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The Kelsey Report® Advisory

Yellow Pages Vertical Focus: Restaurants
Bobbi Loy-Luster , 10/28/2002

Analyst: Bobbi Loy-Luster

Issue: Publishers Search for Growth Opportunities in Key Category

News: Contrary to fears that the restaurant and food-service industry would tank in the wake of September 11, the category has shown remarkable strength. The food-service industry generated almost US$400 billion in 2001 revenue, and the National Restaurant Association projects 2002 growth of about 4 percent to nearly US$410 billion. Much of the growth is being driven by chains such as P.F. Chang's China Bistro, Applebee's, Chili's and Outback Steakhouse. These national chains have taken advantage of economies of scale, enabling them to lower food prices while meeting customer demands with a variety of new take-out services.

The challenge for the Yellow Pages industry is that these chain restaurants have generally bypassed the Yellow Pages and turned instead to national television and radio advertising to fuel their growth.

Restaurants remains the top-referenced heading in both printed and online Yellow Pages. Still, declining advertising expenditures in the print Restaurants heading warrants an examination of why this decline is occurring, how publishers are combating it, and how online may be playing a bigger role in this category than originally thought.

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