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Table Of Contents

1. About 4 Definition 4 Related Terms 4 What’s Included 4 Related Industries 4 Additional Resources 5 2. At a Glance 6 Key Takeaways 6 Products and Services 7 Major Players 8 Key External Drivers 9 Industry Structure 9 SWOT 10 Executive Summary 10 3. Performance 12 Highlights 12 Key Takeaways 12 Executive Summary 13 Performance Snapshot 14 Volatility 20 Outlook 23 Life Cycle 25 4. Products and Markets 26 Highlights 26 Key Takeaways 26 Products and Services 27 Major Markets 29 5. Geographic Breakdown 31 Key Takeaways 31 Business Locations 32 6. Competitive Forces 37 Highlights 37 Key Takeaways 37 Concentration 38 Barriers to Entry 40 Substitutes 41 Buyer & Supplier Power 42 7. Companies 44 8. External Environment 45 Highlights 45 Key Takeaways 45 External Drivers 45 Regulation & Policy 48 Assistance 49 9. Financial Benchmarks 50 Highlights 50 Key Takeaways 50 Cost Structure 51 Financial Ratios 54 Key Ratios 60 10. Key Statistics 61 Industry Data 61

This industry includes quick-service and full-service restaurants that exclusively sell vegan and vegetarian food and drinks. This industry does not include restaurants that sell a small portion of vegan or vegetarian food as part of a wider cuisine.

VEGETARIAN

A person who does not eat meat, and sometimes other animal products, especially for moral, religious, or health reasons

VEGAN

A person who does not eat any food derived from animals and who typically does not use other animal products

FLEXITARIAN

A semi-vegetarian diet, which is centered on plant foods with the occasional inclusion of meat

· Full-service restaurant operation (waiter or waitress service at tables)

· Quick-service restaurant operation

· Fast-food restaurant operation

Industries in the Same Sector

· Competitors:

· No data available

· Complementors:

· No data available

International Industries

· Global Fast Food Restaurants

· Full-Service Restaurants in Canada

· Cafes and Restaurants in New Zealand

· Restaurants and Takeaways in Ireland

· Full-Service Restaurants in China

Performance

Vegetarian and vegan restaurants have performed well over the years to 2023, as US consumers have grown increasingly fond of vegetarian-style cuisine. Many consumers with little exposure to the food have grown open to visiting vegetarian and vegan restaurants, driven by the rising popularity of the flexitarian diet and rising health consciousness.

The onset of COVID-19 and subsequent government restrictions on dining services caused revenue to fall. Vegetarian and vegan restaurants endured a moderately greater adverse effect, as many are located in large population centers and in states like New York and California, which endured the strictest pandemic-related restrictions in 2020.

External Environment

Operators within the Vegetarian and Vegan Restaurants industry have been subject to a moderate level, yet increasing, level of regulation. This regulation includes rules related to labor condition standards and food safety.

Although operators within the Vegetarian and Vegan Restaurants industry do not receive any formal form of assistance, there are numerous associations that aim to help the restaurant industry as a whole. There are organizations that offer services including research and networking opportunities.

Vegetarian and vegan restaurants have shrunk as an industry over the five years to 2023, despite several favorable trends that have supported a growing consumer base for vegetarian and vegan cuisine. Rising health consciousness and the rising popularity of the flexitarian, or semi-vegetarian, diet have bolstered demand for vegetarian and vegan-style food. The growing value of agriculture and rising consumer spending during most of the period led to a rise in consumers' spending money on food away from home. The industry was adversely affected by the outbreak of COVID-19, however, and subsequent government restrictions on indoor dining resulted in revenue plummeting that year. Revenue is expected to abate at a CAGR of 1.9% to $30.9 billion over the five years to 2023, including a rise of 1.1% in 2023 alone.

Consumer spending has increased in recent years, but despite the uptick in spending, consumers have remained budget-conscious. They still maintain a preference for food that is less expensive, and vegetarian and vegan food is often more affordable than meat-inclusive alternatives. More and more consumers have sought out food at these establishments, which can provide high-quality food at an affordable price point. Profit has fallen over the past five years, largely as a result of rising wage and input costs, which were exacerbated by the pandemic.

