Franchise Investors’ Guide to Fast-Food Franchises – Part 1
by Seth Lederman
The restaurant service industry, specifically the immediate service area, reported a revenue of over $239 billion in 2020, even amidst the pandemic.
Mass shutdowns and social distancing significantly impacted many businesses across the nation, and franchises were no exception, although they fared better than the rest. And although the economic impact is still looming as we head into the second quarter of 2021, there are some industries that not only appear to have weathered the storm, they have experienced a surge and appear to be headed into a renaissance for years ahead. The restaurant service industry, specifically the immediate service area, reported a revenue of over $239 billion in 2020, even amidst the pandemic.
The current figures show that fast food is responsible for more than $570 billion, which is more than most small countries’ value. And forecasters predict that there will be a 2.5% annual growth in the coming year. Although that percentage is behind pre-pandemic growth, it is an indication that restaurants are making a quick comeback, even with COVID still looming.
Americans report as many as 200,000 fast-food eaters, with estimates that more than fifty million partake in fast food daily. And the fast-food industry is responsible for employing more than four million workers in the United States. Fast food and fast-casual food are categorized as Quick Service Restaurants or QSR. The QSR segment accounts for over 50% of all sales in the restaurant sector. Although fast food dominates the industry, fast-casual is quickly gaining in popularity.
Leading QSR Segments
Top Five QSR Segments by Market Share
- Hamburger-focused restaurants – 30%
- Pizza parlors – 15%
- Sandwich shops – 12%
- Chicken restaurants – 8%
- Mexican restaurants – 7%
Why Fast Food is So Popular
Fast food has been around as an icon in American history for as long as most of us remember. One of the reasons it maintains its popularity is that established franchises offer predictability and consistency. The menus from one location to the next vary little – if at all – and customers know what to expect and what their experience will be, no matter what region or location they visit. Another allure is the price. Fast food outlets target lower-cost food options, which is highly attractive to many Americans.
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