Fitch report says U.S. QSR restaurants to struggle in 2004 and beyond

Sept. 9, 2003

NEW YORK -- A report by Fitch Ratings says that favorable demographic trends will push the U.S. restaurant industry to above-average growth for the foreseeable future, but that the quick-service restaurant (QSR) segment will struggle.

According to a news release, the industry will benefit from sales driven by double-income households, whose members have less free time to prepare meals at home. Retiring baby boomers also are expected to have increased leisure time and disposable income to patronize full service and casual dining restaurants more frequently.

However, growth in these areas will not be enjoyed by QSR concepts, the report said.

"Although the larger QSRs are well-established, they have become dated in terms of their menus and restaurant design," said Gian-Carlo Laguzza, director of Fitch Ratings. "Repositioning them for today's consumer, who is attracted to a less cafeteria-style restaurant atmosphere and healthier food will not be easy. Fitch expects that QSRs will continue to underperform other segments of the restaurant industry, with low single-digit growth over the next several years."

The Fitch report said the QSR segment's ability to increase same-store sales depends upon how well it adapts to changing trends. McDonalds managed to boost sales recently with its premium salad promotion, while Yum! Brands, owner of Pizza Hut, KFC, Taco Bell, Long John Silver's Seafood and A&W All American Foods chains, has kept U.S. sales growth positive through multibranding.

Click here to view the full report, titled "Restaurant Industry; Changing Demographics Driving Growth."

Topics: Pizza Hut

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