Fast-Food Sales to Hit $118 Billion in 2013

ROCKVILLE, Md. Quick-service and snack and beverage restaurant sales are back on track for moderate growth, according to recent report from Packaged Facts. The report estimates limited-service restaurant sales will reach $188.1 billion in 2013, up 4.9% over 2012, while sales at snack and beverage establishments will rise 4.6% to $29.1 billion.

Incremental improvement in macroeconomic drivers, a brighter consumer outlook, modest improvements in same-store sales, store re-imaging programs and aggressive menu innovation and limited time offer (LTO) experimentation are all playing a positive role in the industry. According to Packaged Facts survey data, 68% of limited-service restaurant users say low price influences their decision to go to a fast food restaurant, and 24% cite it as most important."

A recent report by QSR Magazine, however, shows price may not always be the top priority, as Chick-Fil-A, who boasted the highest sales per unit at $3.16 million in 2012, received an average of $7.65 per customer compared to $6.25 per customer for runner-up McDonald's, who averaged $2.6 million per unit. This continued price sensitivity reflects the fact that macroeconomic improvements have not lifted all demographics, and some key fast-food guest demographicsincluding households earning under $50,000 annually, African Americans, and 18- to 24-years oldshave not benefited proportionately.

Quick-service restaurant (QSR) operators, which also face highly competitive prepared foods offerings in grocery stores, will thus continue to have limited pricing power and to face guest traffic challenges into 2014. In addition, results from a survey released in August by the NPD Group suggested the industry be aware of other forms of competition, in this case the food truck service. According to the survey, nearly half of the participants said they would replace a QSR visit with a food truck visit. The top reasons consumers gave for using food trucks related to availability of "interesting" foods and convenience, which are the traditional strengths of QSR outlets, according to NPD.

In an environment where stealing share is key to growth, menu innovation and keeping up with broader nutritional trends remain essential," said to David Sprinkle, Packaged Facts research director.