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A new report from Rabobank's global Food & Agribusiness Research and Advisory group looks at the growth of the quick-service restaurant sector in the U.S. and determines that, by 2018, spending on food away from home will exceed food at home for the first time.
In the report, Rabobank analyst Nicolas Fereday charts the remarkable resilience and robustness of the U.S. restaurant industry in recent years, noting that the industry's contribution to the nation's GDP exceeds that of food manufacturing. Rabobank, a global financial services leader for the food and agriculture industry, predicts that restaurants will continue to take an increasing slice of the U.S. consumer food dollar, with leading quick serves being the particular beneficiaries of consumers' growing preference for eating out versus at home.
Although there was a temporary emphasis on eating more at home during the 2007-2009 recession, that proved to be a blip. Contrary to some views, Rabobank believes that the U.S. has not reached a turning point in consumer habits or a move back to thrifty habits and home cooking. The organization says it would take a cultural sea change to completely reverse consumer behavior and preference for dining out.
Quick serves have adopted a number of winning strategies to sustain their growth over the long term and successfully navigate through the current macroeconomic uncertainty.
Some of these strategies include:
- Giving consumers what they want: Successful quick serves are adroit in profiting from giving consumers what they want by responding to longer-term lifestyle changes and emerging trends toward healthy eating options and premium coffee, among others.
- Early adoption and expansion of the franchise business model: Franchising spares the franchisor the heavy capital investments and management responsibility involved in building a chain of restaurants, while providing a stable stream of rent and royalty income and much faster growth.
- Driving costs out of the system through supply chain efficiencies: Over time, many leading quick serves have also proven very adept at driving costs out of their supply chain, employing risk management practices, and leveraging scale. Quick serves have also learned the value of close collaboration, building long-term partnerships with their decentralized supply and distribution networks.
- Adapting to uncertain times: Since the recession, some chains have fared better than others. Rabobank attributes their success in part to pioneering strategies such as menu diversification, improving the look and feel of the restaurants, branching out into more eating occasions, and improving the quality of the dining experience.
- Fast casuals challenge the conventional view of quick serves: These restaurants position themselves in a sweet spot, combining convenience and relative cheapness of fast food with a higher-quality dining experience.