III. Industry Analysis
The following industry size facts and statistics bode well for [Company Name].
The Chain Restaurants industry has experienced steady growth over the past five years. During the five-year period, as per capita income increased and unemployment declined, consumer confidence improved, giving rise to greater spending on sit-down meals. Although the average industry profit margin remains slim, profit margins at most chains have increased over the past five years, as revenue has grown and costs have been kept under control. As such, industry revenue is expected to increase at an annualized rate of 4.3% to $107.6 billion.
Full-service chain restaurants operate within the increasingly competitive food service sector. Major chains, such as Dine Equity Inc. (which operates Applebee’s and IHOP) and Cracker Barrel Old Country Store, compete against independent full-service restaurants, major fast food chains and a range of other eat-in or take-out establishments. Over the past five years, consumers have sought greater convenience at a lower cost, to the detriment of full-service establishments that serve sit-down meals. In response to greater competition, full-service restaurant chains have invested in labor-saving technology to cut down costs and have redesigned restaurant layouts to create a more modern ambiance.
Over the next five years, consumers will increase their spending at restaurants as the economy continues to improve and unemployment dissipates. However, increasing competition from a growing number of fast casual restaurants that serve high-quality food at reasonable prices and have business models that are not reliant on large overheads will continue to threaten industry profit margins. For this reason, major full-service restaurant chains will increasingly push operations abroad to emerging economies for growth.