Funeral Operations

The US funeral industry includes 22,000 companies that generate about $14 billion of annual revenue from the operation of funeral homes, crematoriums, and cemeteries. Major companies include Service Corporation International (SCI), Keystone North America, and Stewart Enterprises. The industry is fragmented: the top 50 companies generate about 30 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for services is driven mainly by the number of older Americans. The profitability of individual companies depends on sales and marketing and efficient operations, because local demand is relatively fixed. The main advantage of large companies is their ability to share resources (limos and hearses, embalmers, and marketing costs) among clusters of funeral homes. Small operators can compete successfully with national companies because the funeral business is intensely local. The industry is labor-intensive: annual revenue per employee is around $130,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Companies in the industry sell products including caskets, burial vaults, burial garments, flowers, burial rights, memorial stones, and cremation urns. Services include embalming and cosmetic preparation, transportation, facility rental for wakes and memorial services, opening and closing burial plots, and cremation. Caskets are the largest cost item for most funerals. National suppliers include Batesville Casket, Aurora Casket, and Matthews International. Most funeral homes conduct around 100 funerals a year and have a large investment in physical assets (facilities, hearses, limos) that are often idle.

Cremations have become a significant and less-expensive alternative to a traditional burial with casket. About 35 ...