by Michele Ardoni, March 12, 2025
The chain restaurant sector in Italy is currently experiencing a period of reflection. Despite official data indicating consistent YOY growth for many operators, these numbers must be carefully analyzed and contextualized. A broader study across key European markets is necessary for a better understanding.
A necessary premise: Operators are obviously well aware of their own companies’ actual performance, as well as that of their competitors. Therefore, the data shared with the media or at industry events often reflect only some financial dynamics — not all.
To identify solutions capable of reversing negative trends, it’s essential to analyze the specific dynamics of each component of the system. This approach allows for innovative strategies that can offer companies new opportunities or improve channel performance.
The evident stagnation in growth of foodservice concepts that had previously set the trend over the last four years — paired with a halt in expansion plans and a mere consolidation of territorial presence — shows a lack of new concepts able to “excite” the target audience and become new trendsetters.
This opens up opportunities for leading international brands, mostly North American, that can sustain growth through various tools, despite the drop in OOH (Out-of-Home) consumption across Europe.
Does this mean Italian chains have less and less room to grow?
Not necessarily. The challenges are the same for everyone. Let’s look at a few key points:
The Real Cost Composition of a QSR Product
Raw material increases have a major impact on both menu composition and financial statements. Brands are taking different approaches — from reducing ingredient quality (for EBITDA’s sake and in hopes of attracting investor interest), to raising menu prices, or more commonly, innovating with new food offerings based on more affordable ingredients — often plant-based proteins.
The rise in raw material costs is driven by multiple factors, many of which are linked to the Russia-Ukraine conflict, significantly affecting energy and many animal-based proteins.
Raw Material Cost Increases in Europe (2022–2025)
- Average increase: +40%
- Sunflower oil: +62%
- Wheat/flour: +48%
- Packaging: +18% (due to the EU SUP Directive promoting sustainable — but pricier — materials)
Let’s apply this to a hypothetical QSR burger menu (YOY comparison):
2022 Scenario (VAT included)
- Retail price: €10.00
- Price without VAT (10%): €9.09
- Food cost (25%): €2.27
- Operating costs: €5.00
- Operating margin: €1.82 (20%)
2025 Scenario
- Raw material increase: +38% (EU weighted avg)
- New food cost: €3.13
- Break-even price (without VAT): €12.52
- Retail price with VAT (10%): €13.77 (+37.7% vs 2022)
Source: Eurostat Inflation Tool
These projected values show a realistic picture if full supply chain increases and operational costs are applied to end-consumer pricing.
So what happens when companies promote seemingly positive growth stats?
Using median data, we now compare estimated market growth with inflation-adjusted figures.
QSR Turnover Comparison: Nominal vs Real (2022–2025)
- +38% prices → 55% of nominal growth
- +15% new store openings → 35%
- +2.5% organic growth (same-store sales)
Source: Goldman Sachs, European QSR Report 2024
This means most of the revenue growth is illusory. Real organic growth only accounts for +2.5%, highlighting stagnant demand. The sector is relying on price increases and physical expansion to generate revenue.
Case Study: McDonald’s Europe
No one is immune from increases in food and operational costs.
- 2023 Food cost: 25% (Source: McDonald’s Annual Report 2023)
- Price increase 2022–2025: +28% (e.g. Big Meal France: from €9.00 to €11.50)
- Revenue impact in EU: +12% from price hikes, +8% from new stores (320 per year), +3% organic