Have You Seen the Opportunity with Quick Service Restaurant Companies?

This week we will be taking a look at a company that has completely overhauled its business model and moved quickly into the QSR (Quick Service Restaurant) space.  I’d like to point out some major highlights of this industry so that everyone will be up on why this could be a HUGE opportunity for the company and in turn its shareholders.  For starters, the National Restaurant Association found that driven by a stronger economy and historically high levels of pent-up demand among consumers, restaurant-industry sales are expected to hit a record high of $683.4 billion in 2014. This will represent the fifth consecutive year of real growth in restaurant sales.

Think about it…$683 BILLION…that’s over $1.8BILLION spent EVERY DAY or roughly $1.3MILLION EVERY MINUTE!  With a market like that, there should be huge opportunity for new business to grab even a minute percentage of that and turn it into a multi-million dollar business right?  Companies in this industry operate restaurants in which customers order and pay at a counter. Major companies include US-based Chipotle, McDonald’s, Wendy’s, and YUM! Brands (KFC, Pizza Hut, Taco Bell), as well as Café de Coral (Hong Kong), Greggs (UK), Seven & i Food Systems (Japan), and Tim Hortons (Canada).

Demand is driven by consumer tastes and personal income. The profitability of individual companies depends on efficient operations and effective marketing. Large companies have advantages in purchasing, finance, and marketing.  Small companies can compete effectively by offering superior food or service. In the US, the 50 largest companies account for about 20 percent of revenue leaving the majority of the industry open for entry opportunities from smaller businesses.

 

Directional Trends in the Marketplace:

Generation Z, Millennials, Generation X and Baby Boomers total about 74 percent of the U.S. population, and make up a majority of foodservice consumers. Technomic released new data on the needs and behaviors of each generation, including the market research firm’s first examination of Generation Z.

 

According to the data, Gen Z, the first true digital generation, strongly prioritizes speed of service, technology and having what they want, when they want it. Technomic also says that Millennials, more so than older generations, prefer to visit restaurants that offer new and unique foods and flavors. Gen X and Boomers converge on several preferences — such as the importance of a convenient location.

 

“Each generational group may have distinctly different foodservice needs, yet there are opportunities to leverage their similarities and target specific customer groups without alienating others,” Sara Monnette, senior director, consumer insights of Technomic, said in a news release. “Regardless of the generation, it’s vital for restaurant operators and suppliers to understand their core audience. So whether you’re working to appeal to your Boomer base through dine-in ambiance or traditional menu offerings, or drawing in younger guests with faster service and an innovative menu, successful execution can begin with identifying and addressing what each group values as a generation.”

More Food for Thought:

 

• Gen Zers and Millennials tend to be more optimistic about and reliant on foodservice: they’re more likely than older generations to anticipate increases in foodservice visits in the next year.
• Dining-format preferences vary by generation: of all generations, Boomers are most likely to visit restaurants for dine-in, Gen Z are most likely to order takeout, and Millennials are most likely to opt for delivery.
• Speedy service is key for the youngest generation: for example, Gen Z places the highest importance on fast service at limited-service restaurants (54 percent), compared to just two-fifths of Millennials (40 percent), Gen Xers (41 percent) and Baby Boomers (43 percent).

So not only are tech trends going to weigh heavily on the future of QSR’s but also the ability to deliver a fast,  consistent product day in and day out.  Based on this information it would appear that the QSR is not only here to stay but with the birth of a new generation almost dependent on dining out, the industry as a whole could be in position to receive a HUGE adrenaline boost for the next several years to come! Make sure you stay tuned for my full report on a company that has just dove into this space and find out why it could be poised with big breakout potential!