Quick Service Restaurant (QSR) industry in the US

Delivered April 18th, 2018. Contributors: Justin B., Sarah F., Sweta S., Ifeoma D. and

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Market Size - Quick Service Restaurant (QSR) industry in the US

The market size in revenue for the Quick Service Restaurant (QSR) industry in the United States is expected to be $233.7 billion in 2017. This figure accounts for around 29% of the expected sales for the whole restaurant industry in the United States ($798.7 billion). Below, I will provide the market size in 2016 and 2017, and trends in 2018 for the QSR industry in the United States.

MARKET SIZE IN 2016 and 2017
According to the National Restaurant Association (NRA), the market size in revenue for the Quick Service Restaurant (QSR) industry in the United States is expected to be $233.7 billion in 2017, a 5.3% increase from the 2016 sales volume of $221.8 billion. The expected 2017 sales for the QSR industry would account for around 29% of the sales for the whole restaurant industry in the United States ($798.7 billion). The QSR industry in the United States is dominated by hamburger fast food restaurants, which accounted for 30% of the total sales. The other segments that made up the top five segments by market share are pizza parlors (15%), sandwich shops (12%), chicken restaurants (8%), and Mexican restaurants (7%). According to Rewards Network, the restaurant industry as a whole in the United States would be experiencing a “flat growth” in 2018.

The NRA is a foodservice trade association that serve their members by “advancing and protecting America’s restaurant and foodservice industry.” Please note that the NRA had placed quick service and fast-casual in the same category and quick service restaurants are also known as limited-service restaurants where “patrons generally order at a cash register or select items from a food bar and pay before they eat.” The NRA report utilized the term “sales,” but it could be assumed that sales of food and beverage in the QSR industry constitute the majority of the revenue generated by the industry.

TRENDS IN 2018
QSR magazine had provided a list of trends that would affect the QSR industry in the United States. Restaurants experts such as founder and CEO of the New England Consulting Group, Gary Stibel believes that the “value war” would grow in 2018. He also expects restaurants to increase the use of technologies for both ordering and pure entertainment to provide customers with a “theater” experience. Customers are expected to continue to seek “healthy, wholesome foods and tasty” food. 

The marketing director of Natalie's Orchid Island Juice Company, Natalie Sexton, expects customers to look for beverages are available in “exotic flavors.” The head of content for the Specialty Food Association, Denise Purcell expects more customers to seek foods made with activated charcoal due to their “striking appearances and charcoal's reported association with cleansing and healthy digestion.” Purcell also pointed out the growth in the importance of “food aesthetics.” 

The corporate executive chef at McAlister's Deli, Will Eudy expects Jewish deli items to enjoy a resurgence. He also expects diners to seek dishes that “pair spicy flavors with sweet, savory or tangy tastes.” The associate director of foodservice research at Mintel, Amanda Topper believes that speed and innovation are key to attract busy diners. Restaurants are expected to offer more items in smaller portions and snack options to attract the Generation Z who prefer to “grab food whenever it’s convenient, and to accommodate their schedules.”

CONCLUSION
In conclusion, the market size for the QSR industry in the United States is expected to be $233.7 billion in 2017. The top five segments by market share are hamburger fast food restaurants, pizza parlors, sandwich shops, chicken restaurants, and Mexican restaurants.

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Revenue By Time of Day - Quick Service Restaurant (QSR) industry in the US

The breakdown for the percentage of traffic a restaurant sees for each time of day is 22% for breakfast, 33% for lunch, and 30% for dinner. The rest of the day is considered snack time and accounts for 15% of the total traffic. Using these traffic metrics, we can estimate the total sales for each quick service restaurant by time of day. McDonald’s is the top QSR with over $36.4 billion in US sales, which can be broken down further with $8 billion for breakfast, $12 billion for lunch, $11 billion for dinner, and about $5.5 billion for snack times. McDonald's is the top QSR by sales but not by revenue, which was only $8 billion in the United States in 2017. We created a spreadsheet to organize all the figures by QSR. Below you will detailed information on my findings as well as the calculations we used to triangulate the information. 
Findings 
Because the top quick serve restaurants were found in a pre-compiled list along with their sales, we compiled a spreadsheet with the top 20 QSR, breaking down the total sales and the average sales for an individual location for breakfast, lunch, dinner, and snack time. Using the traffic breakdown for each time of day, we can calculate the total sales breakdown for both the overall total sales and the average sales for each location. In this case, we are using sales rather than revenue because we are estimating the total sales for the traffic by location and time. We’ve also added the revenue of the top brands on the list based off of annual reports and news articles. These were not as readily available, so we were only able to procure 2016/2017 sales figures for only 13 restaurants. 
CalculationsFor each time of the day we multiplied the percentage by the revenue or sales as listed in the samples below. 
Breakfast:
Total Sales * .22 = Total Sales for Breakfast 
Average Sales by Location * .22 = Location Sales for Breakfast 
Total Revenue * .22 = Revenue for Breakfast

