According to preliminary data from a UIPOS survey, in August 2024, the US catering industry added 29,900 net jobs, marking the largest monthly increase in employment since August 2023. It is indeed good news, which means that the US catering industry is beginning to show signs of recovery. But does the increase in jobs mean that the situation in the US catering industry is already very good? It gives pause for thought.
The UIPOS survey revealed that by mid-2024, over 15,000 restaurants across the US had closed, with profits in the Los Angeles catering sector by 70%. In New York City, small and medium-sized catering businesses reported losses exceeding $500 million. The fast food sector is also grappling with a “wave of closures.” Brands like Subway saw a reduction in store numbers during the first half of the year, and overall sales continued to decline. These figures highlight the significant challenges the US catering industry still faces in 2024.
However, despite these negative trends, there are still many companies that remain in business as usual in this difficult environment and have achieved revenue growth. McDonald’s, for instance, saw its total revenue in Q2 2024 rise by 5% year-on-year, with net profits up by 8%. Starbucks’ North American market revenue increased by 7%, while Chipotle generated nearly $2 billion in revenue during the first half of 2024, a 12% year-on-year increase, with core profits rising by 10%.
Although the epidemic is over and the US market has begun to enter a recovery period, the recovery is very slow. To survive, many catering businesses have resorted to price wars. While this strategy may attract customers and boost transactions in the short term, over time, merchants may fall into a dilemma of not being able to retain customers without price cuts and reduced profits after price cuts.
Moreover, with the sluggish employment environment, many professionals from the medical, technology, and education sectors have turned to entrepreneurship, with the catering industry – which has relatively low initial investment costs – being their first choice. Due to the lack of experience in catering operations, these people often choose to join chain stores, but can choosing chain stores guarantee stable operations? Obviously not. UIPOS conducted a survey on the closure rate of franchised restaurants in the United States and found that the closure rate of franchised restaurants in the United States has increased significantly after the epidemic. As of August 2024, the number of franchised restaurants in the United States after the epidemic is about 25,000 to 30,000, and the closure rate is about 25% to 30%.
In conclusion, the American catering industry still face stiff competition and considerable challenges. To cut costs and improve efficiency, restaurants need to not only enhance their unique offerings but also invest in equipment that can improve operational efficiency, such as cost-effective POS hardware. UIPOS specialises in providing affordable POS hardware solutions. If you need assistance, please contact us.