Food Services and Drinking Places (U.S.) — NAICS 722

A rollup primer for a general investing audience. Relevant to both public-market and private investors.

NAICS 2022 code 722. NAICS — the North American Industry Classification System — is the nested standard the U.S. government uses to sort businesses. This page covers the three-digit subsector 722, Food Services and Drinking Places, which sits under sector 72 (Accommodation and Food Services) — 722 is the eating-and-drinking-out half of that sector, everything except lodging (721). It rolls up three four-digit children: 7225 (restaurants and other eating places), 7223 (special food services — caterers, contract/cafeteria operators, and food trucks), and 7224 (drinking places — bars whose main business is alcohol). Bracketed numbers like [1] point to the numbered Sources list at the end. Full company-level detail lives in the three child primers; this page rolls them up and, above all, contrasts them.

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1. Overview

NAICS 722 is one of the largest consumer sectors in the United States: roughly $900 billion in receipts, about 714,500 employer locations, and 12.6 million paid workers — close to one in every ten private-sector jobs.[1][2] It is the business of feeding and pouring for Americans away from home, and it rests on one of the most durable habits in the economy: food-away-from-home now takes about 59% of the U.S. food dollar (roughly $1.5 trillion a year in the broadest definition).[13]

For an investor, the single most useful fact about this level is that it is not one market — it is three very unlike businesses stacked under one code, and one of them (restaurants) is nearly the whole thing.

• Restaurants and other eating places (7225) — every sit-down dining room, drive-thru, coffee counter, and buffet — is about 89% of the subsector's receipts and 90% of its jobs. Mature, modestly growing, fragmented in ownership but dominated by big brands.
• Special food services (7223) — contract/cafeteria feeding, caterers, and food trucks — is a small ~7% of receipts, but it contains the only genuine oligopoly and the only clean public pure-plays in all of 722 (the contract caterers).
• Drinking places (7224) — bars, taverns, pubs, nightclubs, taprooms — is the smallest child at ~4% of receipts, the most fragmented, and the only one in secular volume decline.

The distinctive thing about 722 as a level is the contrast across those three: how big each is, which way it is growing, who owns it, and how (or whether) you can buy it in public markets. The subsector's near-zero headline concentration — a four-firm share of just 5.7% — is inherited almost entirely from its giant, atomized restaurant child, and it hides the one pocket of real concentration inside. The rest of this page is built around that contrast.

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2. What's inside — and how the three children differ

The comparison below is the heart of this page. Read it top to bottom before the section-by-section detail; every later section elaborates one of these rows. Children are ordered largest-to-smallest by receipts.

(CR4 / HHI: CR4 is the combined revenue share of the four largest firms; HHI — the Herfindahl-Hirschman Index — is a standard 0-to-10,000 measure of how concentrated an industry's revenue is. Federal antitrust agencies treat 1,500 as the "moderately concentrated" line. PE = private equity.)

The one-sentence takeaway: 722 is ~89% restaurants by money and jobs, so the subsector's aggregate numbers are essentially the restaurant story — but the two small siblings carry the exceptions that matter to an investor: special food services holds the only oligopoly and the only clean public pure-plays (contract caterers), while drinking places is the only child shrinking in real terms. Where the dollars and most jobs sit (restaurants), where the only concentration and cleanest pure-plays sit (contractors, inside 7223), and where the structural decline sits (bars) are three different places in this group.

Each child page carries the detail: 7225 (restaurants) and 7224 (drinking places) are each single-child "pass-through" groups that equal their one industry beneath them, while 7223 (special food services) splits into three sub-industries (contractors, caterers, mobile food) whose own contrast is covered in that child's primer.

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3. Size (this level's federal figures)

These are our ground-truth federal statistics for NAICS 722. Note the mixed vintages: receipts, firm counts, and concentration are the 2022 Economic Census (EC); establishments, employment, and payroll are 2023 County Business Patterns (CBP) — the Census Bureau's annual count of employer businesses. Treat this as a profile, not a single-year income statement, and do not divide across the two datasets to manufacture a sales-per-location or margin figure.

These totals reconcile cleanly with the three children. Establishments and employment sum exactly to the children (55,221 + 40,835 + 618,476 = 714,532; and the jobs likewise); receipts and payroll match within rounding. Firm counts are not strictly additive — a company operating in more than one industry is counted in each child but once here — so the children sum slightly above this level's 517,626; don't read that as an error.

Implied from the above: about $1.74 million average receipts per firm, roughly 18 paid employees per establishment, and about $24,700 average annual pay per employee.[1][2] Treat all three as blended averages that hide enormous spread — the pay figure in particular excludes tips, a large part of server and bartender take-home, and the per-firm figure blends a handful of global operators with hundreds of thousands of single-location small businesses.

