Description
Industry businesses, patrons pay before eating. Purchases may be consumed on-site, taken out or delivered. Some establishments also sell alcohol. Gross sales come from franchises and company-owned stores.
Fast Food Restaurants in the US April 2010?? 1
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Fast-food fallout: Health-conscious and cash
poor consumers serve as an industry challenge
IBISWorld Industry Report 72221
Fast Food Restaurants in the US
April 2010 Roman Zwolak
2 About this Industry
14 International Trade
35 Operating Conditions
2
Industry Definition
15 Business Locations
35 Structural Risk Index
2
Main Activities
2
Similar Industries
17 Competitive Landscape
36 Technology & Systems
2
Additional Resources
17 Market Share Concentration
37 Industry Volatility
17 Key Success Factors
37 Regulation & Policy
18 Cost Structure Benchmarks
38 Industry Assistance
19 Basis of Competition
38 Taxation Issues
3 Industry at a Glance
35 Investment Requirements
4 Industry Performance
19 Barriers to Entry
4
Executive Summary
20 Industry Globalization
4
Key External Drivers
5
Current Performance
21 Major Companies
39 Annual Change
7
Industry Outlook
21 McDonald’s Corporation
39 Key Ratios
9
Industry Life Cycle
23 Yum! Brands, Inc.
40 Historical Performance
39 Key Statistics
39 Industry Data
25 Wendy’s/Arby’s Group, Inc.
11 Products & Markets
27 Starbucks Corporation
11 Supply Chain
28 Burger King Corporation
11 Products & Services
30 Doctor’s Associates Inc
42 Jargon & Glossary
12 Demand Determinants
13 Major Markets
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com
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About this Industry
Industry Definition
At industry businesses, patrons
pay before eating. Purchases may
be consumed on-site, taken out
or delivered. Some establishments
also sell alcohol. Gross sales come
from franchises and company-owned
stores. Officially reported SEC
Main Activities
The primary activities of this industry are
company revenue (net revenue) refers
to revenue obtained only from
company-owned stores and franchise
fees. Franchised stores’ gross sales
revenue is not available to the
franchisor. Net revenue is therefore
always less than gross revenue.
Operating drive-thru and take-out facilities
Operating fast-food services
Operating quick-service restaurants
The major products and services in this industry are
Cafeteria amenities
Limited service restaurant amenities
Other amenities inc – coffee shops, ice cream and donut shops
Similar Industries
44529 Candy, Bakery & Other Food Stores in the US
This industry primarily retails confectionery goods and nuts not packaged for immediate consumption.
72211 Full-Service Restaurants in the US
This industry primarily engages in full waiter service. They provide food to patrons who pay after eating.
72232 Caterers in the US
These establishments are primarily engage in catering.
72233 Street Vendors in the US
Establishments in this industry primarily sell snacks and nonalcoholic beverages from vehicles.
72241 Bars, Nightclubs & Drinking Establishments in the US
Establishments in this industry primarily prepare and serve alcoholic beverages.
Additional Resources
For additional information on this industry
www.restaurant.org
National Restaurant Association
www.bls.gov
U.S. Bureau of Labor Statistics
www.census.gov
U.S. Census Bureau
www.ibisworld.com
Fast Food Restaurants in the US April 2010??
3
Industry at a Glance
Fast Food Restaurants in 2010
Key Statistics
Snapshot
Revenue
Annual Growth 05-10
Annual Growth 10-15
Profit
Wages
Businesses
$184.0bn 0.4%
2.5%
$48.0bn 300,645
$8.3bn
Per capita disposable income
Revenue vs. employment growth
6
Yum! Brands, Inc.? 9.7%
3
% change
McDonald’s Corporation?
12.7%
Wendy’s/Arby’s Group,
Inc.? 6.6%
Starbucks
Corporation? 5.9%
4
3
% change
Market Share
0
?3
Burger King
Corporation? 5.1%
?6
Year
2
1
0
02
04
06
Revenue
08
10
12
?1
Year
14
03
05
07
09
11
13
15
Employment
SOURCE: WWW.IBISWORLD.COM
p. 21
Business locations
Key External Drivers
13615
Per capita disposable
income
New England
9118
Rocky Mountains
57855
16120
Health consciousness
Southeast
Plains
Consumer
sentiment index
26948
Southwest
Competition from full
service restaurants
47151
38034
West
Great Lakes
p. 4
41464
Mid-Atlantic
Industry Structure
Life Cycle Stage
Revenue Volatility
Investment Requirements
Mature
Regulation Level
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Heavy
Low
Technology Change
Low
Barriers to Entry
Low
Industry Globalization
High
Competition Level
High
Industry Assistance
None
Concentration Level
Low
For additional statistics and time series see the appendix on page 39
Medium
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Industry Performance
Executive Summary ? | ? Key External Drivers ? | ?Current Performance
Industry Outlook ? | ?Life Cycle Stage
Executive
Summary
The fast food industry has experienced a
major slowdown due to changing
consumer tastes and a struggling
economy. Over the five years to 2010
industry revenue is expected to grow at a
rate of 0.4%, with revenue declining 3.3%
in 2009 and starting its climb back up in
2010 with a forecast growth of 3.0%.
Restaurants
menus are changing due to society
concerns with high fat, salt and sugar contents
The average consumer is spending less
on luxuries like eating out and when they
do they tend to purchase lower priced
items. Fast food restaurants are
increasingly losing to home cooked meals
in the battle over peoples shrinking
budgets. Consumers are also becoming
increasingly health conscious and
Per capita disposable income
The industry is affected by factors which
affect the growth in real household
disposable income (which are changes to
tax and interest rates and changes in
labor market growth). During economic
recessions, the spike in unemployment,
however, generally leads to more
subdued growth in household incomes.
High and increasing gas prices also
affects disposable income, and therefore,
consumer expenditure on food, including
take-out foods.
Health consciousness
There is increasing consumer awareness
Consumer sentiment index
Per capita disposable income
4
100
3
90
2
Index
% change
Key External Drivers
although major fast food retailers have
responded by expanding the number of
healthy options on their menus, the
general trend toward healthy eating has
hurt the often greasy fast food industry.
Over the last five years, both industry
employment and industry establishments
declined in response to the weak market
conditions. There is, however, a long
term trend of major fast food chains
investing in ethnic food and other
specialty chains, many of which have
grown over the last few years and have
outperformed the industry as a whole.
International growth is also a large part
of many major chains long term strategy.
China, in particular, is viewed by fast
food restaurants as a market that has
huge potential for growth and long term
profitability. Over the five years to 2015,
industry revenue is forecast to grow at a
rate of 2.5% per year.
