Industry Analysis & Industry Trends
The Global Fast Food Restaurants industry has managed to grow over the past five years despite being battered by a weakened global economy and society's increasing awareness of the health risks associated with a diet high in fat, salt and sugar. The industry's attempts to respond to changes in consumer preferences have also supported revenue growth. Moreover, over the five years to 2020, IBISWorld forecasts that the industry will continue to surge forward. Global fast food restaurants will benefit as the global economy improves and consumers continue to spend on small luxuries, such as eating out. Rising international expansion of US-based fast food chains will continue to be the primary driver of industry growth as emerging economies increasingly demand more fast food options... read more
The industry's capital intensity is determined by the ratio of capital to labor costs. To calculate the ratio, wages and depreciation are used as proxies. In 2015, IBISWorld estimates that for every dollar spent on wages, about $0.17 is spent on the use and replacement of buildings and equipment, indicating that this industry has a medium level of capital intensity.
Fast food operators need to invest in cooking and storage equipment such as burners, grills, deep fryers, fridges and freezers. Capital outlays can be reduced by renting or leasing buildings and equipment. Most franchise agreements are arranged so the franchisee is not exposed to excessive capital costs, meaning the building they operate out of is rented and much of the equipment is leased... read more