Read the concentration figures carefully — the blend hides the story. A subsector HHI of 13.1 and a CR4 of 5.7% make 722 look like one of the most competitive industries in the economy. That is true of ~96% of it, but it is an average. The near-zero reading is set almost entirely by the giant, atomized restaurant child (7225, HHI 11.3) and the tiny bar child (7224, HHI ~3). Buried inside is one moderately concentrated oligopoly — contract caterers, whose slice of 7223 runs to an HHI around 1,300 and a four-firm share above 60% — but it is so small in the whole (~5% of the subsector's receipts) that it barely moves the aggregate. 722 is a near-perfectly-competitive sector with one concentrated pocket you cannot see in the headline number.

Undercount caveat — the $900.6 billion is a floor, and each child understates for its own reason.

• Restaurants (7225) are captured well because almost all have payroll; the gap is the smallest no-employee operators (a one-person espresso cart, a self-run boba kiosk) in the separate Nonemployer Statistics — more outlets than counted, but little missed revenue.[3]
• Special food services (7223) understate the most: an enormous amount of institutional dining is self-operated in-house by schools, hospitals, and companies and tallied under education, health care, or manufacturing — never appearing here — plus non-employer caterers and a food-truck count that treats the commissary, not each truck, as the establishment.[4]
• Drinking places (7224) miss the nonemployer tail of owner-run bars, and — a boundary effect — a great deal of on-premise drinking happens at chain restaurants, hotels, arenas, and casinos that are counted elsewhere, not in 7224.[5]

Two further points on scale. The receipts figure is 2022 and predates recent menu-price inflation, so current sales are higher; for scale, the National Restaurant Association (NRA) estimates the entire U.S. restaurant-and-foodservice industry — a broader definition folding in bars, caterers, contract foodservice, and food trucks — reached about $1.5 trillion in 2025.[6] And the federal file does not publish, at this level, industry-wide margins, growth rates, profit, same-store sales, or a public/private ownership split — so we do not state them. Company figures in later sections come from filings and trade data, labeled as such; no confidentiality-suppressed value is used anywhere on this page.

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4. Investable universe (where value concentrates across the children)

For a public-market investor, 722's investable core sits in two of the three children, through two very different doors, while the third is almost entirely closed:

• Restaurants (7225) — the deepest public menu. This is where most listed food-services equity lives: franchise-royalty compounders (asset-light brand owners collecting a royalty on franchisees' sales, concentrated in fast food/fast casual), company-operated growth chains, about a dozen large full-service operators, and a short snack-and-beverage list led by one coffee blue-chip. But two rules govern: the biggest brand is often private (Chick-fil-A, In-N-Out, Raising Cane's, Panera cannot be bought on any exchange), and where franchising dominates, the public "company" is the brand owner collecting royalties, not the restaurants.
• Special food services (7223) — the only clean pure-plays in 722, but mostly abroad. The investable core is one sub-industry, contract caterers: Compass Group (London-listed, the largest and highest-quality operator), Aramark (New York — the only large-cap pure-play listed in the U.S.), Sodexo (Paris), and small-cap Healthcare Services Group in U.S. healthcare/senior-living dining. Caterers and food trucks have no public pure-play of scale — public exposure to them is only indirect, through those diversified operators and "picks-and-shovels" suppliers.
• Drinking places (7224) — effectively no public door. There is no large, pure-play public "bar company." The closest listed name is a niche small-cap adult-nightclub operator (RCI Hospitality, ticker RICK); otherwise, exposure is indirect through bar-forward chains reported as restaurants and the "eatertainment" trade (e.g., Dave & Buster's, Bowlero). The real industry is private.

The takeaway at this level: public dollars have effectively two doors — the broad restaurant menu (7225) and the narrow contract-catering pure-plays (inside 7223) — and there is no clean pure-play index for the whole subsector. Private dollars have doors into all three. Ticker-, ADR-, and company-level maps are in each child primer's investable-universe section. (ADR = American Depositary Receipt, a U.S.-traded proxy for a foreign share, relevant to the London/Paris-listed caterers.)