1
70
0
?1
Year
80
03
05
07
09
11
13
15
60
Year 02
04
06
08
10
12
14
16
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
of issues related to weight and obesity,
fatty food intake and food safety issues,
which are impacting on this industry’s
growth, particularly for meat and
hamburger products and any fried
products.
Consumer sentiment index
Changes in consumer sentiment have a
significant effect on household expenditure
on discretionary items, including fast food.
During recessions there is also an
Current
Performance
Over the past few years the fast food
industry has been battered by a weakened
economy, the rapid rise in unemployment,
as well as society’s increasing awareness of
the health risks associated with a high fat,
salt and sugar diet. Despite these
obstacles, the industry has made strides to
ensure it quickly responds to changes in
consumer preferences. Over the five years
to 2010 industry revenue is expected to
grow at an average annual rate of 0.4%
per year. Industry revenue declined 3.3%
in 2009, though it is expected to partially
bounce back in 2010 with revenue
increasing 3.0%.
The general economic malaise and
rising unemployment rates have resulted
in household disposable income levels
declining over the last few years. The
average consumer is spending less on
luxuries like eating out and when they do
they tend to purchase lower priced items.
This has forced fast food chains to
compete with each other to convey to
consumers that their restaurants are
where you can get the most bang for your
buck. The competition between operators
has now become more intense, with a shift
more toward taking market share from
each other, rather than seeking a share of
a growing market. Some revenue is also
lost in the form of substitute competition,
with certain consumers cutting out fast
food altogether and instead saving money
increasing demand for lower priced, value
products from operators.
Competition from full service restaurants
There are competitors to this industry,
apart from continuing strong competition
within the industry itself, operators from
other foodservice providers, including
full service restaurants, caterers and
pre-prepared foods available from
supermarkets, are also seeking their fair
share of household expenditure on meals.
Share of the economy
0.340
0.334
% of GDP
Key External Drivers
continued
0.328
0.323
0.317
0.311
0.305
Year 01
03
05
07
09
11
13
15
SOURCE: WWW.IBISWORLD.COM
by cooking themselves.
Consumers are becoming increasingly
health conscious and major fast food
retailers have responded by expanding
the number of healthy options on their
menus. For many fast food chains this
has become a cornerstone of their
marketing strategy and has enabled them
to target a new segment of the market
and renew interest in their products.
Although it has cooled to a certain
extent with the onset of the recession,
international growth is still a large part
of many major chains long term
strategy. China, in particular, is viewed
by fast food restaurants as a market that
has huge potential for growth and long
term profitability.
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Industry Performance
Barriers to future
industry growth
The barriers to future industry growth
are now largely due to total market
saturation and by changes in the age
structure of the population, a leaning
toward healthy diets and some
competition for both labor and store
sites. There have been some concerns
about mad cow disease among consumers
Industry performance
Due to the changes in economic
conditions and consumer tastes as
described above, total revenue from the
fast food industry is expected to increase
by only 0.4% per year over the five years
ending in 2010. The industry
experienced two distinct growth and
decline periods during the last five years,
with the industry riding on the coattails
of expanding economy in the first half
and fighting through the declining
demand in the second part.
From 2005 through 2006, industry
revenue was driven by strong economic
growth. Industry revenue grew 4.9% to
$180.6 billion in 2005 and 5% to $189.5
billion in 2006, though there were
indicators of the troubles around the
corner. Operators competed ferociously
in the domestic market and some further
consolidation of underperforming sites
occurred, as operators searched for
better located and higher volume ones.
Many launched new concepts and menus
(that included more healthy items) and
expanded internationally in order to
grow overall revenue and profits.
In 2008 and 2009, lower levels of
consumer expenditure resulted in
people cutting their fast food spending.
Rising unemployment also contributed
to lower demand. This combined with
an increased focus on healthy eating
seemed to secure the industry’s fate. In
2008, industry revenue declined 0.9% to
$184.8 billion. Revenue is forecast to fall
an additional 3.3% to $178.6 billion in
for certain meat quick service products
and many have diversified into chicken
and other products, including Italianand Mexican-style foods. Some major
operators have begun developing
combined or multi-branded outlets in
which they share these locations with
own other brands or food styles.
Lower
levels of consumer
expenditure, combined
with healthy eating trends,
hurt industry revenue
2009. In 2008, the industry was also
directly affected by increased
commodity and food prices that led to
reducing margins or to untimely menu
price rises, as store traffic declined. Fastfood meals are typically viewed by many
as an area where potential expenditure
savings can be made. Increasingly,
price-based competition, value-added
meal offerings and discounts spread.
Consolidation of menus and
underperforming sites occurred, as well
as industry player consolidation, such
as?the Wendy’s/Arby’s merger. Major
players also reviewed their international
expansion plans, as the recession spread
globally. In 2009, major players
continued to consolidate some
underperforming sites and launch new
healthy menu items, as well as offering
better value to customers. For major
operators, stronger revenue and profit
growth occurred from?their expansion
into China and other countries.
The industry is expected to turn the
corner in 2010, with revenue growing
3.0% to $184.0 billion.
Industry profit margins have been
declining (and remaining flat at best)
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Industry Performance
Industry performance
continued
due to lower sales volume and
customers opting for lower priced items
(thereby reducing revenue), high levels
of competition in the domestic market,
and with the industry reaching
saturation levels.
Establishments,
employment and
wages
Over the last five years, industry
employment will fall at an average annual
rate of 0.3% to 3.9 million, directly
relating to the recent decline in industry
revenue and some underperforming
location consolidation by major
operators. Similarly, the number of
establishments is expected to fall at a rate
of 0.2% per year over the five years to
2010. Over the last decade, many
operators also invested in and acquired
ethnic food and other specialty chains,
though over the last five years many have
divested from them in order to focus on
growing their core business. Examples of
this include Wendy’s selling its profitable
Tim Horton’s chain and Baja Fresh
Mexican Grill stores in 2006.
There has been a trend towards
consolidation within the industry. In 2008,
Wendy’s and Arby’s agreed to merge. The
trend towards consolidation indicates that
major players are realizing the benefits of
economies of scale and attempting to gain
a competitive advantage through
acquisition and growth. IBISWorld
estimates that on average, there will be 13
people employed per industry
establishment, earning an average of
$47,100 each in 2010 (compared to 13.4
and $45,400 in 2005). Competitive
pressures and declines in demand are
forcing companies to consolidate their
operations and streamline employment.
Industry
Outlook
Over the five years to 2015, industry
revenue is expected to increase at an
average annual rate of 2.5%. The industry
will show its first signs of growth in 2010,
and then the industry will resume its long
term growth trend from 2011 onward.
