Submarkets in the Restaurant Industry

by Jared Lewis

The restaurant industry is a multibillion dollar per year industry that spans the entire globe. Within the restaurant industry there are three primary submarkets that a restaurant owner can pursue business in. These submarkets are generally defined by the size of the market in which the restaurant operates. Knowing the level of competition within each market can help the small business owner plan to compete appropriately.


Independent restaurants make up a significant portion of the restaurant industry. This submarket consists of those restaurants owned by a sole proprietor or a small group of individuals. In the independent restaurant submarket, the owner may own one, two or a small handful of restaurants. These restaurants are generally free of any franchise tags and the owner is generally in competition with other local owners, although he may also compete with franchises that have similar cuisines.

Regional Restaurants

Regional restaurants are restaurant chains that have a regional influence and appeal. They generally consist of more than two restaurants within the chain and can consist of up to 50 restaurants or so. The regional restaurant chain doesn't have a national following, but it is usually found in more than one state. The restaurant may have a certain type of cuisine that appeals in a certain area of the country and may not have the same success or appeal in areas where regional tastes differ.

National Franchises

The large national franchise is the most recognizable type of restaurant throughout the country. In the case of some fast food franchises, their influence and market extends far beyond the borders of the United States to other countries as well. National franchises are those that generally have more than 50 restaurants, although they are not typically owned by one person or even a small group of restaurateurs. Instead, they are often publicly traded companies that are owned by their shareholders and have a corporate structure.

Emerging Markets

Some submarkets within the restaurant industry don't necessarily fit within the broad size categories that other restaurants fit within. Instead, they represent the niche submarkets that appeal to consumers based on changes in the marketplace. For instance, the emergence of the health food movement as an alternative to fast food and traditional cuisines has allowed some entrepreneurs to break into the restaurant field with little competition from existing restaurants. However, this does not necessarily keep existing restaurants out of the newly emerging submarkets either. Many fast food restaurants, for example, offer healthy alternatives to draw in the health food crowd that would otherwise avoid those types of establishments.

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