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5. How the money works

All three children share a family resemblance — thin-margin, labor-intensive food-and-drink businesses run on prime cost (food + labor combined, the number that matters more than store counts) — but they earn in structurally different ways:

• Restaurants (7225) run on one equation — guest visits × average check = sales — plus takeout, delivery, and catering. The economics split on operator vs. franchisor: a company-operated unit keeps the whole sales dollar but bears every cost (thin single-digit margins), while a franchisor licenses its brand and collects a high-margin ~4–6% royalty on franchisees' sales. The most-watched metric is same-store (comparable) sales, split into traffic vs. check.
• Special food services (7223) earn on contracts, events, and vehicles. Contractors run on procurement scale and contract mechanics — profit-and-loss contracts (operator keeps dining revenue, bears costs) vs. management-fee (cost-plus) contracts — with mid-single-digit margins but high returns on capital because the client owns the kitchen. Caterers earn per-event (helped by prepaid deposits — negative working capital); food trucks earn per-vehicle, closest to a tiny restaurant paying almost no rent.
• Drinking places (7224) earn on the spread between what a drink costs to pour and what a customer pays. Well-run bars keep "pour cost" around 18–24% for alcohol gross margins near 70–80%, but heavy fixed costs — labor, rent, licensing, insurance — leave a typical bar netting only ~5–6% of revenue.

Common thread for diligence across all three: watch prime cost, labor, and utilization, and — where relevant — royalty mix and contract type, not headline system sales. The most reliable organized profit in the fragmented corners is made one layer up: franchisors on royalties, demand platforms on booking fees, commissaries and landlords on rent, distributors on the underlying goods. Valuation multiples and unit-economics detail are reserved for the child primers and the how-to-invest section below.

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6. Demand drivers

One durable habit underpins the whole subsector: Americans eating and drinking food and beverages someone else prepared. Food-away-from-home spending reached roughly $1.52 trillion in 2024, about 59% of the U.S. food dollar — a share that has trended up for decades.[13] On top of that base sit several cross-cutting forces: discretionary spending and the business cycle (all three trade down in downturns), value perception, convenience and digital (mobile order-ahead, delivery, drive-thru), food and labor inflation (a margin headwind but a driver of reported revenue through pass-through pricing), and return-to-office (RTO) attendance (more people in buildings means more institutional feeding, catered lunches, and lunchtime bar and restaurant traffic).

Where the children diverge:

• Restaurants (7225) — a mature demand base pulled in different directions by segment: snack-and-beverage growing, a limited-service value war pressuring margins, full-service cyclical, buffets shrinking; plus an emerging GLP-1 weight-loss-drug headwind to per-person consumption.[6]
• Special food services (7223) — rides a long structural tailwind (institutions converting from self-operated kitchens to specialists) layered on an aging population (more healthcare and senior-living dining) and RTO; it is the group's clearest structural growth story.
• Drinking places (7224) — faces a secular decline in drinking. The share of U.S. adults who drink at all fell to a record-low 54% in 2025 (Gallup), and IWSR reported U.S. beverage-alcohol volume down 5% in 2025, with cannabis and non-alcoholic alternatives adding substitution pressure.[7][8] Bars must now earn traffic through experience, food, and credible zero-proof menus rather than ride rising consumption.

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7. Regulation

As industries, all three children are lightly regulated in structure but heavily exposed to labor and food-safety rules that move costs — mostly at state and local level with federal overlays. A common federal spine runs under the whole subsector:

• Food safety — the FDA (Food and Drug Administration) model Food Code, plus HACCP (Hazard Analysis and Critical Control Points) plans and local health inspections.[9]
• Labor — the FLSA (Fair Labor Standards Act), including the tip credit (a $7.25 federal floor, a $2.13 tipped cash wage) and the recurring tip / service-charge and worker-classification questions, on top of state fast-food wage mandates such as California's $20/hour rule for large chains.[10]
• Franchising — the FTC (Federal Trade Commission) Franchise Rule and its Franchise Disclosure Document (FDD), wherever a brand is franchised.[14]

On top of that spine, each child carries its own layer:

• Restaurants (7225): calorie-posting for 20-plus-location chains; the tip credit and franchise rules bite hardest here given the volume of tipped labor and franchised units.
• Special food services (7223): child-nutrition procurement (USDA — U.S. Department of Agriculture — school-meal rules), the federal Service Contract Act on government sites, and — for food trucks — the most locally regulated layer of all: mobile-vending permits, commissary agreements, and politically charged proximity restrictions.
• Drinking places (7224): alcohol is among the most heavily regulated legal consumer products in the U.S. — the federal TTB (Alcohol and Tobacco Tax and Trade Bureau), the state three-tier system and Alcoholic Beverage Control (ABC) boards, quota-limited local liquor licenses (a scarce, tradeable asset), and dram-shop liability (laws that can make a bar liable for harm caused by an over-served patron).[11]

For the concentrated top (contractors), regulation is largely a barrier to entry and a cost that protects incumbents; for the fragmented base (independent restaurants, caterers, trucks, bars) it is a fixed setup cost every operator clears — part of why those segments stay fragmented rather than a moat.

