The restaurant industry is very competitive. It is an industry where profit margins are perceived as high, but overheads and lack of effective stock control may result in a profit turning into a loss. The place of restaurants in society may also be seen as one of the industries that will suffer when an economy suffers due to the elasticity and the high level of competitors and substitutes. Brand name and reputation are key factors for national chain in seeking to gain and maintain customers, one such restaurant chain that is away of this is P F Chang, a Chinese restaurant that is also quoted on the NASDAQ stock exchange.
In general terms the restaurant industry in the US may be seen as mature. There is a high level of turnover of companies, with many single restaurants forming and folding. 2001 was a difficult year for the restaurant industry as a whole. The economy was suffering, and the events of September the 11th left many people feeling reluctant to go out and enjoy themselves. These two events created problems in the restaurant trade. Restaurants closer to the twin towers were very badly effected, changing from bustling centres of activity into deserted buildings. This was not repeated to the same extent nationally, but there was a downturn. However, in 2002 things started to pickup. There are a total of roughly 870,000 in the United States, and with sales forecast of $426.1 billion this shows a 4.5% increase on 2002 (National Restaurant Association, 2003). On average each American household will spend a total of $2,116 per year of food eaten outside the house, this amounts to $846 per capita. Therefore this can be seen as a wide reaching and important industry. .
The industry may be divided into two main segments, full service, which is the traditional style restaurant with waiters or waitresses, and partial service where customers serve themselves. These are aimed at different markets with different aims.