Which Restaurant Brands Will Win in 2020?

Posted by Drivosity

Throughout 2019, restaurants across all sectors faced a similar theme. Eroding guest counts balanced by an acceleration in guest checks. Restaurants weathered traffic declines thanks to a consumer more willing to spend on dining out. According to data from the U.S. Census Bureau, sales at eating and drinking establishments rose more than 4 percent in 2019. That beat year-over-year grocery sales growth of 3 percent.

Also, the National Restaurant Association predicted business to hit $863 billion, a 3.6 bump from 2018. You can credit the rise in consumer sentiment to a strong jobs market and tax cuts.

What’s taking shape, though, has major implications for 2020.

It’s providing operators a counter punch to slowing growth. Restaurant sales have enjoyed a 6 percent compound annual growth rate, or CAGR, since 1970. But that’s crawled to 4 percent since the economic downturn in 2008, per the Association. However, people are spending more of their income on food—a sign restaurants today are seen as a cost-effective option for younger generations to chase experiences.

In 1955, as CNBC points out, 25 cents of every $1 spent on food went to restaurants. Today, it’s more than half.

Association SVP of research, Hudson Riehle, noted in the article that quick service has grown faster than sit-down chains during this evolution for two main reasons: The restaurant industry is being driven by convenience and socialization. The definition of “experience” is no longer handcuffed to great service. There’s far more emphasis on erasing friction from the point of impact. Being able to offer a great delivery experience from start to finish, for instance, holds as much weight with some consumers as getting a great server.


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