The industry's expansion will be underpinned by further consumer adherence to the flexitarian diet over the five years to 2028. Rising consumer spending is expected to continue to support revenue growth, as will rebounding employment; reduced free time for consumers to cook their own meals will likely arm them with more disposable income to spend at restaurants. Continued product innovation in the meat alternative realm is anticipated to attract new consumers to industry establishments. Rising health consciousness over the next five years will also benefit restaurant owners, as will the falling cost of produce. Revenue is estimated to rise at a CAGR of 1.1% to $32.6 billion over the five years to 2028.

Vegetarian and vegan restaurants have performed well over the years to 2023, as US consumers have grown increasingly fond of vegetarian-style cuisine. Many consumers with little exposure to the food have grown open to visiting vegetarian and vegan restaurants, driven by the rising popularity of the flexitarian diet and rising health consciousness.

The onset of COVID-19 and subsequent government restrictions on dining services caused revenue to fall. Vegetarian and vegan restaurants endured a moderately greater adverse effect, as many are located in large population centers and in states like New York and California, which endured the strictest pandemic-related restrictions in 2020.

Vegetarian and vegan restaurants have shrunk as an industry over the five years to 2023, despite several favorable trends that have supported a growing consumer base for vegetarian and vegan cuisine. Rising health consciousness and the rising popularity of the flexitarian, or semi-vegetarian, diet have bolstered demand for vegetarian and vegan-style food. The growing value of agriculture and rising consumer spending during most of the period led to a rise in consumers' spending money on food away from home. The industry was adversely affected by the outbreak of COVID-19, however, and subsequent government restrictions on indoor dining resulted in revenue plummeting that year. Revenue is expected to abate at a CAGR of 1.9% to $30.9 billion over the five years to 2023, including a rise of 1.1% in 2023 alone.

Consumer spending has increased in recent years, but despite the uptick in spending, consumers have remained budget-conscious. They still maintain a preference for food that is less expensive, and vegetarian and vegan food is often more affordable than meat-inclusive alternatives. More and more consumers have sought out food at these establishments, which can provide high-quality food at an affordable price point. Profit has fallen over the past five years, largely as a result of rising wage and input costs, which were exacerbated by the pandemic.

The industry's expansion will be underpinned by further consumer adherence to the flexitarian diet over the five years to 2028. Rising consumer spending is expected to continue to support revenue growth, as will rebounding employment; reduced free time for consumers to cook their own meals will likely arm them with more disposable income to spend at restaurants. Continued product innovation in the meat alternative realm is anticipated to attract new consumers to industry establishments. Rising health consciousness over the next five years will also benefit restaurant owners, as will the falling cost of produce. Revenue is estimated to rise at a CAGR of 1.1% to $32.6 billion over the five years to 2028.

Revenue:

Employees:

Businesses:

Profit:

Performance Snapshot

What's driving current industry performance?

Health-conscious consumers have taken to following a flexitarian diet

· In recent years, veggie-style food has increasingly become an integral component of the American diet.

· Increased popularity of the flexitarian diet in recent years has driven industry growth, as the number of consumers who consider themselves vegetarian or vegan has been largely stagnant over the past two decades.

· A flexitarian is someone who maintains a semi-vegetarian diet, but still occasionally eats meat.

· The industry has leaned on an increasing consumer preference to try vegetarian or vegan foods occasionally, as opposed to a total conversion to vegetarianism or veganism.

· The growing prominence of the flexitarian diet has made it possible for new restaurant owners to enter the industry, causing the number of vegetarian and vegan restaurants to rise.

Fast food and mainstream establishments have made meat-free options accessible

· The surging popularity of vegetarian and vegan foods has also led businesses outside of the industry to increasingly incorporate veggie-style foods on their menus to capitalize on this growing market.

· Burger King, a multinational chain of hamburger fast food restaurants, and Impossible Foods, a company that develops plant-based substitutes for meat products, collaborated to introduce the Impossible Whopper Burger to the menu.

· Other large operators in the food sector have also introduced vegan products in recent years, including McDonald's Corporation, PepsiCo Inc. and Starbucks Corporation.

