According to United States Census Bureau, there were 326 million people in the United States in 2016. United States GDP has been growing for the past 6-7 years at a rate of 2-4% a year. The unemployment rate has also been very stable at an average of 4-5% in the past years. We are living a strong economy and many opportunities, people are seeking the American dream. However, in order keep the dream alive, the population people need food to survive, and according Maslow’s theory, food is essential for survival.
We notice a diversity in the United States population as gender, race, culture, age, money, demographic and other factors influence customer’s behaviors and spending. The concept of food has drastically changed as a revolution in food has created new tastes, habits, and trends. Recent technology has developed new systems for restaurants to adapt to survive. These systems accepts orders online and through apps to quickly deliver the food to your home. However, one of the target markets that the industry has missed are people conscious about their health, which avoid fast food chains to maintain their healthy habits.
Due to relatively low barriers to entry and high profitability, participants in industry operate in a extremely competitive environment. These Competing companies vary in size, from big Fortune 500 companies to locally operating companies. Two of the largest companies account for around 13.8% of total sales for chain restaurants. The top players in this industry are DineEquit (7.1%), and Darden Restaurants (6.7%).
Mergers and Acquisitions describes that the industry’s major players focus on strategic acquisitions and product development, eagerly buying smaller companies with specialties in growing niches. Industrialization and urbanization of emerging markets are expected to increase demand, thereby increasing growth and revenues. The market in the U.S. is quite saturated, but there is also high potential abroad.
Many restaurants went public in the past few years and are struggling to regain confidence in the market. Sales decreased and many have started losing market share and profits.
Justin Leo contributed to this report.