Aggressive competition is likely to
continue over the next five years. This
will involve significant price-based
competition; an increasing emphasis on
the regular introduction of new
products, including healthy-eating ones;
a move away from standard products by
allowing some menu and meal choices
by customers.
Most fast food chains will introduce
new healthy food alternatives and expand
their current product line. The major
operators will continue to seek to expand
revenue, and especially profit by
expanding their product offerings into
non-red meat products (such as chicken
There
will be significant
price-based competition
and regular healthy
product introductions
burgers, Mexican, and pasta) and
providing a variety of other meals,
including fresh salads. They are also
diversifying into areas, such as cafes and
full service restaurants, but operating
under different brands, through multibranding concepts, at both existing and
new locations.
Many domestic operators will continue
to seek international expansion
opportunities. International expansion is
expected to be the largest source of
revenue and profit growth for major
players over the next five years.
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Industry Performance
Industry Outlook
continued
Over the next five years, there is
expected to only be a marginal
improvement in industry profitability due
Revenue
IBISWorld believes that the industry will
turn the corner in 2010, as consumer
spending begins to rebound and
consumers parlay that flexibility in their
pocket book into quick satisfying fixes
such as fast food. In 2010, IBISWorld
forecasts that industry revenue will grow
by 3.0% to $184.0 billion. Industry
revenue growth will sustain in 2011 and
2012 as the US economy recovers from
recession, demand for fast food
increases, and the implementation of
healthy options succeed in abating some
of the concern over the health risks
associated fast food. The resumption
international growth will also improve
the revenue of major fast food chains.
IBISWorld forecasts that industry
revenue will grow by 3.4% to $190.2
billion in 2011, and 2.6% to $195.2 billion
in 2012.
Industry revenue growth will level off
as growth rates approach historical levels
and the industry is forced to contend
with the market saturation issues it has
grappled with over the last 10 years.
IBISWorld forecasts that industry
revenue will grow by 2.2% in 2013 and
2.1% in 2014. Revenue is expected to
grow 2.2% in 2015.
Despite the forecast improvement of the
domestic economy, operators will still
compete ferociously in the domestic
market for their fair share of revenue.
Consolidation among operators has been
occurring for some time and is expected
to continue, though new growth
opportunities will offset those losses.
Over the next five years the number of
establishments is expected to increase at
a rate of 1.7% per year. The number of
enterprises is also forecast to increase at
a rate of 1.3%. The difference in the rate
of growth between establishment and
enterprises indicates that existing fast
food chains will be adding locations at a
faster rate than new entrants entering the
industry. This is likely due to the high
rate of market saturation.
Over the same period, industry
employment is projected to grow at an
average annual rate of 1.1%, to 4.13
million by 2015. This number will be
partially inflated by the increasing use of
casual employees to meet peak customer
service periods.
As a result, the average number of
employees per establishment is forecast
to decrease from 13 in 2010 to 12.6
people in 2015. Average real wage is also
forecast to increase from $12,300 to
$12,600 per worker between 2010 and
2015. Despite the long term trend of
declining wages due to automation of the
food preparation process, over the next
five years wages and employment are
both expected to increase. This is
partially due to the industry recovering
from depressed wage and employment
levels as a result of the recession.
Establishments and
employment
to the on-going significant level of
competition in the low growth, saturated
domestic market.
Industry
revenue growth
will level off as the industry
is forced to contend with
market saturation
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Industry Performance
Life Cycle Stage
Some operations/stores are closing
The opening rate of new stores is slowing
There has been a movement toward
international openings
Price-based competition is heavy
% Growth of profit/GdP
Profitability levels are low
maturity
30
Quality Growth
Company
consolidation;
level of economic
importance stable
25
High growth in economic
importance; weaker companies
close down; developed
technology and markets
Key Features of a mature industry
Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
20
15
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
technology change
10
5
Fast Food
restaurants
caterers
candy, bakery & other
Food stores
Frozen Food
wholesaling
dairy
wholesaling
0
shake-out
Full-service
restaurants
decline
Crash or Grow?
–10
–10
–5
shake-out
–5
0
Potential Hidden Gems
Time wasters
Future Industries
5
10
Hobby Industries
15
20
25
30
% Growth of establishments
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Industry Life Cycle
This
industry
is Mature
Life cycle measures the development
phase of an industry. The Fast Food
Restaurants industry is in the mature
phase of its industry life cycle.
This industry is in a low growth phase
currently and has possibly now reached
saturation point, or is very close to it, in
the domestic market. The limits of
population size within a city or town
which can profitably support a franchised
or other outlet is starting to be reached
and competition for high profile operating
sites in other areas is significant.
Also, around a quarter of total industry
revenue is controlled by seven multiestablishment and franchised operators,
and the top four operators account for an
even smaller percent of total industry
revenue. The opening of new stores in the
United States by the major operators has
slowed recently.
There is significant consolidation
occurring (the latest being Wendy’s in
2008), with major franchised operators
taking over other multi-establishment
or franchised stores in other quick
service categories to their own to
achieve growth.
There are also significant market and
consumer changes, with increasing
demand for healthy foods and choices;
away from high fat, high salt and supersize meals, as the obesity epidemic
continues to rise.
Significant price-based competition is
continuing to occur, as operators strive to
capture an increasing market share in a
slow growth domestic market.
Also, major franchised operators are
currently receiving most of their sales
growth from expansion of their overseas
operations or into new areas such as
Mexican or Italian restaurants, cafe’s and
full service restaurants.
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Products & Markets
Supply Chain ? | ? Products & Services ? | ? Demand Determinants
Major Markets ? | ? International Trade ? | ? Business Locations
Supply Chain
Key buying industries
9901 Consumers in the US
Households are the key driver of demand for this industry’s products.
Key selling industries
42242
Frozen Food Wholesaling in the US
Supply of frozen foods
42243 Dairy Wholesaling in the US
Supply of dairy products
42244
Egg & Poultry Wholesaling in the US
Supply of poultry products
42246
Fish & Seafood Wholesaling in the US
Supply of seafoods
42247 Beef & Pork Wholesaling in the US
Supply of meat products
42248
Products & Services
Fruit & Vegetable Wholesaling in the US
Supply of fruit and vegetables
Franchised and multi-establishment
operators account for about 10.0% of
establishments, but 65.0% of total
revenue. The main foods offered by major
franchised operators include pizzas,
sandwiches (including hamburgers) and
chicken. There has recently been a move
by major franchised operators,
particularly those selling meat product
including hamburgers, to also offering
chicken burgers and other white meat
products. As well, many are diversifying
into providing other healthy foods
(including salads) and even extending into
cafes. Others have acquired or opened
chains under different brands to offer
pizzas and other Italian style foods,
Mexican foods and other food styles. Over
time, the industry has shifted from major
operators offering a single food style, to
Products and services segmentation (2010)
9.9%
3.9%
Cafeteria amenities
Other amenities inc – coffee shops,
ice cream and donut shops
86.2%
Limited service
restaurant amenities
Total $184.0bn
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
Products & Services
continued
offering diversity and health foods under
their own or a variety of brands.
