If you're an investor in the fast food industry (euphemistically referred to as the "quick-serve" industry), or are thinking of becoming such an investor, here are some interesting statistics from QSR magazine, an industry trade journal. First off, note that the fast-food group includes firms such as McDonald's
- Fast food sales (excluding snacks) in 2003 grew 3.2% to $119 billion and are expected to grow 3.9% in 2004. Full-service sales rose 3.7% in 2003 to $151 billion and are projected to advance 4.6% in 2004.
- The average check for a fast-food takeout order was $12 in 2002, versus $19 for casual-dining establishments. The number of takeout meals bought per U.S. family annually averaged 118 in 2002, up a whopping 30% since 1991. That's fully 16% of all lunches and dinners in a year.
- Franchise and royalty fees vary widely in the industry, and these have major implications for companies' profits. For example, according to QSR, Domino's Pizza
(NYSE:DPZ)charges $2,500 in franchise fees and takes a 5.5% royalty. McDonald's charges $45,000 and takes 4%, Wendy's charges $25,000 and takes 4%, Taco Bell charges $45,000 and takes 5.5%, Subway charges $12,500 and takes 8%, KFC charges $25,000 and takes 4%, and Pizza Hut charges $25,000 and takes 6.8%.
The magazine mentioned several key challenges faced by the restaurant industry. In descending order, the top five listed were: the availability of labor, sites/real estate, the economy, competition, and the availability of financing.
This is a great industry for many investors for several reasons. First, well-chosen firms have done very well over the long haul, and continued growth is expected as Americans increasingly seek meals outside the home. In addition, this industry is relatively easy for most of us to understand, since we tend to be customers of the companies, familiar with their offerings.
Learn more about the industry in these articles:
- Time to Buy a Value Meal?
- Next: McDonald's Riches Brew
- Is Wendy's a Wallflower?
- A Yum! Feast for the Chinese
- Nathan's Is Progressing Famously
- Red Lobster's Eating Disorder
Also, grab some free samples of our various investing newsletters, and you'll likely find some recommended restaurant stocks.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.