Read an article today on Blue MauMau regarding the decline in the number of restaurant units over the past year. Independent restaurants are the culprit as chain restaurants saw growth in the number of units over the same period.
It seems to be getting tougher and tougher on the independent restaurant operators to compete these days especially with the fast casual explosion. A number of factors are at play here from having the resources available to implement technology, economies of scale on ingredient costs, national/regional marketing, families seem to be “busier” hence the fast casual concepts are doing well vs. full service etc. Most of the new laws around the Affordable Care Act tend to only be applicable to chains, but the minimum wage hikes affect all businesses. All in all I don’t see it getting any easier for independents to compete.
Here are some of the highlights from the article:
- Total U.S. restaurant outlets down by one percent to 630,511 units
- Fast casual chain units increased by 7 percent
- Full service independent units were down 3 percent while quick service independent units remained stable
- Visits to total restaurants were flat in the year ending May 2015 compared to same period prior year
- Over a five year period, traffic has declined by 3 percent at quick service hamburger chain restaurants and at midscale/family dining restaurants (includes hotel midscale restaurants), respectively, and by 2 percent at independent restaurants
I have copied the full article below:
CHICAGO ─ According to a recent survey, the number of independent restaurant outlets in the United States dropped by three percent compared to a year ago. That shrinkage brought total U.S. restaurant outlets down by one percent to 630,511 units. The total restaurant count decrease was offset by a one percent increase in chain restaurant units. Fast casual chain units increased by 7 percent, based on NPD’s Spring 2015 census of U.S. commercial restaurant locations compiled in the spring and fall each year, which includes restaurants open as of March 31, 2015.
The drop in independent restaurants was concentrated in the full service segment, which includes casual dining, midscale/family dining, and fine dining. Full service independent units were down 3 percent while quick service independent units remained stable.
The overall decline in restaurant counts is a reflection of the stalled traffic growth experienced by the foodservice industry over the past several years. Independent traffic, quick service hamburger, and full service restaurant visit declines, particularly at midscale/family dining restaurants, are contributing to industry traffic not growing. Visits to total restaurants were flat in the year ending May 2015 compared to same period prior year, according to NPD’s ongoing foodservice market research, CREST. Over a five year period, traffic has declined by 3 percent at quick service hamburger chain restaurants and at midscale/family dining restaurants (includes hotel midscale restaurants), respectively, and by 2 percent at independent restaurants. Quick service restaurants, which represent 79 percent of total industry traffic, were up 1 percent and casual dining restaurants were flat after several years of decline in the year ending May 2015 period compared to year ago.
“It’s a tough road for independent restaurants particularly in a down or even ‘soft’ economic climate,” said Greg Starzynski, director- product management, NPD Foodservice. “Independent operators do not have the resources of a chain to sustain themselves in slower times.”