The above is a reflection of changes in
consumer attitudes, needs and desires
over time.
For 2002, the US Census Bureau
indicated that in the Fast Food service
restaurant component there were 187,019
locations, with total revenue of $117.2
billion, there were 5,875 cafeteria
locations with total revenue of $5.3
billion, and 35,954 locations in the snack
and nonalcoholic beverage bars with total
revenue of $13.6 billion.
This latter component, consisted of
9,022 ice cream and soft serve shops with
Demand
Determinants
Demand Determinants outlines
the various factors which stimulate or
reduce demand for services supplied by
this industry.
Firstly, the industry is sensitive to
factors which affect the growth in
household disposable income from
which restaurant and dining expenditure
by consumers is financed. Household
disposable income growth is affected by
changes in labor market growth (i.e.
unemployment), and in tax and interest
rates, as well as high and increasing gas
prices. It is also sensitive to changes in
consumer sentiment, particularly
currently associated with the subprime
residential mortgage crisis.
The changing age structure of
population is also influencing industry
change. The “baby-boomers”, aged
between 35 and 55 years, is a major
group which is affecting industry
revenue growth, as this demographic has
both the numbers and high disposable
income to spend on fast food and
restaurant meals.
US Census household expenditure
data indicated that households with
total revenue of $2.2 billion (an average
of $245,510 each); 737 frozen yogurt
shops with total revenue of $156.5
million (an average of $212,350 each);
6,228 doughnut shops with total revenue
of $2.9 billion (an average of $467,250
each); 3,203 bagel shops with total
revenue of $1.4 billion (an average of
$421,170 each); 9,451 coffee shops with
total revenue of $4.2 billion (an average
of $439,000 each); 1,029 cookie shops
with total revenue of $231.5 million (an
average of $225,000 each); and 6,284
other snack and nonalcoholic beverages
bars with total revenue of $2.6 billion (an
average of $409,610 each).
Industry
demand hinges
on household income, but
healthful eating’s sway is
growing strongly
income of more than $50,000 account
for about 70.0% of the total personal
expenditure on food eaten away from
the home. Of this group, those
households in the highest income
quintile provide about 30.0% of the total
away from home food expenditure.
Convenience and vale-for-money are
also other important factors driving the
growth of this industry from consumers
is time (including convenience and quick
service) and now value for money.
More recently, consumers have
become far more health conscious, and
this is currently impacting certain
quick-service operators. In particular,
there are concerns about fat content,
fried foods, salt content and meat
products, with some major international
meat product scares recently.
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Products & Markets
Major Markets
The markets for this industry includes
most consumers from businesspeople, to
the elderly and young (including for
special event/birthday parties). In 1998,
the U.S. Census Bureau reported that
households with a pretax income of
$70,000 or more spent a total of 34.0%
of total food expenditure away from
home, even though they comprised 17.0%
of all households.
Convenience is the main factor
attracting customers to quick service
establishments. Value for money is also
important, and health concerns are
increasingly resulting in changes in
consumer quick-service meals preferences.
Away-from-home food spending per income threshold
Household income
($ ‘000)
Away-from-home food
($)
Per capita
($)
Proportion of total
(%)
4,328
2,834
2,401
1,979
1,574
1,253
1,396
945
889
792
645
570
50.5
43.7
43.3
40.9
38.0
35.6
70 plus
50 to 70
40 to 50
30 to 40
20 to 30
15 to 20
SOURCE: US CENSUS BUREAU
Major market segmentation (2010)
30%
40%
Households with less than
$50,000 income per annum
Total $184.0bn
Households with incomes between
$50,000 and $70,000 per annum
30%
Households with incomes
above $70,000 per annum
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
International Trade
In recent years exports have been
accounting for an increasing share of total
revenue of major operators. Many large
operators have established franchised
operations internationally. Given the very
mature stage of this industry’s life cycle in
the domestic market, together with
changes in customer profiles and tastes,
many major operators are seeking to
increase their growth in revenue and
earnings through further global expansion.
The demand for US services in global
markets has led to numerous operators
relying on foreign customers and
subjecting them to vulnerable economic
conditions outside of the United States.
In 2005, Yum Brands opened 409
new restaurants in China to make a total
of 2,291 (of which 33.0% were
Exports
are increasing as
a direct result of domestic
market saturation
franchised). By mid-2009, store
numbers increased to 3,208, or by a
further 40%, with 2,670 KFC, 435 Pizza
Hut Casual Dining and 81 Pizza Hut
Home Service stores in that country.
Also as at June 2009, Domino’s Inc.
had 489 domestic company-owned
stores, 4,498 domestic franchise stores as
well as 3,742 international stores (42.9%
of total stores), for a total of 8,729.
There are no reliable estimates of
import and export flows for this industry
over time.
Fast Food Restaurants in the US April 2010?? 15
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Products & Markets
Business Locations 2010
West
New
England
AK
0.3
wA
Rocky
Mountains
id
1.5
West NV
0.9
1.7
sd
0.3
wy
0.5
mN
0.2
0.4
or
Great
Lakes
Nd
mT
2.6
Plains
0.9
UT
co
0.8
1.9
0.9
9
4.2
13.0
oK
1.2
Nc
2.8
sc
Southeast
AZ
Nm
1.8
0.6
Southwest
TX
7.2
Hi
0.6
0.8
ms
Al
8
0.6
Ky
TN
Ar
7
wV VA
2.6
1.9
cA
West
oH
1.3
mo
Ks
1.8
2.1
6
4.0
iN
4.2
0.6
PA
3.1
il
0.5
1 2
3
Ny
6.5
5 4
mi
1.6
iA
NE
0.2
wi
mE
MidAtlantic
1.4
GA
1.4
3.0
0.8
lA
1.4
Fl
5.2
industry establishments (%)
Additional states (as marked on map)
1 VT
2 NH
3 mA
4 ri
5 cT
6 NJ
7 dE
8 md
0.2
1.2
0.5
3.3
2.6
0.3
0.5
2.0
9 dc
cold Zone (
Industry businesses, patrons pay before eating. Purchases may be consumed on-site, taken out or delivered. Some establishments also sell alcohol. Gross sales come from franchises and company-owned stores.
