Restaurant Industry Analysis

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Industry: Restaurants Sector: Services Industry Overview: Yum! operates in both the Quick Service Restaurants and Casual Dining Restaurants segments within the Restaurant Industry. Quick Service Restaurants are fast food restaurants which emphasize speed of service and low cost over all other considerations. Casual Dining Restaurants are sit-down restaurants which serve moderately priced food. Quick Service Restaurants include Taco Bell, KFC, Long John Silver’s, McDonald’s, Burger King, Domino’s, Subways and Wendy’s. Casual Dining Restaurants include Pizza Hut, A&W Restaurants, Olive Garden and Red Lobster. Yum is consistently one of the best performing companies within its industry. Demographics, consumer tastes, and personal income drive demand. The profitability of individual companies can vary. QSR rely on efficient operations and high volume sales. Large companies like YUM! have advantages in purchasing, finance, and marketing. The industry is highly labor-intensive. The annual revenue per worker is between $40,000 and $45,000 in the US. The restaurant industry includes national and global chains, franchises, and independent operators. The majority of companies are independently owned and operated, although many QSRs are franchises of large national chains. Franchises allow individual owners to leverage a well-known brand name and benefit from the purchasing efficiencies and operational expertise of the franchiser. Franchise agreements generally cover a specific geographical market and outline restaurant operating requirements, such as hours of operation, menu offerings, and pricing. Annual sales average is $694,000 for a QSR franchise, according to the National Restaurant Association (NRA). In QSRs, customers generally order and pay before eating. While most QSRs are fast food restaurants, QSRs also include fast casual restaurants, which offer higher

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