First Research US Industry Profile

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Restaurants, Bars & Food Services
SIC Codes: 5812, 5813
NAICS Codes: 722
Last Quarterly Update: 5/9/2022
Companies in this industry provide meals, snacks, and beverages to customers for on-site or off-site consumption. Major companies include restaurant operators such as Darden Restaurants, McDonald's, Starbucks, and Yum! Brands (all based in the US), as well as Greggs (the UK), Restaurant Brands International (Canada), and Skylark Group (Japan). Major food service contractors include US-based ARAMARK and Delaware North, as well as Autogrill (Italy), Compass Group (UK), Sodexo (France), and SSP Group (UK).
The global food service market reached about $2.5 trillion in 2020, and is expected to grow at a CAGR of about 5% during the 2021-2026 forecast period, according to IMARC Group. Among the key factors driving the global food service market include growing demand for customization and innovation in food menu options and an increasing preference for readily available hassle-free, nutritious, and hygienic food.
The US restaurant, bar, and food services industry includes about 660,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $680 billion.
Competitive Landscape
Restaurants and bars 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. Some operators work closely with local farms, breweries, and distilleries to keep up with the latest trends. Dining and bar culture varies considerably from region to region, making it difficult for all but the largest companies to operate internationally.
Bars and restaurants compete with other sites that offer food, drinks, and entertainment, including casinos, movie theaters, and music venues. Restaurants may also compete with the prepared food sections of grocery and convenience stores; emerging competitors such as subscription meal kit services could further disrupt the restaurant industry in the future. Bars and nightclubs can lose business to liquor stores and other off-premises alcohol retailers. Food service contractors may compete with potential customers that manage their dining operations in-house.
Large companies have advantages in economies of scale in purchasing, as well as greater marketing resources. Small companies can compete effectively by providing superior customer service and offering specialized food and beverage products. The US industry is highly fragmented: the top 50 companies account for about 20% of industry revenue.
Competitive Advantages:
Trendy Menus – Restaurants, bars, and food service providers stand out from competitors by adapting their menus in response to changing consumer tastes. Restaurants have increased sales in recent years by adding new breakfast items, snacks, and healthy dishes. Bars have also driven traffic by featuring signature cocktails and rotating taps of seasonal craft beers.
Strategic Pricing – Bars and restaurants are under constant pressure to keep their prices competitive while accounting for ever-rising expenses. Operators attempt to maintain healthy margins by closely monitoring the profitability of individual menu items and adjusting prices according to changes in demand and operating costs.
Focus on Convenience – Proximity to residential areas, central business districts, and other high-traffic locations is a key advantage for restaurants and bars, which compete for customers who increasingly value convenience. Restaurants are also expanding their delivery networks and investing in mobile ordering and payment technologies to provide faster service.
Entertainment Options – Many bar operators have seen traffic slow in recent years as more consumers decide to socialize at home. Bars are introducing new games, activities, and special events to compete with the growing variety of at-home entertainment options.
Companies to Watch:
McDonald's has more than 38,000 restaurants serving burgers and fries in about 100 countries. More than 90% of the company’s restaurant locations are run by franchisees or affiliates.
Starbucks, the world's largest coffee shop chain, has about 30,000 coffee shops in 80 countries. The company also sells products through grocery stores and food service customers, and it earns additional revenue through brand licensing.
Compass Group provides hospitality and food services for a variety of businesses, cultural institutions, hospitals, and schools, as well as vending, catering, concessions, and security services for event and sports venues. The UK-based company is the largest contract food services provider in the world, with operations in more than 45 countries.
Products, Operations & Technology
Companies in this industry include full service restaurants (47%), limited service eating places (40%), special food services (9%), and drinking places ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

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