· The increasing amount of mainstream veggie-style food options is spurring demand by invigorating consumer interest in vegetarian and vegan diets.

· The increasing availability of vegetarian and vegan offerings at traditional restaurants has also fueled external competition industry operators contend with.

Rising costs have contributed to subsiding profit margins

· Many of the ingredients used in vegetarian or vegan style cooking can be subject to price volatility.

· The agricultural price index, which represents prices received by farmers for all US agricultural products, including both livestock and crops, has surged in recent years, a trend exacerbated by the pandemic and subsequent supply chain disruptions.

· Combined with weak demand in 2020 and rising competition and wage costs, this trend has resulted in declining profit during the period.

· Wages costs have risen, as many business owners in the food service industry offered higher pay in an effort to attract employees in a tight labor market.

Rising demand for vegetarian and vegan food has enticed new owners to enter the industry

· Largely positive economic conditions during most of the current period, including rising per capita disposable income and falling unemployment, resulted in consumers happily spending money on dining experiences.

· The onset of the COVID-19 and subsequent government restrictions on dining services put strain on the industry in 2020, hampering performance that year.

· Demand for vegetarian and vegan food, as well as limited-service restaurants, still experienced persisting popularity in the last few years, as consumers with disposable continue to seek fast, healthy dining options.

· Although vegan restaurants only constitute about 6.0% of establishments in 2023, this is rising thanks to the success of chains like Veggie Grill and Beyond Sushi.

What influences industry volatility?

Changes in factors affecting income directly affect industry revenue

· The industry depends on consumer tastes and preferences, as well as levels of disposable income and consumer confidence.

· Restaurant spending is highly discretionary and easily substituted for lower-cost options such as home-cooked meals.

· Over most of the five years to 2023, the US economy experienced strong economic growth and historically low unemployment rates, leading consumers to spend more on meals away from home.

Demand fluctuates and is easily disrupted

· Although the percentage of individuals that maintain a vegetarian or vegan diet has only marginally risen over the past five years, increased popularity of the flexitarian diet has bolstered demand for the industry.

· The onset of the COVID-19 and subsequent government restrictions on restaurant operations resulted in revenue falling substantially in 2020.

How do successful businesses overcome volatility?

Access to multiskilled and flexible workforce

Access to suitably skilled and trained staff is helpful when trying to meet customer demand during peak periods.

Ability to control stock on hand

Profit can be improved if major cost areas, including order, stock and food waste, are controlled.

Fast adjustments made to changing regulations

To avoid incurring unnecessary fines or risk losing their operating license, industry players must ensure to monitor government regulation changes relating to food safety and handling.

Ability to franchise operations

A significant component of this industry that can provide necessary support to owners is franchising within the United States and internationally.

What's driving the industry outlook?

Vegetarian and vegan restaurants will likely benefit from greater foot traffic

· As Americans return to work and household incomes rise, spending at restaurants is anticipated to grow.

· Demand will be further bolstered by pent-up consumer interest in dining out following the worst of the pandemic.

· Vegetarian and vegan restaurants will likely need to closely monitor costs over the next five years to maintain healthy profit.

· The agricultural price index, a proxy for input prices for the food service sector, is anticipated to taper off in the next few years, reducing prices for consumers and input costs for restaurant owners.

· Veggie diet staples like pasta, rice, tofu, and beans are inexpensive compared to meat, so consequently, owners are somewhat more insulated from volatile food costs than their meat-serving competition.

· Food prices are notoriously volatile and any sustained drought or other supply chain interruptions could lead to inflated costs for restaurants.

· If input prices do rise, vegetarian and vegan restaurants will be forced to contend with the difficult decision of either raising menu prices or absorbing the cost in the form of lower profit.

The industry will benefit from rising health consciousness

· The healthy eating index, which is a calculation of the percentage of a recommended diet that the average American consumes, is anticipated to rise.

· As consumers increasingly value their health, and the source of their food, they are anticipated to continue turning to industry operators to maintain a healthy diet.

· The rest of the restaurant sector is anticipated to take notice of consumers' increased preference for flexitarian diets and healthy eating options.

