Limited Service Restaurant Industry: Analysis & Trends

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  • 0:03 Limited Service…
  • 0:25 What Is Limited Service?
  • 1:33 Limited Service Analysis
  • 2:59 Limited Service Trends
  • 5:40 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

The limited service restaurant industry is poised for future growth due to a renewed focus on consumers and high-quality ingredients. In this lesson, you'll learn more about this industry and future trends.

Limited Service Restaurant Industry

You probably didn't think to call it a limited service restaurant, but when was the last time you heard ''I'll take your order when you're ready,'' over the loudspeaker of a drive-thru window? Surprise! You were at one type of limited service restaurant when you placed that order. Let's learn a little more about the limited service industry and where it's headed.

What Is Limited Service?

The limited service restaurant industry is probably familiar to you and you don't even realize it; more than half of the restaurant market share in the United States is made up of limited service establishments. Limited service restaurants are marked by a couple of characteristics:

  1. Patrons pay for food selections upfront.
  2. Facilities typically boast a drive-thru.
  3. Food varies from breakfast offerings to late-night meals.
  4. Items are inexpensive compared to casual or family dining.

Breaking it down even further, limited service restaurants can be divided into sub-categories including quick service (such as fast food chains like McDonald's), cafés, and fast casual establishments like Chipotle Mexican Grill or Panera Bread. Quick service restaurants are typically the cheaper of the two sub-categories. Fast casual restaurants serve food quickly as well, but the price tag is generally slightly higher. The limited service restaurant industry also includes cafés (Dunkin' Donuts or Starbucks) and pizza restaurants (Papa John's and Pizza Hut).

Limited Service Analysis

Years ago, full service restaurants like Applebee's were dominating the restaurant scene, but the tide seems to be shifting. Today, more than 50 percent of the commercial food service industry is limited service restaurants. That growth is attributed to the surge in popularity of fast casual restaurants, which continue to gain market share, and fast food restaurants reinventing themselves in both menu offerings and appearance to be able to compete with sit-down establishments.

There are many examples of restaurants changing their image, including McDonald's. Many renovations at McDonald's feature more casual, living-room-type furniture. The menu features high-end coffee beverages and more sophisticated salads and organic options.

Food and beverage sales at limited service restaurants were expected to top $223 billion in the United States in 2016. The growth experienced by these restaurants outperformed full service restaurants by almost two percent, with the most significant driver of growth coming from the fast casual segment. Part of this growth is being driven by consumer demands for fresher and more high-quality products. These foods are typically more inexpensive at limited service restaurants than their sit-down dining counterparts. After a few years of declining popularity and little growth, the industry is finally seeing somewhat of an uptick in consumer spending.

Limited Service Trends

Successful restaurants and chains in today's economy are doing so through some calculated risks and trends taking over the industry. Here are a few of the more popular ways that limited service restaurants are gaining ground.

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