Fast Food Restaurants in the US April 2010?? 1
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Fast-food fallout: Health-conscious and cash
poor consumers serve as an industry challenge
IBISWorld Industry Report 72221
Fast Food Restaurants in the US
April 2010 Roman Zwolak
2 About this Industry
14 International Trade
35 Operating Conditions
2
Industry Definition
15 Business Locations
35 Structural Risk Index
2
Main Activities
2
Similar Industries
17 Competitive Landscape
36 Technology & Systems
2
Additional Resources
17 Market Share Concentration
37 Industry Volatility
17 Key Success Factors
37 Regulation & Policy
18 Cost Structure Benchmarks
38 Industry Assistance
19 Basis of Competition
38 Taxation Issues
3 Industry at a Glance
35 Investment Requirements
4 Industry Performance
19 Barriers to Entry
4
Executive Summary
20 Industry Globalization
4
Key External Drivers
5
Current Performance
21 Major Companies
39 Annual Change
7
Industry Outlook
21 McDonald’s Corporation
39 Key Ratios
9
Industry Life Cycle
23 Yum! Brands, Inc.
40 Historical Performance
39 Key Statistics
39 Industry Data
25 Wendy’s/Arby’s Group, Inc.
11 Products & Markets
27 Starbucks Corporation
11 Supply Chain
28 Burger King Corporation
11 Products & Services
30 Doctor’s Associates Inc
42 Jargon & Glossary
12 Demand Determinants
13 Major Markets
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com
Fast Food Restaurants in the US April 2010?? 2
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About this Industry
Industry Definition
At industry businesses, patrons
pay before eating. Purchases may
be consumed on-site, taken out
or delivered. Some establishments
also sell alcohol. Gross sales come
from franchises and company-owned
stores. Officially reported SEC
Main Activities
The primary activities of this industry are
company revenue (net revenue) refers
to revenue obtained only from
company-owned stores and franchise
fees. Franchised stores’ gross sales
revenue is not available to the
franchisor. Net revenue is therefore
always less than gross revenue.
Operating drive-thru and take-out facilities
Operating fast-food services
Operating quick-service restaurants
The major products and services in this industry are
Cafeteria amenities
Limited service restaurant amenities
Other amenities inc – coffee shops, ice cream and donut shops
Similar Industries
44529 Candy, Bakery & Other Food Stores in the US
This industry primarily retails confectionery goods and nuts not packaged for immediate consumption.
72211 Full-Service Restaurants in the US
This industry primarily engages in full waiter service. They provide food to patrons who pay after eating.
72232 Caterers in the US
These establishments are primarily engage in catering.
72233 Street Vendors in the US
Establishments in this industry primarily sell snacks and nonalcoholic beverages from vehicles.
72241 Bars, Nightclubs & Drinking Establishments in the US
Establishments in this industry primarily prepare and serve alcoholic beverages.
Additional Resources
For additional information on this industry
www.restaurant.org
National Restaurant Association
www.bls.gov
U.S. Bureau of Labor Statistics
www.census.gov
U.S. Census Bureau
www.ibisworld.com
Fast Food Restaurants in the US April 2010??
3
Industry at a Glance
Fast Food Restaurants in 2010
Key Statistics
Snapshot
Revenue
Annual Growth 05-10
Annual Growth 10-15
Profit
Wages
Businesses
$184.0bn 0.4%
2.5%
$48.0bn 300,645
$8.3bn
Per capita disposable income
Revenue vs. employment growth
6
Yum! Brands, Inc.? 9.7%
3
% change
McDonald’s Corporation?
12.7%
Wendy’s/Arby’s Group,
Inc.? 6.6%
Starbucks
Corporation? 5.9%
4
3
% change
Market Share
0
?3
Burger King
Corporation? 5.1%
?6
Year
2
1
0
02
04
06
Revenue
08
10
12
?1
Year
14
03
05
07
09
11
13
15
Employment
SOURCE: WWW.IBISWORLD.COM
p. 21
Business locations
Key External Drivers
13615
Per capita disposable
income
New England
9118
Rocky Mountains
57855
16120
Health consciousness
Southeast
Plains
Consumer
sentiment index
26948
Southwest
Competition from full
service restaurants
47151
38034
West
Great Lakes
p. 4
41464
Mid-Atlantic
Industry Structure
Life Cycle Stage
Revenue Volatility
Investment Requirements
Mature
Regulation Level
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Heavy
Low
Technology Change
Low
Barriers to Entry
Low
Industry Globalization
High
Competition Level
High
Industry Assistance
None
Concentration Level
Low
For additional statistics and time series see the appendix on page 39
Medium
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Industry Performance
Executive Summary ? | ? Key External Drivers ? | ?Current Performance
Industry Outlook ? | ?Life Cycle Stage
Executive
Summary
The fast food industry has experienced a
major slowdown due to changing
consumer tastes and a struggling
economy. Over the five years to 2010
industry revenue is expected to grow at a
rate of 0.4%, with revenue declining 3.3%
in 2009 and starting its climb back up in
2010 with a forecast growth of 3.0%.
Restaurants
menus are changing due to society
concerns with high fat, salt and sugar contents
The average consumer is spending less
on luxuries like eating out and when they
do they tend to purchase lower priced
items. Fast food restaurants are
increasingly losing to home cooked meals
in the battle over peoples shrinking
budgets. Consumers are also becoming
increasingly health conscious and
Per capita disposable income
The industry is affected by factors which
affect the growth in real household
disposable income (which are changes to
tax and interest rates and changes in
labor market growth). During economic
recessions, the spike in unemployment,
however, generally leads to more
subdued growth in household incomes.
High and increasing gas prices also
affects disposable income, and therefore,
consumer expenditure on food, including
take-out foods.
Health consciousness
There is increasing consumer awareness
Consumer sentiment index
Per capita disposable income
4
100
3
90
2
Index
% change
Key External Drivers
although major fast food retailers have
responded by expanding the number of
healthy options on their menus, the
general trend toward healthy eating has
hurt the often greasy fast food industry.
Over the last five years, both industry
employment and industry establishments
declined in response to the weak market
conditions. There is, however, a long
term trend of major fast food chains
investing in ethnic food and other
specialty chains, many of which have
grown over the last few years and have
outperformed the industry as a whole.
International growth is also a large part
of many major chains long term strategy.
China, in particular, is viewed by fast
food restaurants as a market that has
huge potential for growth and long term
profitability. Over the five years to 2015,
industry revenue is forecast to grow at a
rate of 2.5% per year.
1
70
0
?1
Year
80
03
05
07
09
11
13
15
60
Year 02
04
06
08
10
12
14
16
SOURCE: WWW.IBISWORLD.COM
Fast Food Restaurants in the US April 2010?? 5
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Industry Performance
of issues related to weight and obesity,
fatty food intake and food safety issues,
which are impacting on this industry’s
growth, particularly for meat and
hamburger products and any fried
products.