· Nonvegetarian and vegan restaurant operators are likely to increasingly incorporate vegetarian and vegan offerings on their menus during the outlook period, resulting in increased competition for industry operators.

· Although industry profit, measured as earnings before interest and taxes, is anticipated to rise, high levels of competition are anticipated to discourage industry operators from raising prices too much, preventing significant profit growth.

Restaurants in the industry will increasingly cater to a younger demographic

· To accommodate the increasingly digital-savvy, younger, consumer market, vegetarian and vegan restaurant operators are anticipated to increasingly invest in technology and online marketing.

· Restaurant operators are expected to use social media and smartphone applications to communicate with customers, enabling them to make reservations, wait for tables, browse menus and conduct their entire transactions.

· Operators will do what they can to reduce wait times and make the restaurant experience as seamless as possible for customers.

· Technology upgrades will not only lead to greater customer satisfaction, but are likely to boost profit for industry operators as well.

· Growth in demand is anticipated from this group, driven by the popularity of fast-casual restaurants in the industry, which can offer lower prices to attract consumers seeking value for money when dining out.

Why is the industry growing?

Contribution to GDP

Vegetarian and vegan restaurants' contribution to GDP has been shrinking as a result of pandemic disruptions that pressured the industry's revenue and profit growth over the past 10 years.

Market Saturation

Demand for plant-based ingredients has surged in recent years as a rising population of consumers have begun partaking in the flexitarian diet, demand for new industry establishments.

Innovation

Plant-based meat alternatives like Impossible and Beyond meat that mimic the taste and texture of animal products are increasingly introduced to the market, driving consumer interest.

Consolidation

There is a high level of turnover among industry operators, with various new restaurants replacing unprofitable establishments in any given year. However, mergers and acquisitions are uncommon in this industry.

Technology & Systems

Technology like advanced point-of-sale systems and efficient kitchen management software is streamlining operations and enhancing customer experiences. Allowing consumers to order and making reservations online have become vital tools for reaching customers.

Most establishments in the Vegetarian and Vegan Restaurant industry are full-service restaurants. In 2023, this restaurant type will collectively account for over 50.0% of revenue.

The major markets for vegetarian and vegan restaurants mainly include individuals, businesses and governmental entities. The distribution among the major markets of the industry is not expected to change significantly moving forward.

How are the industry’s products and services performing?

Most establishments in the Vegetarian and Vegan Restaurant industry are full-service restaurants

· Full-service restaurants offer a waitstaff that typically serve customers food and beverages.

· Early during the pandemic, demand for this segment began to drop due to the widespread closure of indoor dining rooms.

· Takeout services continued to remain popular, which enabled some of these restaurants to stay remain in business during the difficult time.

· As restaurant-related coronavirus restrictions ease, full-service restaurants resumed operations in full capacity.

Demand for limited-service restaurants grew in the pandemic

· Within these establishments, customers typically order and pay before eating, and drive-thru and takeout options are often offered.

· Establishments that only offer takeout or delivery services make up an insignificant share of industry revenue.

· During the pandemic, demand for these types of restaurants surged due to indoor dining room closures.

· In that regard, employees and customers were able to limit exposure risk through these establishments, especially when using drive-thru.

What products or services do successful businesses offer?

Ability to quickly adopt new technology

Incorporating kitchen and customer-related technology into new employee training can contribute to higher productivity and a decline in labor costs.

What are innovations in industry products and services?

Imitation meat

· Companies like Beyond Meat have crafted plant-based meats that not only replicate the taste but also the texture of traditional meats.

· Cutting-edge food scientists have created plant-based burgers and sausages, even made steaks that sizzle and sear.

· This innovation is pulling in not only vegans and vegetarians but also curious meat-eaters, expanding the customer base for veggie friendly restaurants.

Egg replacements

· Brands like Just Egg have introduced game-changing egg replacements to the market that work seamlessly in both baking and cooking.

· Made from entirely plant-based ingredients, it mimics the binding, leavening, and moisture-retaining properties of eggs.

· This is a boon for vegan bakeries and restaurants, allowing them to create fluffier cakes, richer quiches, and perfectly textured scrambled "eggs."

What’s influencing demand from the industry’s markets?

