If you take a look at the US/Canadian restaurant industry based on brands by location counts, it sort of looks like a push pin. It’s broad at the base and narrows to a point as you move up the location counts. Let me break this down and explain what this means for go-to-market strategies.
When we consider restaurant brands (not franchisee groups), it becomes clear that single-unit operators dominate the market. There are 850,000 distinct restaurant brands in the US/Canada (not locations), and out of that number, 845,234 are single-unit operators (according to restaurantdata.com). This means that 99.4% of the restaurant brands in the US/Canada are independents. So, it’s easy to see why new restaurant tech companies often start by targeting single-location venues.
Now, let’s explore the market further by looking at multi-unit brands based on their location counts:
- 2-4 locations: 903 brands
- 5-9 locations: 1,194 brands
- 10-19 locations: 1,064 brands
- 20-49 locations: 958 brands
- 50-99 locations: 362 brands
- 100-999 locations: 399 brands
- 1,000+ locations: 64 brands
Adding up all these multi-unit brands, we get a total of 4,944 brands to pursue in the market. This is a much smaller number compared to the 845,000 single-unit operators.
So, what does this mean for restaurant tech companies? Most are targeting these 5,000 multi-unit brands, and they aren’t small or medium players. With only 64 brands having 1,000 locations or more, it’s clear that companies like OLO, PAR, Qu, TRAY, Checkmate, and other enterprise players are moving down market. How far down? They’re going after brands with 3 units or more.
This means many companies are chasing a limited number of brands in the multi-unit space.
Unless you have a distinct and highly valuable product, you’ll face a lot of competition for attention among a limited number of brands. You’ll also encounter downward pricing pressures due to this competition. For large-location-count brands, it might take many years to even get a “chance at bat” with some products like POS.
Patience, persistence, and delivering an exceptional product over several years is how you’ll build a portfolio of brands. However, selling to multi-units is a very different “game.” We’ll explore how and why in a series of articles to follow.