Food services and drinking places, annual, 2023

Food services and drinking places report all-time high in operating revenue in 2023, while profit margins get squeezed

Operating revenue for the food services and drinking places subsector rose 12.5% to $95.0 billion in 2023. Revenue for the subsector was over one-fifth (+21.2%) higher compared with 2019, before the COVID-19 pandemic.

Sales of food and non-alcoholic beverages accounted for 86.6% of total sales in 2023, with alcoholic beverages making up 10.5% and other sales accounting for the final 2.8%.

Operating expenses for the food services and drinking places subsector rose 13.3% year over year to $91.6 billion in 2023, pulling the operating profit margin down to 3.6%. This represents the lowest profit margin since 2003 (3.2%), highlighting the growing impact of cost pressures on the subsector over the past few years. The higher costs have resulted in a 25.0% increase in prices of food purchased from restaurants as of December 2023, compared with December 2019. This is notably higher than the all-items price increase of 16.1% over the same period.

In 2023, the cost of goods sold continued to be the largest operating expense for the food services and drinking places subsector, accounting for 35.7% of the total. Salaries, wages, commissions and benefits (33.4%) were the second-largest expense, followed by rental and leasing costs (8.3%).