Households earning $75,000 and over frequent high-end restaurants

· Although individuals within this income bracket is more inclined to dine-out, they are more likely to dine out at a variety of restaurants, including traditional steakhouses and Asian restaurants.

· This segment has declined as a share of revenue in recent years thanks to more profound growth in other market segments.

Households earning $30,000 to $74,999 maintain steady demand

· These consumers do not typically spend a significant amount at expensive restaurants.

· Because of the relatively lower cost of vegan food and beverages, this income segment is expected to drive industry demand.

Households earning less than $30,000 have limited food budgets

· When choosing a restaurant, individuals earning less than $30,000 are typically more inclined to visit one that offers less expensive options.

· Given that vegan foods are typically less expensive than fish and meat alternatives, this income segment is the largest segment contributing to demand for industry products.

· Demand from this segment fell during the pandemic, which contributed to a reduction in already-restricted spending on discretionary goods and services.

The distribution of establishments in the Vegetarian and Vegan Restaurants industry is highly correlated with population density and income. This is likely because these restaurants are part of a service-based retail industry.

States that are densely populated are likely to contain a higher number of individuals who are vegetarian or vegan. Many operators seek to locate establishments in large cities where foot or automobile traffic is high.

Percentage of total industry Establishments,Population in each region

Where are industry businesses located?

The Southeast has the greatest concentration of establishments

· The Southeast is home to the largest number of agricultural businesses because of the many food processors and distributors that are established within the region.

· The Southeast's fertile lands yield an abundance of fresh produce year-round.

· The local supply of fruits, veggies, and grains encourages restaurants to create innovative and seasonally driven vegetarian dishes, capitalizing on the region's natural bounty.

The West is led by industry dominance in California

· Many operators seek to locate establishments in large cities where foot or automobile traffic is high.

· The West is known for its culinary innovation and experimentation.

· This creative energy has led to a plethora of vegetarian and vegan eateries that serve up exciting, trend-setting dishes that attract both locals and visitors.

· The highest percentage of industry operators can be found in large cities, including major cities in California where tourism and business activity is high.

· California comprises the highest percentage establishments, due to the regions focus on health and wellness.

The Mid-Atlantic region is a melting pot of cultures and cuisines

· The Mid-Atlantic provides access to large consumer markets and is home to several large cities.

· Culinary diversity in the region has sparked a demand for vegetarian and vegan options that cater to various palates.

· Restaurants are inspired to create dishes that draw from a wide array of global flavors, making the region a hotspot for plant-based dining.

How do businesses use location to their advantage?

Proximity to key markets

Being in a desirable location and understanding customers’ restaurant desires can increase customer traffic.

Ability to control stock on hand

Profit can be improved if major cost areas, including order, stock and food waste, are controlled.

The Vegetarian and Vegan Restaurants industry has a low level of market share concentration. This is evident of the industry's fragmented structure and the countless small operators that dominate the industry.

Franchising is becoming increasingly popular amongst vegetarian and vegan restaurant owners. Thanks to the expected growth in popularity for vegetarian and vegan foods, the market share concentration will likely increase.

What impacts the industry’s market share concentration?

The industry inherently consists of single, owner-operated businesses

· The low concentration level in the industry results in fierce competition among restaurants.

· The industry has low barriers to entry and owners typically compete on price, menu offerings, cuisine and customer service.

The industry is highly dominated by sole proprietorships

· Owner-operators are prominent in the industry, putting a significant proportion of their time and effort into running a restaurant.

· Many restaurants are family-run, meaning they primarily employ the owners' extended family members.

· Franchising is becoming increasingly popular amongst vegetarian and vegan restaurant owners as vegetarian and vegan foods become even more popular.

How do successful businesses handle concentration?

Ability to quickly adopt new technology

Incorporating kitchen and customer-related technology into new employee training can contribute to higher productivity and a decline in labor costs.

What challenges do potential industry entrants face?

Legal

· There are high regulations pertaining to restaurant industries, and it is imperative that these regulations are followed. Such rules include obtaining an alcohol service license and abiding by strict health requirements.

