Strategy& projects US restaurant market to grow by 2.5% to 2022

A recent Strategy& study – commissioned by TripAdvisor – projects that the US restaurant market will expand by a CAGR of 2.5% between 2018 and 2022, while the global restaurant market will grow 4.7%. The study, which drew on TripAdvisor data and 2,127 consumer responses, also found that TripAdvisor and its restaurant reservation subsidiary TheFork influenced nearly $8 billion in restaurant revenue in 2018.

Strategy& – the strategy arm of PwC – found that the global restaurant market reached $1.6 trillion in 2018, with its growth expected to accelerate from 2.9% (2010-2018) to 4.7% (2018-2022).

The US market reached $222 billion in 2018, with projected growth of 2.5% between 2018 and 2022. The US restaurant market had 1.8% CAGR in the post-financial crisis period (2010-2018).

The study also covered five European markets, four of which fared poorly between 2010 and 2018, perhaps battered by the Euro Crisis. The UK (0.0%), France (-2.1%), Italy (2.7%), and Spain (-1.7%) saw either no growth or declines in the restaurant market this decade.

Strategy&, however, projects growth for every one of those countries’ restaurant industries, from modest 0.6% growth in Italy to explosive 5.8% growth in Spain. The study expects increased tourism, a change in consumption, and innovative cuisine to power Spain’s restaurants.

The Netherlands, meanwhile, managed to buck the poor trends in Europe from 2010-2018, seeing 1.4% growth, and is expected to have 2.3% growth from 2018-2022.

"The size and acceleration of the global dining industry is very encouraging for restaurateurs in the U.S. and beyond," said Pierre Péladeau, partner at Strategy&.

The study also revealed that TripAdvisor and TheFork collectively influenced nearly $8 billion in restaurant revenue in 2018 in the six markets surveyed, representing more than 320 million additional restaurant meals. TripAdvisor and TheFork also generated or sustained over 60,000 direct and indirect jobs in 2018 in the six countries, including approximately 14,000 in the US.

"TripAdvisor and TheFork are proud to contribute to the growth of the restaurant industry and create value where we operate globally," said Bertrand Jelensperger, senior vice president, TripAdvisor Restaurants and CEO, TheFork. "Our ambition continues to be to help drive growth and digitization within the restaurant and hospitality industry as we connect more diners with exciting culinary experiences that match their interests."

The study offered a number of strategies for restaurants to improve their online engagement. A presence on TripAdvisor led to +2% in average annual restaurant revenue, while having 51-100 user reviews drove an average +2% incremental revenue. Having a 4.5 bubble rating on the site also drove +2% in incremental revenue.

Being on TheFork’s reservation platform, meanwhile, drove an average 16x ROI, and a 10% increase in additional revenue.

"The restaurant industry is going through a monumental period of digitization, as more and more consumers expect to compare places to eat online and seamlessly book a table from their mobile device," Jelensperger added. "We believe the biggest online marketing opportunity for restaurants is still ahead of them, as 80% of diners are checking online before dining out, while restaurants are dedicating a limited amount of time and investment in online marketing."          

The common research refrain is that younger generations prefer to research a product or service before they try it or buy it. Gen Z and Gen Y also tune into digital experiences and journeys more readily than older generations, and tend to dine out more despite their limited resources – driven by a preference for “experiences,” FOMO, and Instagram-fueled keeping-up-with-the-Joneses. Despite razor-thin industry margins, an effective digital strategy nonetheless seems key in the cutthroat restaurant market.