The US restaurant industry runs 606,091 establishments that employ 10.9 million people and take in $804.6 billion in annual receipts. That makes it one of the largest, most fragmented vertical markets in the economy — and a perennial target for software. So how big is the software opportunity sitting on top of it? Here's a bottom-up estimate built from public data, with every assumption on the table.
All figures are for NAICS 7225 (Restaurants and Other Eating Places), the narrowest credible definition of "restaurants" — it excludes bars, caterers, and mobile food services that sit elsewhere in food services.
How big is the market?
| Metric | Value | Source |
|---|---|---|
| Establishments | 606,091 | Census CBP 2022 |
| Firms | 450,319 | Census SUSB 2022 |
| Employees | 10,868,031 | Census CBP 2022 |
| Annual payroll | $253.5B | Census CBP 2022 |
| Annual receipts | $804.6B | Census SUSB 2022 |
Average receipts per firm come out to roughly $1.8M ($804.6B ÷ 450,319) — the signature of a market made of small, independent operators rather than a handful of giants.
A fragmented market with a heavy head
The firm-size distribution is the part that matters most for go-to-market. Group the SUSB 2022 firm counts and a clear barbell appears:
| Segment (by employees) | Firms | Receipts |
|---|---|---|
| 1–499 (SMB) | 448,639 | ~$552B |
| 500–4,999 (mid / regional chains) | 1,515 | ~$111B |
| 5,000+ (national chains) | 165 | $141.4B |
Two facts jump out. First, 99.6% of restaurant firms have fewer than 500 employees — this is overwhelmingly an SMB market, and 155,149 firms have fewer than five. Second, just 165 enterprise firms (the national chains) drive $141.4B, or about 17.6% of all receipts. A restaurant-software business has to decide which end of that barbell it's selling to: a high-volume, low-ACV SMB motion, or a concentrated enterprise motion against 165 named accounts.
Where the money goes
The IRS reports the corporate P&L composition for the broader food-services sector (NAICS 722, tax year 2022 — 310,215 corporate returns, $617.6B in receipts). Note this covers only corporate returns, which is why it's smaller than the all-firms SUSB receipts figure above. The deduction breakdown:
| Line item | Amount |
|---|---|
| Cost of goods sold | $244.6B |
| Salaries and wages | $121.2B |
| Other deductions | $86.6B |
| Rents paid | $39.1B |
| Taxes and licenses | $24.7B |
| Depreciation | $18.5B |
| Compensation of officers | $14.0B |
| Advertising | $9.5B |
A caveat that matters for software sizing: the IRS does not break out a "software" or "technology" line. Restaurant tech spend is folded into Other deductions ($86.6B), so you can't read it directly off the P&L. What you can read directly is advertising — $9.5B, or about $30,600 per corporate return per year. That's a real, sourced addressable line for the marketing, loyalty, and online-ordering layer of restaurant tech.
A bottom-up TAM for restaurant software
Because software isn't a reported line item, the honest way to size it is to model it as a share of receipts and show the sensitivity — rather than invent a per-location price. Applied to the $804.6B receipts base:
| Software spend as % of receipts | Implied TAM |
|---|---|
| 0.5% | $4.0B |
| 1.0% | $8.0B |
| 1.5% | $12.1B |
The % of receipts is the assumption you control — it's not a measured figure. A useful reality check on the range: a single public vendor, Toast, already books more revenue than the low end of this band (see below), which argues the addressable wallet — once you fold in payments and hardware — sits comfortably in the low tens of billions, with the pure-software slice in the mid-single-digit billions.
That's TAM. SAM narrows it to the segment a given product actually serves — say, cloud POS for the ~449,000 sub-500-employee firms, or enterprise platforms for the 165 national chains. SOM is the share you can win in a few years given reach and competition. Each step down should be stated, not assumed away.
The public comparable: Toast
Toast (NYSE: TOST) is the clearest public read on restaurant technology. Its revenue trajectory from SEC 10-K filings:
| Fiscal year | Revenue | YoY |
|---|---|---|
| FY2021 | $665M | — |
| FY2022 | $2.73B | +310.7% |
| FY2023 | $2.73B | 0.0% |
| FY2024 | $3.87B | +41.5% |
| FY2025 | $6.15B | +59.2% |
One important nuance: most of Toast's reported revenue is payment processing, not subscription software — so $6.15B is not "software TAM captured." But it does prove two things: a single restaurant-tech vendor can scale into the multiple billions, and the combined software-plus-fintech wallet on top of a $804.6B industry is large and still growing fast.
Caveats and assumptions
- Definition: NAICS 7225 only; bars, caterers, and food trucks are excluded. Widen to all of NAICS 722 and the receipts base grows.
- Data years: Census CBP and SUSB are 2022; IRS SOI is tax year 2022; OEWS wages are May 2024; Toast figures are from FY2021–FY2025 10-Ks. The market has grown nominally since 2022, so the receipts base is conservative.
- Universe mismatch: SUSB counts all firms; the IRS P&L covers only corporate returns — don't add them together.
- The software TAM is a model, not a measurement. The receipts base is real; the percentage applied to it is an explicit lever, not data.
The bottom line
The US restaurant market is enormous and fragmented — 606,091 establishments, $804.6B in receipts, and a long tail of small operators with 165 national chains on the other end. The software opportunity layered on top is plausibly $4–12B in pure software (0.5–1.5% of receipts) and well into the tens of billions once payments and hardware are included — a range Toast's $6.15B FY2025 revenue helps anchor. The exact number depends on assumptions you should always state out loud, which is the whole point of a defensible TAM.