Start-up Costs

· A single-location establishment will likely experience more substantial start-up costs like investing staffing and equipment. If a company chooses to enter a franchise, start-up costs will be minimized.

Differentiation

· Nonfranchise restaurants can have a harder time earning brand recognition and consumer loyalty. Therefore, the company may have to invest in marketing efforts and/or unique ways of positioning themselves relative to more well-known restaurants.

Labor Intensity

· Staffers are essential in all aspects of daily operations, ranging from cooking, and serving to cleaning.

What are substitutes for industry services?

Do-it-yourself

· Long time vegetarians and vegans have learned how to cultivate a diet that suits them long before restaurants catering to them began popping up.

· Individuals who follow a veggie diet for health reason likely avoid eating out in case restaurants use unhealthy additives, and feel more comfortable preparing meals themselves

Restaurants in the US

· Many restaurants have begun to ensure a few veggie-friendly dishes on their menus, though some consumers may find these options limited.

· Fast-food restaurants like Burger King and Taco Bell have meat-free options, serving as a faster and more accessible alternative for a meal for non-meat-eaters.

What power do buyers and suppliers have over the industry?

Buyer: Price competition

· Since this industry contains more than 30,000 restaurants, customers can easily turn elsewhere if the food and quality do not justify the menu prices.

· Apart from restaurants that deliver a unique take on veggie food that is inimitable, customers will usually opt for the lowest-priced establishments when income falls.

Supplier: Switching costs

· In addition to food purchases. vegetarian and vegan restaurants require items like alcohol, food and other incidentals, like paper towels, cleaning equipment and glassware.

· The steady and on-time delivery of supplies and ingredients is critical to many restaurants, especially when dealing with fresh produce that can go bad.

How do successful businesses manage buyer & supplier power?

Proximity to key markets

Being in a desirable location and understanding customers’ restaurant desires can increase customer traffic.

Ability to franchise operations

A significant component of this industry that can provide necessary support to owners is franchising within the United States and internationally.

Operators within the Vegetarian and Vegan Restaurants industry have been subject to a moderate level, yet increasing, level of regulation. This regulation includes rules related to labor condition standards and food safety.

Although operators within the Vegetarian and Vegan Restaurants industry do not receive any formal form of assistance, there are numerous associations that aim to help the restaurant industry as a whole. There are organizations that offer services including research and networking opportunities.

What demographic and macroeconomic factors impact the industry?

During periods of low economic growth, any spike in unemployment generally leads to declining consumption. Conversely, when personal consumption expenditure is high, consumers will be more likely to spend money on eating at restaurants. Consumer spending is expected to rise in 2023. representing a potential opportunity for the industry.

The agricultural price index represents nominal prices received by farmers for all US agricultural products, both livestock and crops, and is also a strong indicator of the prices vegetarian and vegan restaurants can expect to pay for their purchases and ingredients that go into preparing meals. When the price of meal ingredients increases, operating costs typically increase and result in lower profit. These increases cannot always be passed on to consumers, especially during periods of low consumer spending. The agricultural price index is expected to experience a downturn beginning in 2023.

Consumers are becoming increasingly aware of issues related to weight and obesity, fatty food intake and food safety issues. Consumers are now more aware of the health issues associated with fatty foods and are increasingly going out of their way to avoid them. The healthy eating index will show modest growth in 2023.

The urban population measures measure the number of individuals within the United States living in urban municipalities. This represents a large group of customers for the industry. Specifically, time-strapped individuals living in urban areas will likely frequent industry establishments to save time on cooking. The urban population will grow only marginally in 2023, posing a potential threat to the industry.

What regulations impact the industry?

Labor relations

The industry is subject to regulations concerning minimum wage and employee benefits. This is due to the fact that a high number of young workers are employed in restaurants. The statutory minimum wage federally is currently $7.25 per hour, but varies from state to state. Employers are obligated to provide healthcare to its employees if they employ at least fifty employees that work, at minimum, thirty hours weekly.

Food safety and standards

The US Food and Drug Administration (FDA) is in charge of providing regulations concerning food preparation and sales, as well as providing specs on nutritional content and menu items. The FDA has produced a guide for the best practices of handling food known as the Model Food Code, which is updated yearly. If a restaurant claims that a menu item is heart healthy or low-fat, the owner must ensure that it can show health officials the basis for such claims.