Consumer sentiment index
Changes in consumer sentiment have a
significant effect on household expenditure
on discretionary items, including fast food.
During recessions there is also an
Current
Performance
Over the past few years the fast food
industry has been battered by a weakened
economy, the rapid rise in unemployment,
as well as society’s increasing awareness of
the health risks associated with a high fat,
salt and sugar diet. Despite these
obstacles, the industry has made strides to
ensure it quickly responds to changes in
consumer preferences. Over the five years
to 2010 industry revenue is expected to
grow at an average annual rate of 0.4%
per year. Industry revenue declined 3.3%
in 2009, though it is expected to partially
bounce back in 2010 with revenue
increasing 3.0%.
The general economic malaise and
rising unemployment rates have resulted
in household disposable income levels
declining over the last few years. The
average consumer is spending less on
luxuries like eating out and when they do
they tend to purchase lower priced items.
This has forced fast food chains to
compete with each other to convey to
consumers that their restaurants are
where you can get the most bang for your
buck. The competition between operators
has now become more intense, with a shift
more toward taking market share from
each other, rather than seeking a share of
a growing market. Some revenue is also
lost in the form of substitute competition,
with certain consumers cutting out fast
food altogether and instead saving money
increasing demand for lower priced, value
products from operators.
Competition from full service restaurants
There are competitors to this industry,
apart from continuing strong competition
within the industry itself, operators from
other foodservice providers, including
full service restaurants, caterers and
pre-prepared foods available from
supermarkets, are also seeking their fair
share of household expenditure on meals.
Share of the economy
0.340
0.334
% of GDP
Key External Drivers
continued
0.328
0.323
0.317
0.311
0.305
Year 01
03
05
07
09
11
13
15
SOURCE: WWW.IBISWORLD.COM
by cooking themselves.
Consumers are becoming increasingly
health conscious and major fast food
retailers have responded by expanding
the number of healthy options on their
menus. For many fast food chains this
has become a cornerstone of their
marketing strategy and has enabled them
to target a new segment of the market
and renew interest in their products.
Although it has cooled to a certain
extent with the onset of the recession,
international growth is still a large part
of many major chains long term
strategy. China, in particular, is viewed
by fast food restaurants as a market that
has huge potential for growth and long
term profitability.
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Industry Performance
Barriers to future
industry growth
The barriers to future industry growth
are now largely due to total market
saturation and by changes in the age
structure of the population, a leaning
toward healthy diets and some
competition for both labor and store
sites. There have been some concerns
about mad cow disease among consumers
Industry performance
Due to the changes in economic
conditions and consumer tastes as
described above, total revenue from the
fast food industry is expected to increase
by only 0.4% per year over the five years
ending in 2010. The industry
experienced two distinct growth and
decline periods during the last five years,
with the industry riding on the coattails
of expanding economy in the first half
and fighting through the declining
demand in the second part.
From 2005 through 2006, industry
revenue was driven by strong economic
growth. Industry revenue grew 4.9% to
$180.6 billion in 2005 and 5% to $189.5
billion in 2006, though there were
indicators of the troubles around the
corner. Operators competed ferociously
in the domestic market and some further
consolidation of underperforming sites
occurred, as operators searched for
better located and higher volume ones.
Many launched new concepts and menus
(that included more healthy items) and
expanded internationally in order to
grow overall revenue and profits.
In 2008 and 2009, lower levels of
consumer expenditure resulted in
people cutting their fast food spending.
Rising unemployment also contributed
to lower demand. This combined with
an increased focus on healthy eating
seemed to secure the industry’s fate. In
2008, industry revenue declined 0.9% to
$184.8 billion. Revenue is forecast to fall
an additional 3.3% to $178.6 billion in
for certain meat quick service products
and many have diversified into chicken
and other products, including Italianand Mexican-style foods. Some major
operators have begun developing
combined or multi-branded outlets in
which they share these locations with
own other brands or food styles.
Lower
levels of consumer
expenditure, combined
with healthy eating trends,
hurt industry revenue
2009. In 2008, the industry was also
directly affected by increased
commodity and food prices that led to
reducing margins or to untimely menu
price rises, as store traffic declined. Fastfood meals are typically viewed by many
as an area where potential expenditure
savings can be made. Increasingly,
price-based competition, value-added
meal offerings and discounts spread.
Consolidation of menus and
underperforming sites occurred, as well
as industry player consolidation, such
as?the Wendy’s/Arby’s merger. Major
players also reviewed their international
expansion plans, as the recession spread
globally. In 2009, major players
continued to consolidate some
underperforming sites and launch new
healthy menu items, as well as offering
better value to customers. For major
operators, stronger revenue and profit
growth occurred from?their expansion
into China and other countries.
The industry is expected to turn the
corner in 2010, with revenue growing
3.0% to $184.0 billion.
Industry profit margins have been
declining (and remaining flat at best)
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Industry Performance
Industry performance
continued
due to lower sales volume and
customers opting for lower priced items
(thereby reducing revenue), high levels
of competition in the domestic market,
and with the industry reaching
saturation levels.
Establishments,
employment and
wages
Over the last five years, industry
employment will fall at an average annual
rate of 0.3% to 3.9 million, directly
relating to the recent decline in industry
revenue and some underperforming
location consolidation by major
operators. Similarly, the number of
establishments is expected to fall at a rate
of 0.2% per year over the five years to
2010. Over the last decade, many
operators also invested in and acquired
ethnic food and other specialty chains,
though over the last five years many have
divested from them in order to focus on
growing their core business. Examples of
this include Wendy’s selling its profitable
Tim Horton’s chain and Baja Fresh
Mexican Grill stores in 2006.
There has been a trend towards
consolidation within the industry. In 2008,
Wendy’s and Arby’s agreed to merge. The
trend towards consolidation indicates that
major players are realizing the benefits of
economies of scale and attempting to gain
a competitive advantage through
acquisition and growth. IBISWorld
estimates that on average, there will be 13
people employed per industry
establishment, earning an average of
$47,100 each in 2010 (compared to 13.4
and $45,400 in 2005). Competitive
pressures and declines in demand are
forcing companies to consolidate their
operations and streamline employment.
Industry
Outlook
Over the five years to 2015, industry
revenue is expected to increase at an
average annual rate of 2.5%. The industry
will show its first signs of growth in 2010,
and then the industry will resume its long
term growth trend from 2011 onward.
Aggressive competition is likely to
continue over the next five years. This
will involve significant price-based
competition; an increasing emphasis on
the regular introduction of new
products, including healthy-eating ones;
a move away from standard products by
allowing some menu and meal choices
by customers.
Most fast food chains will introduce
new healthy food alternatives and expand
their current product line. The major
operators will continue to seek to expand
revenue, and especially profit by
expanding their product offerings into
non-red meat products (such as chicken
There
will be significant
price-based competition
and regular healthy
product introductions
burgers, Mexican, and pasta) and
providing a variety of other meals,
including fresh salads. They are also
diversifying into areas, such as cafes and
full service restaurants, but operating
under different brands, through multibranding concepts, at both existing and
new locations.
Many domestic operators will continue
to seek international expansion
opportunities. International expansion is
expected to be the largest source of
revenue and profit growth for major
players over the next five years.
Fast Food Restaurants in the US April 2010?? 8
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Industry Performance
Industry Outlook
continued
Over the next five years, there is
expected to only be a marginal
improvement in industry profitability due
Revenue
IBISWorld believes that the industry will
turn the corner in 2010, as consumer
spending begins to rebound and
consumers parlay that flexibility in their
pocket book into quick satisfying fixes
such as fast food. In 2010, IBISWorld
forecasts that industry revenue will grow
by 3.0% to $184.0 billion. Industry
revenue growth will sustain in 2011 and
2012 as the US economy recovers from
recession, demand for fast food
increases, and the implementation of
healthy options succeed in abating some
of the concern over the health risks
associated fast food. The resumption
international growth will also improve
the revenue of major fast food chains.
IBISWorld forecasts that industry
revenue will grow by 3.4% to $190.2
billion in 2011, and 2.6% to $195.2 billion
in 2012.
Industry revenue growth will level off
as growth rates approach historical levels
and the industry is forced to contend
with the market saturation issues it has
grappled with over the last 10 years.
IBISWorld forecasts that industry
revenue will grow by 2.2% in 2013 and
2.1% in 2014. Revenue is expected to
grow 2.2% in 2015.
Despite the forecast improvement of the
domestic economy, operators will still
compete ferociously in the domestic
market for their fair share of revenue.
Consolidation among operators has been
occurring for some time and is expected
to continue, though new growth
opportunities will offset those losses.
Over the next five years the number of
establishments is expected to increase at
a rate of 1.7% per year. The number of
enterprises is also forecast to increase at
a rate of 1.3%. The difference in the rate
of growth between establishment and
enterprises indicates that existing fast
food chains will be adding locations at a
faster rate than new entrants entering the
industry. This is likely due to the high
rate of market saturation.
Over the same period, industry
employment is projected to grow at an
average annual rate of 1.1%, to 4.13
million by 2015. This number will be
partially inflated by the increasing use of
casual employees to meet peak customer
service periods.
As a result, the average number of
employees per establishment is forecast
to decrease from 13 in 2010 to 12.6
people in 2015. Average real wage is also
forecast to increase from $12,300 to
$12,600 per worker between 2010 and
2015. Despite the long term trend of
declining wages due to automation of the
food preparation process, over the next
five years wages and employment are
both expected to increase. This is
partially due to the industry recovering
from depressed wage and employment
levels as a result of the recession.
Establishments and
employment
to the on-going significant level of
competition in the low growth, saturated
domestic market.
Industry
revenue growth
will level off as the industry
is forced to contend with
market saturation
Fast Food Restaurants in the US April 2010?? 9
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Industry Performance
Life Cycle Stage
Some operations/stores are closing
The opening rate of new stores is slowing
There has been a movement toward
international openings
Price-based competition is heavy
% Growth of profit/GdP
Profitability levels are low
maturity
30
Quality Growth
Company
consolidation;
level of economic
importance stable
25
High growth in economic
importance; weaker companies
close down; developed
technology and markets
Key Features of a mature industry
Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
20
15
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
technology change
10
5
Fast Food
restaurants
caterers
candy, bakery & other
Food stores
Frozen Food
wholesaling
dairy
wholesaling
0
shake-out
Full-service
restaurants
decline
Crash or Grow?
–10
–10
–5
shake-out
–5
0
Potential Hidden Gems
Time wasters
Future Industries
5
10
Hobby Industries
15
20
25
30
% Growth of establishments
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Industry Life Cycle
This
industry
is Mature
Life cycle measures the development
phase of an industry. The Fast Food
Restaurants industry is in the mature
phase of its industry life cycle.
This industry is in a low growth phase
currently and has possibly now reached
saturation point, or is very close to it, in
the domestic market. The limits of
population size within a city or town
which can profitably support a franchised
or other outlet is starting to be reached
and competition for high profile operating
sites in other areas is significant.
Also, around a quarter of total industry
revenue is controlled by seven multiestablishment and franchised operators,
and the top four operators account for an
even smaller percent of total industry
revenue. The opening of new stores in the
United States by the major operators has
slowed recently.
There is significant consolidation
occurring (the latest being Wendy’s in
2008), with major franchised operators
taking over other multi-establishment
or franchised stores in other quick
service categories to their own to
achieve growth.
There are also significant market and
consumer changes, with increasing
demand for healthy foods and choices;
away from high fat, high salt and supersize meals, as the obesity epidemic
continues to rise.
Significant price-based competition is
continuing to occur, as operators strive to
capture an increasing market share in a
slow growth domestic market.
Also, major franchised operators are
currently receiving most of their sales
growth from expansion of their overseas
operations or into new areas such as
Mexican or Italian restaurants, cafe’s and
full service restaurants.
Fast Food Restaurants in the US April 2010?? 11
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Products & Markets
Supply Chain ? | ? Products & Services ? | ? Demand Determinants
Major Markets ? | ? International Trade ? | ? Business Locations
Supply Chain
Key buying industries
9901 Consumers in the US
Households are the key driver of demand for this industry’s products.
Key selling industries
42242
Frozen Food Wholesaling in the US
Supply of frozen foods
42243 Dairy Wholesaling in the US
Supply of dairy products
42244
Egg & Poultry Wholesaling in the US
Supply of poultry products
42246
Fish & Seafood Wholesaling in the US
Supply of seafoods
42247 Beef & Pork Wholesaling in the US
Supply of meat products
42248
Products & Services
Fruit & Vegetable Wholesaling in the US
Supply of fruit and vegetables
Franchised and multi-establishment
operators account for about 10.0% of
establishments, but 65.0% of total
revenue. The main foods offered by major
franchised operators include pizzas,
sandwiches (including hamburgers) and
chicken. There has recently been a move
by major franchised operators,
particularly those selling meat product
including hamburgers, to also offering
chicken burgers and other white meat
products. As well, many are diversifying
into providing other healthy foods
(including salads) and even extending into
cafes. Others have acquired or opened
chains under different brands to offer
pizzas and other Italian style foods,
Mexican foods and other food styles. Over
time, the industry has shifted from major
operators offering a single food style, to
Products and services segmentation (2010)
9.9%
3.9%
Cafeteria amenities
Other amenities inc – coffee shops,
ice cream and donut shops
86.2%
Limited service
restaurant amenities
Total $184.0bn
SOURCE: WWW.IBISWORLD.COM
Fast Food Restaurants in the US April 2010?? 12
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Products & Markets
Products & Services
continued
offering diversity and health foods under
their own or a variety of brands.
The above is a reflection of changes in
consumer attitudes, needs and desires
over time.
For 2002, the US Census Bureau
indicated that in the Fast Food service
restaurant component there were 187,019
locations, with total revenue of $117.2
billion, there were 5,875 cafeteria
locations with total revenue of $5.3
billion, and 35,954 locations in the snack
and nonalcoholic beverage bars with total
revenue of $13.6 billion.
This latter component, consisted of
9,022 ice cream and soft serve shops with
Demand
Determinants
Demand Determinants outlines
the various factors which stimulate or
reduce demand for services supplied by
this industry.
Firstly, the industry is sensitive to
factors which affect the growth in
household disposable income from
which restaurant and dining expenditure
by consumers is financed. Household
disposable income growth is affected by
changes in labor market growth (i.e.
unemployment), and in tax and interest
rates, as well as high and increasing gas
prices. It is also sensitive to changes in
consumer sentiment, particularly
currently associated with the subprime
residential mortgage crisis.
The changing age structure of
population is also influencing industry
change. The “baby-boomers”, aged
between 35 and 55 years, is a major
group which is affecting industry
revenue growth, as this demographic has
both the numbers and high disposable
income to spend on fast food and
restaurant meals.
US Census household expenditure
data indicated that households with
total revenue of $2.2 billion (an average
of $245,510 each); 737 frozen yogurt
shops with total revenue of $156.5
million (an average of $212,350 each);
6,228 doughnut shops with total revenue
of $2.9 billion (an average of $467,250
each); 3,203 bagel shops with total
revenue of $1.4 billion (an average of
$421,170 each); 9,451 coffee shops with
total revenue of $4.2 billion (an average
of $439,000 each); 1,029 cookie shops
with total revenue of $231.5 million (an
average of $225,000 each); and 6,284
other snack and nonalcoholic beverages
bars with total revenue of $2.6 billion (an
average of $409,610 each).
Industry
demand hinges
on household income, but
healthful eating’s sway is
growing strongly
income of more than $50,000 account
for about 70.0% of the total personal
expenditure on food eaten away from
the home. Of this group, those
households in the highest income
quintile provide about 30.0% of the total
away from home food expenditure.
Convenience and vale-for-money are
also other important factors driving the
growth of this industry from consumers
is time (including convenience and quick
service) and now value for money.
More recently, consumers have
become far more health conscious, and
this is currently impacting certain
quick-service operators. In particular,
there are concerns about fat content,
fried foods, salt content and meat
products, with some major international
meat product scares recently.
Fast Food Restaurants in the US April 2010?? 13
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Products & Markets
Major Markets
The markets for this industry includes
most consumers from businesspeople, to
the elderly and young (including for
special event/birthday parties). In 1998,
the U.S. Census Bureau reported that
households with a pretax income of
$70,000 or more spent a total of 34.0%
of total food expenditure away from
home, even though they comprised 17.0%
of all households.
Convenience is the main factor
attracting customers to quick service
establishments. Value for money is also
important, and health concerns are
increasingly resulting in changes in
consumer quick-service meals preferences.
Away-from-home food spending per income threshold
Household income
($ ‘000)
Away-from-home food
($)
Per capita
($)
Proportion of total
(%)
4,328
2,834
2,401
1,979
1,574
1,253
1,396
945
889
792
645
570
50.5
43.7
43.3
40.9
38.0
35.6
70 plus
50 to 70
40 to 50
30 to 40
20 to 30
15 to 20
SOURCE: US CENSUS BUREAU
Major market segmentation (2010)
30%
40%
Households with less than
$50,000 income per annum
Total $184.0bn
Households with incomes between
$50,000 and $70,000 per annum
30%
Households with incomes
above $70,000 per annum
SOURCE: WWW.IBISWORLD.COM
Fast Food Restaurants in the US April 2010?? 14
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Products & Markets
International Trade
In recent years exports have been
accounting for an increasing share of total
revenue of major operators. Many large
operators have established franchised
operations internationally. Given the very
mature stage of this industry’s life cycle in
the domestic market, together with
changes in customer profiles and tastes,
many major operators are seeking to
increase their growth in revenue and
earnings through further global expansion.
The demand for US services in global
markets has led to numerous operators
relying on foreign customers and
subjecting them to vulnerable economic
conditions outside of the United States.
In 2005, Yum Brands opened 409
new restaurants in China to make a total
of 2,291 (of which 33.0% were
Exports
are increasing as
a direct result of domestic
market saturation
franchised). By mid-2009, store
numbers increased to 3,208, or by a
further 40%, with 2,670 KFC, 435 Pizza
Hut Casual Dining and 81 Pizza Hut
Home Service stores in that country.
Also as at June 2009, Domino’s Inc.
had 489 domestic company-owned
stores, 4,498 domestic franchise stores as
well as 3,742 international stores (42.9%
of total stores), for a total of 8,729.
There are no reliable estimates of
import and export flows for this industry
over time.
Fast Food Restaurants in the US April 2010?? 15
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Products & Markets
Business Locations 2010
West
New
England
AK
0.3
wA
Rocky
Mountains
id
1.5
West NV
0.9
1.7
sd
0.3
wy
0.5
mN
0.2
0.4
or
Great
Lakes
Nd
mT
2.6
Plains
0.9
UT
co
0.8
1.9
0.9
9
4.2
13.0
oK
1.2
Nc
2.8
sc
Southeast
AZ
Nm
1.8
0.6
Southwest
TX
7.2
Hi
0.6
0.8
ms
Al
8
0.6
Ky
TN
Ar
7
wV VA
2.6
1.9
cA
West
oH
1.3
mo
Ks
1.8
2.1
6
4.0
iN
4.2
0.6
PA
3.1
il
0.5
1 2
3
Ny
6.5
5 4
mi
1.6
iA
NE
0.2
wi
mE
MidAtlantic
1.4
GA
1.4
3.0
0.8
lA
1.4
Fl
5.2
industry establishments (%)
Additional states (as marked on map)
1 VT
2 NH
3 mA
4 ri
5 cT
6 NJ
7 dE
8 md
0.2
1.2
0.5
3.3
2.6
0.3
0.5
2.0
9 dc
cold Zone (