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A new golden age for fast food?

Girl holding a hamburger in her hands sitting in a car. Unhealthy eating concept - shallow depth of field

By Brian D. Buehler, Managing Partner, Triton Pacific Capital Partners

When it comes to American culture, one area that many people may think of is fast food. According to research conducted by the National Center for Health Statistics, 36.6% of American adults consume fast food daily. With so many people eating fast food, a resilient track record and a host of competitive advantages, quick service restaurants (“QSRs”) have become an interesting emerging investment opportunity.

Historically, the QSR industry has shown itself to be resilient, regardless of most economic conditions. As reported in research published by Stephens, in 2008, the first full year of the Great Recession, restaurant spend actually increased 3%; and, during the pandemic, the QSR segment outperformed the restaurant industry as a whole, according to Statista research. Statista also states that, despite the current inflationary market, QSR sales growth remains robust, up 14.4% year-over-year, as of June 2022, while sales growth at other restaurants has slowed sharply to 9.2% year-over-year.

Additionally, QSRs have several possible competitive advantages to help handle market downturns, including:

  • The ability to function with a smaller workforce – While other industries struggle to find employees, QSRs may utilize drive-thru lanes and other technology to serve more customers with fewer people.
  • E-commerce resistance – Fast food cannot be replaced by large online retailers.
  • Cost pass-through – With their relatively low-cost items, QSRs may quickly streamline menus and adjust prices more easily than other retailers.

During the pandemic, many busy Americans turned to fast food, and many continue to indulge in this pandemic-ingrained habit. According to Bloomberg, drive-thru orders increased 20% between February 2020 and February 2022. This growth and resiliency has even led to the industry publication, QSR, declaring this as a potential “golden era of fast food.”

While the fast-food industry does face challenges, such as dealing with headwinds like inflation and supply chain issues, it also offers many potential benefits. With the emergence of this new “golden era” and the sector’s historical track record, the QSR industry appears to be well-positioned to weather the turbulence of uncertain market conditions.

To learn more about why quick service restaurants may be an appetizing option for many individuals, read our full white paper. Download it here.

For more Triton Pacific news, please visit their directory page.