Dive Brief:
- The total number of U.S. restaurants is up 18,000 as of Sept. 30, 2022 compared to 2020, according to The NPD Group data emailed to Restaurant Dive.
- Only 27% of QSR and fast casual operators expect to open new locations in 2023, the most of any segment, according to the National Restaurant Association's State of the Restaurant Industry 2023 report.
- Following pandemic lockdowns in 2020, the NRA estimated over 110,000 restaurants closed for good.
Dive Insight:
Increased costs related to just about every level of operations are partially responsible for slow restaurant unit growth.
For a restaurant with annual sales of about $900,000, NRA noted that total expenses were up 18.2% and pre-tax income was down over $155,000 in 2022 compared to 2019. Food and beverage costs remain the highest expenses, and were up 21.8% last year. A majority (87%) of operators said they have countered rising costs by increasing menu prices, which helped grow total sales to $937 billion in 2022, according to the NRA.
Full-service restaurants are unlikely to contribute much to unit growth this year. Only one in eight full-service operators said they are looking into opening a new restaurant, per the NRA report. Only 11% of fine dining restaurant owners said they would likely open a new unit this year, followed by 12% of family dining and 15% of casual dining. A majority of full-service operators also feel the health of their restaurants is weaker than it was in 2019, with 63% of family and casual dining operators each saying they don’t think their restaurant is any better than in 2019. Only about one-third of all operators think their sales will be higher this year, as well.
Improving store-level profitability will continue to be a key focus this year, even though several limited-service chains are pushing for growth through franchising. Brands, including Wendy’s, Wienerschitzel and Tijuana Flats, are offering franchise incentives to lower the initial cost of investment and attract new franchisees to spur future unit growth.
