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Positive Restaurant Industry Outlook in Anticipation of the NRA Show

May.16.2014
11:49:00 AM

According to CHD Expert’s latest data, the US restaurant industry has achieved a 2.7 percent net growth in 2013.

The National Restaurant Association (NRA) Show is taking place this month in Chicago, hometown to leading foodservice data and analytics firm CHD Expert. In advance of the show, their latest data evaluation shows an overall rebound for the restaurant industry, with 2.7 percent net growth in the US restaurant industry in 2013. Even better, it was also the second consecutive year where more restaurants opened than closed.

Figure-2-Commercial-Foodservice-Market-Year-Over-Year-Graph

Although it is not the most pleasant of memories to look back on for many businesses, the 2008 economic downturn had an especially negative impact on the US restaurant industry. Both going out to eat and ordering in were some of the first household costs to be cut among consumers looking to save money. In 2009, there were almost twice as many restaurant closures compared to openings, with approximately 61,000 restaurants closing and 31,000 restaurants opening. Things began to change in 2010 however, where despite consistent restaurant closures, data showed an upturn in the amount of new restaurant openings. This reversal finally culminated in 2012, where more restaurants were opened than closed.

Continuing into 2013, this trend remained steady. Approximately 50,000 new restaurants opened vs. 29,000 closings, a stark contrast to just four years prior. This welcome disparity resulted in an approximate 2.7 percent net growth among the restaurant industry. For a complete breakdown of Openings and Closings from 2009 through 2013.

Consistent with the uptick seen in 2013 net restaurant growth, CHD Expert also finds a steady growth among multiple commercial foodservice segments. The Wine Bar segment saw the largest net growth in 2013, with this segment showing a net increase of 12.7 percent.

Restaurants, of course, comprise the lion’s share of the total foodservice market. As of May 2014, CHD Expert reports that there are over 665,000 restaurants in operation across the United States, accounting for 81 percent of the 822,000 Commercial Foodservice establishments.

Further breaking down the current restaurant industry landscape, Full Service Restaurants (FSRs) and Limited Service Restaurants (LSRs) have almost even shares of the market, with FSRs making up 49 percent of the restaurant landscape. FSRs are defined as restaurants with wait-staff and table service, whereas LSRs, who make up 51 percent, require patrons to pay at a counter before receiving food.

While the market is evenly split between FSRs and LSRs, the composition of each varies significantly. In the FSR market, Independent restaurants account for more than 90 percent of the total number of establishments. Conversely, LSRs are divided more evenly between Chains (57.5 percent of the LSR market), and Independent establishments (42.5 percent of the LSR market).

Looking across the state level, CHD Expert finds that the restaurant landscape is as diverse as the states themselves. To no surprise, California boasts the highest number of restaurants of any U.S. state, accounting for 12.7 percent of the national total. However, after breaking the market down by FSR/LSR, and comparing Chain vs. Independent, different states demonstrate a clear preference for different types of restaurants and dining experiences that appeal to their citizens.

For example, 17.8 percent of all restaurants in Kentucky are Full Service Chain Restaurants; they have the largest percentage of FSR Chain restaurants out of any state in the US. In contrast, FSR Chain restaurants comprise only 7.4 percent of California’s restaurant market. In the FSR Independent segment, Alaska is the leading state with FSR Independent Restaurants comprising of more than 95 percent of the state’s restaurant market.

In the LSR segment, Vermont has the leading percentage of LSR Independent establishments, at 61.9 percent of total restaurants within the state. Iowa, on the other hand, has the highest percentage of total LSR Chain Restaurants which account for 72.3 percent of its restaurant market. These findings demonstrate the variability in the restaurant industry and the importance of detailed examination – and data – of each market segment.

For those interested in a more comprehensive breakdown of the restaurant industry by state, CHD Expert is happy to provide a free download of the Restaurant Unit Report, including data on different menu types in each state, as well as FSR and LSR chain and independent breakdowns by state. Click here to access the Restaurant Unit Report.

“Whether it’s to an upscale restaurant or the corner pizzeria, going out for a bite is an integral part of American culture,” said Brad Bloom, Director of Sales for the America’s at CHD Expert. “The restaurant industry is a strong indicator of the financial health of an economy, and it is great to see that more restaurants are opening and sustaining. We are excited to see the newest restaurant innovations at the NRA Show, where CHD Expert will be in full attendance. I look forward to meeting with fellow foodservice colleagues at the show, and sharing our insight in the restaurant industry.”

To schedule an appointment at the NRA Show with Brad Bloom or a CHD Expert consultant please email us at [email protected].

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