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8. Consolidation

Measured by firm, 722 looks almost perfectly competitive — a four-firm share of 5.7% and an HHI of 13.1.[1] That reading is honest for the subsector as a whole but conceals a picture that is really "fragmented ownership, concentrated brands" in restaurants and genuinely bimodal across the children:

• Restaurants (7225): the atomized independent base and franchising — which splits big brands into thousands of separate franchisee "firms" — keep measured concentration low even though a handful of brands are enormous. Consolidation runs through private-equity roll-ups of franchisors (buying capital-light royalty streams), brand rollups and take-privates in full-service, and consolidation-by-attrition in buffets.
• Special food services (7223): this is where the only real operator-level consolidation in 722 lives — the contract-catering oligopoly grows by converting self-operated accounts and acquiring regional operators (Compass Group is the most acquisitive). Caterers and food trucks show essentially none; what consolidation exists there happens one layer up, in franchising and demand platforms.
• Drinking places (7224): durably atomized (CR50 just 7.5%); consolidation happens only at the edges — multi-brand nightlife groups and the fast-growing "eatertainment" format.

So the competitive picture is a giant, atomized restaurant base with concentrated brands on top, one genuine acquisition-led oligopoly (contractors) tucked inside a small child, and a durably fragmented bar base — three different consolidation regimes that the single subsector HHI flattens into one near-zero number.

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9. Risks

Shared across the group: thin (mid-single-digit) margins acutely exposed to food, energy, and labor inflation (price increases to customers lag cost spikes); chronic labor shortages and wage inflation against a labor-heavy model; consumer cyclicality and traffic erosion after years of price increases; food-safety and reputation risk; and a demonstrated tail risk — the 2020 pandemic shut all three off almost overnight. Data opacity is real too: much of the subsector is private, and employer-only federal statistics miss the large non-employer and self-operated segments (Section 3).

Where the risk profiles split:

• Restaurants (7225): a margin-pressuring value war in limited-service, punishing third-party delivery economics, the GLP-1 volume headwind, the structural decline of buffets, and deal/leverage risk in PE roll-ups.
• Special food services (7223): the most defensive day-to-day, but structurally exposed to a permanent shift to remote work (workplace dining is the contractors' largest end-market) and to rebid margin give-ups; the cleanest pure-plays are foreign-listed, adding currency and liquidity considerations for U.S. investors.
• Drinking places (7224): the secular decline in drinking is the biggest structural risk in the whole subsector; add high fixed costs and a high failure rate, license-loss and dram-shop lawsuit exposure, and rising liquor-liability insurance.

The most dangerous combination anywhere in 722 is the same: falling traffic alongside fixed rent, debt, and labor commitments. Full risk registers are in each child primer's risk section.

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10. How to invest, and the outlook

For a public-market investor, 722 is really two trades plus one gap. There is no clean pure-play index for the subsector, and broad consumer-discretionary or restaurant exchange-traded funds (ETFs) give only diluted exposure, so a public position is built stock by stock through two doors:

1. Restaurants (7225) — the broad menu. Franchise-royalty compounders (concentrated in limited-service) for steadier, capital-light exposure; company-operated growth chains for higher growth and volatility; large full-service operators for scale and dividends; a short snack-and-beverage list for the beverage story; essentially nothing clean in buffets. Judge on same-store sales split by traffic vs. price, average unit volume, restaurant-level margins, new-unit returns, and franchise mix.
2. Contract catering (inside 7223) — the pure-plays. Compass Group (CPG.L / CMPGY ADR), Aramark (ARMK), Sodexo (SW.PA / SDXAY ADR), and small-cap Healthcare Services Group (HCSG) — best judged on contract-foodservice metrics (client retention, net new business, organic growth, cost pass-through), not restaurant metrics, and remembering that the cleanest names list abroad.

The gap: drinking places (7224) offer no clean public pure-play — the closest is the niche small-cap RCI Hospitality (RICK); bar exposure otherwise comes indirectly through bar-forward chains and the "experience" trade (Dave & Buster's, Bowlero).

For a private investor, the subsector is far richer, and access widens as the businesses get smaller. Own or buy an independent restaurant, caterer, food truck, or bar; franchise an established brand (read the FDD first); back a private-equity roll-up or lend via private credit; or own the scarce assets underneath — real estate, liquor licenses, commissaries, concession rights. Private drinking places trade cheaply (roughly 3–5× EBITDA — earnings before interest, taxes, depreciation, and amortization — reflecting volatile, location-dependent cash flows). Underwrite the individual location's sustainable cash flow — four-wall for a restaurant, route-level for a truck, venue-level for a bar — not headline system sales or federal totals. (SBA — U.S. Small Business Administration — financing is the common on-ramp for buying a single established operator.)

