Environmental Analysis / Economics

Restaurants are an important industry pertinent to the growth of the economy. In The United States estimates quantify more than 945,000 restaurants existing within the shores, including Alaska and Hawaii. Growth is expected to surpass one million in the next two years. Comprising the make-up of restaurants are Quick-service restaurants (QSR); cafeterias, snack bars, and non-alcohol establishments; full-service restaurants (FSR) and limited-service eating places (BYOB).

Employing 12.7 million individuals, the combined revenue of all establishments in this segment, contributes to annual revenues in excess of $580 billion (Hoovers, 2010, p. 1). Alongside independent-owned establishments are major companies, which include the corporate giants of McDonald’s, Yum! Brands (KFC, Pizza Hut, Taco Bell), and Darden Restaurants (Olive Garden, Red Lobster, Capital Grille). The average daily sales intake of all restaurants in the contiguous states is $1.6 billion.

Demand for this segment is driven by consumer preferences, individual income, and demographics. Individual company profitability varies. The efficiency of QSR’s drives volume sales, which are typically high. High profit margins, branding, and marketing, are the forces that drive FSR’s. Large corporations have the advantage of stronger holdings, thus allowing greater purchasing power, extensive financial means and extensive marketing, whereas, smaller companies may offer stellar service and organic food. The means to an end differs greatly. According to the National Restaurant Association, the average salaried worker grosses between $40,000 and $45,000 annually and works in a labor-intensive environment.

The competition among each other is fierce and competitive, yet the competition for the food market forces the industry to compete against grocery stores, warehouse clubs, delis, and convenience stores with prepared foods. Additionally, home cooking factors into the competition. The restaurant share of the...