Example: McDonalds

$36,389,000,000  * .22 = $8,005,580,000 
$2,550,000  * .22 = $561,000
$8,006,000,000 * .22 = $1,761,320,000
Lunch:Total Sales * .33 = Total Sales for Lunch
Average Sales by Location * .33 = Location Sales for Lunch
Total Revenue * .33 = Revenue for Lunch

Example: McDonalds

$36,389,000,000  * .33 = $12,008,370,000
$2,550,000  * .33 = $841,500
$8,006,000,000 * .33 = $2,641,980,000
Dinner:
Total Sales * .30 = Total Sales for Dinner
Average Sales by Location * .30 = Location Sales for Dinner
Total Revenue * .30 = Revenue for Dinner

Example: McDonalds

$36,389,000,000  * .30 = $10,916,700,000
$2,550,000  * .30 = $765,000
$8,006,000,000 * .30 = $2,401,800,000
Snack:
Total Sales * .15 = Total Sales for Snack
Average Sales by Location * .15 = Location Sales for Snack
Total Revenue * .15 = Revenue for Snack

Example: McDonalds

$36,389,000,000  * .15 = $5,458,350,000
$2,550,000  * .15 = $382,500
$8,006,000,000 * .15 = $1,200,900,000

The spreadsheet calculates all of these figures for each restaurant in an organized manner. The top 10 quick service restaurants on the spreadsheet based on sales include McDonald's, Starbucks, Subway, Wendy's, Burger King, Taco Bell, Dunkin Donuts, Chick-fil-a, Pizza Hut, and Domino's.
ConclusionWe have created a spreadsheet with 20 quick service restaurants along with their total sales, average sales per location and revenue for the first 13 restaurants. The breakdown for breakfast, lunch, dinner and snack time have also been provided for each segment. 

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Revenue by Age of Customers - Quick Service Restaurant (QSR) industry in the US

While there is no preexisting information to fully answer your question, I have used the available data to pull together key findings: 

In a year, Americans spend about 10% of their average income on purchasing fast food products and "20% of US consumers visit QSR (Quick Service Restaurants) at least once per week"; out of this 20%, 6% consumers visit QSR daily. Most of the customers visiting QSRs (Quick Service Restaurants) belong to the age group of 18 to 34 years. These are the customers who visit QSRs most frequently.

It is estimated that customer's of age 18 to 34 spend around $10,073 each year on food away from home including spending on QSRs. Therefore, it could be determined that Quick Service Restaurants in the US draw a large part of their revenue from millennial customers (age 18 to 34 years). 

Below you will find a deep dive of our findings. 

Methodology
Unfortunately, no publicly available sources revealed the data according to the average revenue by age of customers for Quick Service Restaurants in the US.

Since searching direct statistics for the average revenue by age of customers for QSRs (Quick Service Restaurants) in the US was fruitless, I tried finding the reports and articles revealing data for the consumer spending on food and restaurants including QSRs. I found few Industry reports, Survey reports, media articles, and blogs from reputed sites containing some of relevant statistics for consumer spending habit on food according to the age demographics. The most relevant sources I found — indicated customer spending on food as per their demographic profiles. The article published in QSR Magazine referred to a report 'Demographics of Consumer Food Spending, 2012. Then, I did a back research to find if a recent report is available. 

I found the most recent report published in 2017 'Demographics of Consumer Food Spending, 2017' containing the consumer spending data on food, restaurants including QSR. This report is based on "2015 Consumer Expenditures survey (the latest data available)". But, the report is behind paywalls, therefore could not be accessed. However, some other relevant statistics related to the consumer age and their spending at QSR were found providing a rough estimate on 'how often' and 'how much' a US consumer of a particular age group spends at QSR.

Using these reports and articles, I compiled your findings, outlined below. 

Helpful FindingsThe 2017 report from National Restaurant Association revealed that "industry sales will reach $798.7 billion" in 2017. Table service is the 
largest segment of the industry but the sales growth will be higher in QSRs (Quick Service Restaurants) in the US.
 