Outlook. The subsector's center of gravity — restaurants — sets a base case of modest real growth on a durable, enormous demand base (~59% of the food dollar), with cautious value-seeking consumers and persistent cost pressure, its own segments pulling in different directions. Around that center: special food services grows fastest at the top (a long outsourcing runway plus an aging-population tailwind, steady Compass-led consolidation, with RTO durability the swing factor), while drinking places is the structural laggard (a maturing-to-declining market where winners are experience-led and court non-drinkers). Net: a ~$900 billion (2022; larger now), cash-generative, essential consumer subsector whose growth is modest and uneven and whose economics are unforgiving — and whose near-zero headline concentration conveniently hides both its one real oligopoly (contract caterers) and its clearest structural decliner (bars). Forward views here are judgments, not guarantees.

For the complete, company-level treatment of each business, see the child primers: 7225 (restaurants and other eating places), 7223 (special food services), and 7224 (drinking places).

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Sources

Synthesized from our ground-truth federal statistics for NAICS 722 and the three child primers (7225, 7223, 7224) and the sources they cite. No confidentiality-suppressed value is used.

1. U.S. Census Bureau, 2022 Economic Census — Concentration of Largest Firms, NAICS 722 Food Services and Drinking Places (receipts $900.618B; 517,626 firms; CR4 5.7%, CR8 8.5%, CR20 12.9%, CR50 16.5%; HHI 13.1). Ground-truth stats file stats-722.md. https://data.census.gov/table/ECNSIZE2022.EC2200SIZECONCEN
2. U.S. Census Bureau, County Business Patterns 2023 — NAICS 722 (714,532 establishments; 12,644,827 employees; $312.263B annual payroll; $74.116B Q1 payroll). Ground-truth stats file stats-722.md. https://www.census.gov/programs-surveys/cbp.html
3. Histometrics child primer — NAICS 7225 Restaurants and Other Eating Places (receipts $800.1B; structure, franchising, segment mix, investable universe). See primer-7225-DRAFT.md.
4. Histometrics child primer — NAICS 7223 Special Food Services (receipts $66.8B; contractor oligopoly, catering & food-truck fragmentation, self-op undercount, contract mechanics). See primer-7223-DRAFT.md.
5. Histometrics child primer — NAICS 7224 Drinking Places (receipts $33.7B; bar economics, secular drinking decline, alcohol regulation, private-first ownership). See primer-7224-DRAFT.md.
6. National Restaurant Association, 2026 State of the Restaurant Industry / 2025 outlook (~$1.5T total foodservice; traffic declines; value priority; GLP-1 headwind). https://restaurant.org/research-and-media/research/research-reports/state-of-the-industry/
7. Gallup, "U.S. Drinking Rate at New Low as Alcohol Concerns Surge," 2025. https://news.gallup.com/poll/693362/drinking-rate-new-low-alcohol-concerns-surge.aspx
8. IWSR, "U.S. Beverage Alcohol Consumption Drops 5% in Volume During 2025." https://www.theiwsr.com/insight/press-release/us-beverage-alcohol-consumption-drops-5-in-volume-during-2025/
9. U.S. Food and Drug Administration, "Food Code 2022." https://www.fda.gov/food/fda-food-code/food-code-2022
10. U.S. Department of Labor, Wage and Hour Division, "Fair Labor Standards Act" and "Fact Sheet #15: Tipped Employees" ($7.25 minimum; $2.13 cash wage). https://www.dol.gov/agencies/whd/flsa
11. Alcohol and Tobacco Tax and Trade Bureau (TTB), "Liquor Laws and Regulations for Retail Dealers," 2026. https://www.ttb.gov/laws-regulations-and-public-guidance/liquor-laws-regulations-retail-dealers
12. Compass Group plc, "Annual Report 2025" (contract-foodservice metrics; acquisition-led consolidation). https://www.compass-group.com/en/investors.html
13. U.S. Department of Agriculture, Economic Research Service, "Food Prices and Spending" (food-away-from-home ~$1.52T, ~59% of food spending, 2024). https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/
14. Federal Trade Commission, "Franchise Rule" (Franchise Disclosure Document). https://www.ftc.gov/legal-library/browse/rules/franchise-rule
15. U.S. Census Bureau, "2022 NAICS Definitions — 722 Food Services and Drinking Places (7223, 7224, 7225)." https://www.census.gov/naics/?input=722&year=2022