This 700 Billion Pound Gorilla Will Blow Your Mind
Hardly a day goes by lately that there isn’t an article from a major publication talking about evolution in the restaurant industry. From tipping to technology, government to guest, everyone is paying attention to the restaurant industry like never before. A quick look at this chart will help understand why. This industry is a BEAST, and it’s only getting bigger.
Tipping to technology, government to guest, everyone is paying attention to the restaurant industry-Tweet this
For a little more context, this includes giants like AT&T, Ford, Marriott, and Harvard (seriously, $450B for colleges). The restaurant industry dwarfs them all.
How the Industry Gets There
In short, the hard way. The top 100 restaurant chains in the US account for about 30% of the overall revenue. Tao Las Vegas is likely the highest grossing single restaurant at about $64M dollars, or .009% (9 one thousandths of a percent) of all the revenue. The majority of this revenue is generated by small, independent business doing less than $700,000 a year in revenue.
What This Does Not Mean
Restaurants are printing money and you should go get your piece of the action.
Full Service restaurants nationwide average less than 10% profitability (most are closer to 5% and the best are 20%)on that $700,000. The work is physically and mentally demanding, emotionally challenging at times, and the days are often much longer than average. You’ve probably done the math by now and realized there’s not a ton of profit to show for it at the end of that long day.
What This Does Mean
Restaurants are really important to our economy.
It also means that the industry is mostly ‘long tail’; the market is incredibly fractured. As an industry, we rarely punch at our weight compared to other industries. The voices that speak the loudest, or lobby the hardest, often come from the large chain side of the industry.
This is clearly starting to change. Society is more engaged in restaurants and there is opportunity in this for the roughly 70% of the industry comprised of smaller, independent restaurants. If just this portion of the industry were represented in the chart above it would still eclipse any of the other industries shown. That would be a $490B juggernaut; take that college!
*Data shown is from IBIS, Statista, National Restaurant Association, Nation’s Restaurant News