Total sales of the "Quick service and fast-casual" was expected to be $233.7 billion in 2017 with a growth rate of 5.3% from 2016.

Quick Service Restaurants (QSR)Quick service restaurants (QSRs) are the fast food restaurants which are different from full service or table restaurants due to their quick service, limited menus, and minimal table service. 

QSRs (Quick service restaurants) are popular in the US and "20% of US consumers visit QSR at least once per week".

As published in the QSR Magazine: Most of the customers visiting QSRs belong to the age group of 18 to 34 years. These are the customers who visit QSRs most frequently.

: 54% of “super heavy” fast-food users — eat fast food at least once a day
: 37% of “heavy” fast-food users — eat fast food two to six times per week

According to a survey, 80% of Americans eat fast food at least once per month and one in three people eat fast food one to two times per month. This survey also confirmed that people in the age of 18-29 years are the most likely (57%) to consume fast food regularly.

QSR and Consumer Spending on FoodAs per the Statista report, the quick service restaurant sector generated $290.2 billion in consumer spending in the year 2017.

Americans spend "up to 10%" of their average income "on purchasing fast food products in any given year."

— People under the age of 25 years spend the highest percentage of their food expenditures (46%) on food away from home. These people spend on an average $4,073 per year.

— People of age group 25-34years spend more than $6,000 each year at restaurants which accounts for 45% of all their food expenditures.

— People of age group 35-44 years spend the most on food away from home (43%) of their total food expenditures. These people spend around $7,483 per year.

 — People of age 45-54 years spend $7,230 each year at restaurants which accounts for 40% of their food expenditures.

— People of age 55-64 years spend $6,068 in the restaurant each year which accounts for 39% of their food expenditures.

— People of age 75 and above spend the least amount of their food expenditure on food away from home (32%). They spend around $3,873 per year.

According to an article, 37% of QSR (Quick Service Restaurant) users who visit a restaurant 2-6 times per week belong to the age group of 18-34 years. In addition to this, 54% of those people who eat fast food at least once per day also belong to the age group of 18-34 years.

Therefore, from the above statistics, we can estimate that people who visit QSRs most often belong to the age of 18 to 34 years. They spend a total of around $10,073;
[$4,073 (under the age of 25 years) + $6,000 (2 to 34 years)] each year on food away from home. 

Apart from this, Baby Boomers (ages 45 to 64) and people of age 65 and above visit QSRs less often as they prefer Full Service Restaurants (FSRs) and eating at home.

Therefore, customers of age 18 to 34 years, also known as millennials visit QSR (Quick Service Restaurant) the most. These consumers are likely to constitute a large part of the revenue for Quick Service Restaurants in the US. 

ConclusionBased on my research, I have determined that in the US, QSRs (Quick Service Restaurants) draw a large part of their revenue from millennial customers (age 18 to 34 years). Baby Boomers (ages 45 to 64) and people of age 65 and above visit QSRs less often as they prefer Full Service Restaurants (FSRs) and eating at home.

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Top Companies by Revenue - Quick Service Restaurant (QSR) industry in the US

Following the request for information on the top 10-15 quick service restaurants in the US, we have updated the attached spreadsheet with relevant information as requested.
FindingsIn our research, we were able to identify a list of the top 50 quick service restaurants in the US provided by QSR magazine. We then proceeded to research each of the companies on the list categorizing them according to their revenue. In the end, we selected the top 15 companies on the list based on the highest revenue. They are;

- KFC with a revenue of $23.5 Billion -
- Mcdonalds with a revenue of $22.82 Billion 
- Chick-fil-a with a revenue of $5.7 Billion 
- Chipotle with a revenue of $4.5 Billion 
- Burger King with a revenue of $4 Billion 
- Arby's with a revenue of $3.5 Billion 
- Dairy Queen with a revenue of $3.1 Billion 
- Dominos Pizza with a revenue of $2.8 Billion 
- Panera Bread with a revenue of $2.8 Billion 
- Carl's Jnr with a revenue of $2.2 Billion 
- Taco Bell with a revenue of $2 Billion 
- Papa Johns with a revenue of $1.8 Billion 
- Jack in the box with a revenue of $1.5 Billion 
- Wendy's with a revenue of $1.2 Billion 
- Pizza Hut with a revenue of $1 Billion 
ConclusionIn conclusion, Columns A-C, rows 2-16, of the attached spreadsheet have been updated with information on quick service restaurants in the US including the name of the company, revenue, and source link.