INDUSTRY FOCUS
FRANCHISING
OVERVIEW
The US fast-food industry comprises 250,000 restaurant locations generating a combined annual revenue of $250 billion. Full-service restaurants and specialty eateries such as coffee shops are covered in separate industry profiles and not services by Pacifica Business Brokers.
The companies holding the largest market share in the industry include Chipotle Mexican Grill, McDonald’s, Wendy’s, and Yum Brands (KFC, Pizza Hut, and Taco Bell).
Did you know that hamburger restaurants account for about 40% of sales in the fast-food industry? Meanwhile pizza, sandwich, chicken, and Mexican food account for about 10% each.
TRENDS & CHALLENGES
Demand in the fast-food industry is driven by consumer tastes and personal income. The profitability of individual companies depends on efficient operations and effective marketing. Large companies have advantages in purchasing, finance, and marketing. Small companies can compete effectively by offering superior food or service.
The US industry remains highly fragmented with the 50 largest companies accounting for about 20% of revenue.
The increasing labor costs have driven fast-food operators to integrate technology in the service offerings: POS systems, loyalty programs, scheduling software, kitchen display systems, and guest management systems.
FUTURE FORECAST
While the restaurant industry was one of the hardest-hit sectors by COVID-19, the QSR weathered the storm relatively well due to its speed of service, smaller staff, and easier off-premise consumption.
It is hard to say if the table will turn in 2021, but common themes include technology integration; menu optimization; cost-cutting; leaner infrastructure; customer orders-ahead of pickup; delivery services; speed/price trade-offs; and convenience.
INDUSTRY PERFORMANCE
3X
EBITDA MULTIPLE
0.60X
SALES MULTIPLE
Disclosure: These key performance indicators are based on industry averages for a company with $10 million in revenue. The KPIs are not specific to the operational performance of your company or your sub-sector.
The information contained has been obtained from different sources deemed reliable, including DealStats, Deloitte, Dun & Bradstreet, and Business Reference Guide. Pacifica Advisors does not make any representation or warranty as to the accuracy of the data. PA is a mergers and acquisitions (M&A) advisor and business broker.