Smoking bans

At the state level in the United States, various smoking laws have been enforced. In many states, within restaurants, bars and nonhospitality workplaces, people are banned from smoking. Moreover, some states even ban smoking in certain outdoor spaces. Although most laws remain relatively the same, each state individually develops its own legislation.

COVID-19

Many food service industries were adversely affected by the pandemic in 2020. Many restaurant operations were restricted by the government and many dine-in services were forced to close early during the pandemic. By mid-2020, restaurants were permitted to offer limited indoor dining, in addition to expanding outdoor dining operations. Travel restrictions put in place during the pandemic negatively affected industry operator performance even further.

What assistance is available to this industry?

The Coronavirus Aid, Relief and Economic Security (CARES) Act

Congress passed the CARES Act in March 2020 to assist individuals and businesses following the onset of the COVID-19 pandemic and the ensuing economic fallout. Most relevant to auto mechanics, the CARES Act contained the Paycheck Protection Program (PPP), a program designed to provide businesses with federally-guaranteed loans to cover payroll expenses, paid leave and benefits and other applicable operating costs.

The National Restaurant Association

The National Restaurant Association is a non-profit organization focused on supporting the interests of its members within the restaurant industry. The association delivers research data and industry news, in addition to hosting networking opportunities and sponsoring events. It represents and advocates for the restaurant and foodservice industry in the United States.

The National Council of Chain Restaurants (NCCR)

The National Council of Chain Restaurants (NCCR) provides chain restaurants with various resources, including research and networking opportunities. The NCCR also focuses on advocating for policies and regulations that supported the restaurant industry, particularly chain restaurants, in areas such as labor, taxes, health care and other legislative and regulatory matters.

Due to the labor and input-intense nature of industry services, vegetarian and vegan restaurants experience high wage and purchase costs. This has constrained profit growth over the five years to 2023.

This industry is also highly characterized by its fragmented nature. Cost structure represents the average industry operator, but varies significantly depending on the type of service offered and size of the establishment.

Chart displays current year only in the PDF version of this report. You can view and download chart for all other years associated with this industry on my.ibisworld.com.

What trends impact industry costs?

Purchases costs are lower than they are for meat-serving restaurants

· Purchasing costs are influenced by input prices, which can be volatile.

· Purchases constitute 37.0% of industry revenue in 2023.

· Operators must purchase ingredients for menu items and other dining amenities, including chairs and tables.

· Greater emphasis on fresh ingredients, locally sourced produce and organic food has led to higher input prices.

· Although vegan specialty foods, like fake meat or veggie burgers are often more expensive than their nonvegan counterparts, menu staples like pasta, rice, tofu and beans are inexpensive compared with meat, limiting purchase costs somewhat.

Wages costs grew with a mandated minimum wage

· Labor is used for a variety of tasks in restaurants, including making food, taking orders, maintaining premises and managing day-to-day activities.

· Wages represent a significant cost for the industry at 36.6% of industry revenue in 2023, up slightly from 36.3% in 2018.

· These costs include wages and benefits, like workers' compensation, health and unemployment insurance.

· Over the past five years, wage costs have increased slightly, as a result of the passing of new legislation across several states which increases the mandatory minimum wage.

· This affects a large proportion of industry employees operating in these regions.

Profit margins struggled against rising costs

· Profit has declined over the five years to 2023, largely due to restaurant closures and heightened safety protocols amid the pandemic in 2020.

· In 2023, profit is expected to account for 4.2% of revenue, down from 5.3% in 2018.

· Despite strong demand, heightened competition among operators has led many to adopt practices that strains profit.

· This may include slashing the price of menu offerings or purchasing more expensive, premium ingredients to create specialized meals.

· Rising labor costs have also played a role in hampering industry profit in recent years.

Industry Multiples

Industry Tax Structure

Income Statement

Balance Sheet

Liquidity Ratios

Coverage Ratios

Leverage Ratios

Operating Ratios

Cash Flow & Debt Service Ratios (% of sales)

Values

Annual Change

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