology, introducing delivery service, and making other upgrades to provide additional convenience for customers. Proximity to residential areas, central business districts, and other high-traffic locations is a key advantage for full-service restaurants that are facing stiff competition from fast-casual chains that provide faster service.
Companies to Watch:
Darden Restaurants is the top casual-dining operator in the US and Canada, with a collection of chains including Olive Garden, LongHorn Steakhouse, Eddie V's, and The Capital Grille. Many of the company's brands cater to families by offering mid-priced menu items in primarily suburban locations.
OSI Restaurant Partners owns flagship chain Outback Steakhouse, which operates through the subsidiary Bloomin' Brands. Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse are OSI's other top brands.
Dine Brands Global owns two flagship casual dining chains: IHOP and Applebee's Neighborhood Grill and Bar (operated through subsidiary Applebee's Services). Applebee's is the largest individual casual-dining chain in North America, with more than 1,900 locations in the US and about 15 other countries.
Brinker International operates and franchises 1,600 restaurants in more than 30 countries. In addition to its flagship brand, Chili's Grill & Bar, Brinker operates the casual Italian chain Maggiano's Little Italy.
Products, Operations & Technology
Products include appetizers, entrées and main dishes, desserts, and beverages. Some establishments specialize in particular types of cuisine, while about
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms