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  • WWW.IBISWORLD.COM Fast Food Restaurants in the US October 2014 1

    IBISWorld Industry Report 72221aFast Food Restaurants in the USOctober 2014 Andy Brennan

    Fast track: Restaurants will expand their menus as they fight to retain their share of customers

    2 About this Industry2 Industry Definition

    2 Main Activities

    2 Similar Industries

    3 Additional Resources

    4 Industry at a Glance

    5 Industry Performance5 Executive Summary

    5 Key External Drivers

    7 Current Performance

    9 Industry Outlook

    11 Industry Life Cycle

    13 Products & Markets13 Supply Chain

    13 Products & Services

    15 Demand Determinants

    16 Major Markets

    17 International Trade

    18 Business Locations

    20 Competitive Landscape20 Market Share Concentration

    20 Key Success Factors

    20 Cost Structure Benchmarks

    22 Basis of Competition

    23 Barriers to Entry

    23 Industry Globalization

    25 Major Companies25 McDonalds Corporation

    26 Yum! Brands Inc.

    27 Subway

    29 Wendys Company

    32 Operating Conditions32 Capital Intensity

    33 Technology & Systems

    34 Revenue Volatility

    35 Regulation & Policy

    36 Industry Assistance

    37 Key Statistics37 Industry Data

    37 Annual Change

    37 Key Ratios

    38 Jargon & Glossary

    www.ibisworld.com | 1-800-330-3772 | info@ibisworld.com

  • WWW.IBISWORLD.COM Fast Food Restaurants in the US October 2014 2

    This industry is composed of restaurants where patrons pay for quick-service food products before eating. Purchases may be consumed on-site, taken out or delivered. Gross revenue is derived from both franchised and company-owned stores. Franchise

    fees are not accounted for in total industry revenue. This industry specifically excludes coffee and snack shops. Most of the industrys establishments also sell beverages, such as water, juice and sodas, but usually not alcohol.

    The primary activities of this industry are

    Operating quick-service restaurants

    Operating fast-food services

    Operating drive-thru and take-out facilities

    44529 Specialty Food Stores in the USEstablishments in this industry primarily retail confectionery goods and nuts that are not packaged for immediate consumption.

    72211a Chain Restaurants in the USEstablishments in this industry primarily include chain and franchised restaurants that provide food services to patrons who order and are served while seated and pay after eating.

    72211b Single Location Full-Service Restaurants in the USEstablishments in this industry primarily include single-location, independent or family-operated restaurants that provide food services to patrons.

    72232 Caterers in the USEstablishments in this industry primarily provide individual event-based food services.

    72233 Street Vendors in the USEstablishments in this industry are primarily engaged in preparing and serving meals and snacks for immediate consumption from motorized vehicles or nonmotorized carts.

    72241 Bars & Nightclubs in the USEstablishments in this industry includes bars, taverns, pubs, lounges, nightclubs and other drinking places that primarily prepare and serve alcoholic beverages for immediate consumption.

    Industry Definition

    Main Activities

    Similar Industries

    About this Industry

    The major products and services in this industry are





    Pizza and Pasta



  • WWW.IBISWORLD.COM Fast Food Restaurants in the US October 2014 3

    About this Industry

    For additional information on this industry

    www.entrepreneur.com Entrepreneur

    www.nrn.com Nations Restaurant News

    www.restaurant.org National Restaurant Association

    www.bls.gov US Bureau of Labor Statistics

    www.census.gov US Census Bureau

    Additional Resources

    IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com

  • WWW.IBISWORLD.COM Fast Food Restaurants in the US October 2014 4

    % c










    2008 10 12 14 16 18Year

    Consumer spending


    % c








    2006 08 10 12 14 16 18Year

    Revenue Employment

    Revenue vs. employment growth

    Products and services segmentation (2014)







    9%Pizza and Pasta


    Key Statistics Snapshot

    Industry at a GlanceFast Food Restaurants in 2014

    Industry Structure Life Cycle Stage MatureRevenue Volatility Low

    Capital Intensity Low

    Industry Assistance None

    Concentration Level Medium

    Regulation Level Medium

    Technology Change Medium

    Barriers to Entry Low

    Industry Globalization Low

    Competition Level High






    Annual Growth 14-19

    2.0%Annual Growth 09-14


    Key External DriversConsumer spendingHealthy eating indexConsumer Confidence IndexAgricultural price index

    Market ShareMcDonalds Corporation 17.8%Yum! Brands Inc. 11.1%Subway 6.7%Wendys Company 4.5%

    p. 25

    p. 5



  • WWW.IBISWORLD.COM Fast Food Restaurants in the US October 2014 5

    Key External Drivers Consumer spendingIndustry growth is sensitive to changes in consumer spending. During the recession, for example, the spike in unemployment led to declines in consumption levels, including the consumption of fast food. When personal consumption expenditure is high, however, consumers are more likely to spend money on eating out at industry restaurants. Consumer spending is

    expected to increase in 2014, providing a potential opportunity for the industry.

    Healthy eating indexThe healthy eating index is expected to increase slowly in 2014 as consumers become increasingly aware of issues related to weight and obesity, fatty-food intake and food safety issues. This factor particularly affects the often meaty and greasy fast food industry. Despite any

    Executive Summary

    Over the past five years, the Fast Food Restaurants industry has grappled with changing consumer preferences moving away from unhealthy foods and a saturated food service landscape that has kept prices low. In comparison with other operators in the hospitality sector, fast food restaurants performed relatively well during the recession due to their low price points and the extra convenience they offer. However, since the recession, heavy competition from other segments in the food services sector has forced fast food operators to emphasize low prices in a continuing battle to attract cash-strapped

    consumers. As a result, industry revenue is expected to grow at an average annual rate of 1.4% to $198.9 billion over the five years to 2014. In 2014, growth is expected to be modest, with an estimated increase of just 1.4%, as the broader economy continues to work toward a full recovery.

    Over the past five years consumer-eating habits have changed as people have become increasingly health conscious and demanded alternatives to traditional greasy fast food options. While major fast-food retailers have responded by expanding the number of

    healthy menu items, the general trend toward health awareness has decreased demand for traditional fast food restaurants. In response, major chains like McDonalds have expanded their menus to include healthier options such as salads, fruit and smoothies. Furthermore, due to slow domestic growth, many major chains have invested in their international operations as part of a long-term strategy to focus on emerging economies. Fast-food restaurants view China in particular as a market that has strong potential for growth and long-term profitability.

    The industry is expected to perform marginally better over the next five years as the domestic economy improves and consumers continue to seek convenient meal options. While no severe revenue declines are expected, fast food restaurants will continue to operate in a slow-growth environment as many segments of the industry have reached a saturation point. Successful operators will need to adapt to changing consumer preferences as the traditional concept of fast food evolves to include a wider variety of options. As plenty of opportunities remain for new fast food concepts and products, the industrys long era of growth is far from over. As a result of these trends, industry revenue is expected to grow at an annualized rate of 2.0% over the five years to 2019 to $219.3 billion.

    Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

    Fast food chains will invest in healthy options and specialty markets to rebuild revenue

  • WWW.IBISWORLD.COM Fast Food Restaurants in the US October 2014 6

    Industry Performance

    Key External Driverscontinued

    long-term aggregate declines in healthy eating, consumers are now more aware of the health issues associated with fatty foods and are increasingly going out of their way to avoid them, which is a potential threat for the industry.

    Consumer Confidence IndexChanges in consumer sentiment have a significant effect on household expenditure on discretionary items, including fast food. When customers are optimistic about the economy, they spend more on these items. Consumer sentime