Industry Analysis
Industry Size and Growth Trends
The Toasted Owl belongs to the restaurant industry. It is estimated that the restaurant …show more content…
Limited service restaurants can be further broken down into fast-food restaurants and fast-casual restaurants (Jones, 2014, Part 1). Chart A in the Appendix depicts the market share of: limited service restaurants, full service restaurants, and bars/ taverns; limited service restaurants account for 55% of the market, full service restaurants 44%, and bars/taverns just 1% (Jones, 2014, Part 1). Limited restaurant service accounts for the majority of sales in the industry. The most notable growth trend within the industry’s subsets, is fast casual dining; although, “it still accounts for less than 10% of the total market, the number and diversity of fast casual restaurants has been exploding across the country, with an astounding growth of over 500% since 1999” (Fast Casual Industry Analysis 2017 - Cost & Trends, …show more content…
However, “The fast-food industry has reached its mature stage in the United States, and several fast-food chains are already focusing on international expansion.” (Jones, 2014, Part 4) Charts D & E in the Appendix, show that restaurant sales have been quickly growing at an increasing rate since 1970.
External Economic Factors and Their Effect on the Industry
Some external economic factors that affect the restaurant industry are:
• Inflation- When wholesale food costs go up, restaurants must either raise their pricing, or take a hit. Raising menu pricing every time costs go up is risky, because, customers may decide to go elsewhere.
• Growth of Fast Casual Segment- This growth creates direct competition for other restaurants.
• Minimum wage and Healthcare- Wage costs are a difficult issue for a small restaurant, or, one with a lot of employees. It cuts into their profits. Whether it’s enough to put them out of business or not, it adds pressure.