Restaurant Numbers Shrinking In US

The shuttering of more independent restaurants in the last quarter of 2011 has resulted in an overall drop in the number of restaurants in the U.S., according to …

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The shuttering of more independent restaurants in the last quarter of 2011 has resulted in an overall drop in the number of restaurants in the U.S., according to industry researcher NPD Group. Meanwhile, the number of chain restaurants has grown, although there were slight declines in particular restaurant sectors. NPD Group defines independent restaurant owners as those owning one or two units; anything more than that is classified as a small, minor, midsize or large chain. Although disheartening for independent restaurant owners, experts say the number of closures is easing compared to losses sustained earlier on in the recession. For more on this continue reading the following article from Blue MauMau.

The total number of restaurant establishments dropped in the fourth quarter of 2011 from a year earlier says a prominent restaurant researcher.  According to the NPD Group, total U.S. restaurant unit count dropped from 587,335 in the fall of 2010 to 580,852 in 2011. The drop was due to independent restaurant closings.

Independent restaurants declined by 6,863 units in 2011 and a total of 7,158 during the census period. Chain restaurant unit counts remained relatively stable, actually increasing by 380 units in 2011. Quick service restaurants open until the end of the quarter of September 30, 2011, declined by one percent, or 1801 units. Full service restaurant units, which includes casual dining, mid-scale, and fine dining restaurants, decreased by 4,682 units, a -2 percent decline from the Fall 2010 count.

"Restaurant unit losses were steep during the recession, but we are seeing that total unit losses are softening," says Greg Starzynski, director, product development-foodservice. "Independent restaurants, however, are still struggling."

NPD continually tracks consumer usage of commercial and non-commercial foodservice outlets. For year ending December 2011, visits to U.S. restaurants were flat from same time year-ago. Consumer spending at restaurants improved by one percent for year ending December 2011 compared to same time year-ago.

Definitions: How the NPD survey defines chains vs. independents

Chains include franchised networks, where a company grants a license to an independent small business owner to use the franchisor’s brand name. However, they are not synonymous since for purposes of this study, three stores that share the same name are calculated as a chain — be they company owned or franchised. NPD’s survey defines a restaurant chain simply as "three or more locations with the same outlet name." All outlets with only one or two unmatched locations are considered as independents. Operators are segmented according to system size as follows:

Independents  

1- 2 Units

Smallest Chains

3 – 49 units

Minor Chains    

50 – 99 Units

Midsize Chains

100 – 499 Units

Major Chains    

500+ Units


Filtering out the noise: Independents can accidentally be lumped as a chain

A generic restaurant chain is three or more locations with the same outlet name. While the majority of the time this rule works well, it can create what we refer to as a "generic chain." This means that restaurants have been assigned chain status because of a very common name such as "Pizza Place" or "China Inn" (The QSR Pizza and FSR Asian categories are especially prone to this type of assignment.) 

NPD uses discretion in assigning any new units to chains that are a "generic suspect". For all generic chains, we assign a new record only if it is intuitively

This article was republished with permission from Blue MauMau.

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