The foodservice realm continues its slow recovery from the harm caused by pandemic shutdowns, but the pace and magnitude of the recovery often varies depending on the industry sector and the operators themselves.
The latest State of the Industry report from the National Restaurant Association would seem to presage good news: the group estimates U.S. restaurants will collectively reach a record $1.1 trillion in sales in 2024. This figure is up from $997 billion in 2023 and $863 billion in prepandemic 2019.
The report says demand remains high among millennials and Gen Z consumers, with more than two-thirds saying ordering takeout is an “essential” part of their lifestyle, versus 52 percent of adults overall.
This aligns with New York, NY-based Kalinowski Equity Research’s figures which found U.S. families spent almost 56 percent of their food budgets on restaurants as of December 2023.
It’s also backed up by Mintel data, estimating foodservice revenue grew 9.5 percent in 2023, with well over half of surveyed adults planning to eat out more in 2024 with the intent of enjoying new experiences.
All of these numbers seem to bode well for the foodservice industry, from dine-in restaurants and takeout to grocery store offerings, despite inflation and consumer discontent with higher prices.
“More than ever, customers are looking for ways to stretch their dollars and their time,” confirms Melodie Beal, head of culinary development for Amazon Fresh BB #:283186. “Foodservice has been challenged with proving to customers how fresh prepared and value-added products can help them with both.”
Supplier Gains
Growth of the U.S. foodservice market, according to Technomic in Chicago, IL, rose by 7 percent in 2023, while Canada’s increased 12 percent.
Two of the leading players in foodservice distribution showed individual growth within the range of these industry estimates, according to their most recent financial filings.
For US Foods, Inc., based in Chicago, IL, fiscal 2023 saw an increase of 4.5 percent in net sales to $35.6 billion, and a total case volume increase of 4.4 percent. The independent restaurant sector was a highlight, the company reported, with case volume increasing 6.9 percent.
Sysco Corporation, headquartered in Houston, TX, did even better, reporting a sales increase of 11.2 percent globally, to $76.3 billion, for its most recent fiscal year.
Overall, U.S. foodservice volume was up 10.6 percent during the year, to $53.7 billion, with total case volume up 5.2 percent.
Segment Inconsistencies
Despite these generally positive figures, not every company, sector, or commodity performed equally—and much of the increase was caused by rising prices.
For example, there was a 1-percent drop in pounds of potatoes sold to foodservice in 2023, likely due to portion size decreases and less dining out for some segments of the population.
At the same time, there was an increase in market size of 20 percent, according to Potatoes USA and Technomic, primarily due to substantial cost increases.
While inflation is a factor, it’s not the only issue affecting sales and volume.
“This still highlights the inelasticity of potatoes in the foodservice market,” explains Rachel Atkinson-Leach, vice president of brand and category excellence at RPE, LLC, BB #:105471 a shipper of potatoes and onions in Bancroft, WI.
“Quick service, midscale, and casual dining operations are still struggling to bounce back, while fast casual and fine dining showed slight increases in pounds of potatoes sold in 2023. The delta is trending up, but slowly.”
She believes some of the stats may paint a picture that’s actually better than reality.
“There seems to be false strength in the sector,” observes Atkinson-Leach. “Is it improving? Yes. Is it back to prepandemic levels? No. Major markets are still negatively impacted by a lack of people returning to offices.
“This greatly reduces the volume of restaurants offering and serving lunches,” she adds, “which affects overall demand.”
Atkinson-Leach does see improvement ahead, however. “I believe we will continue to see slow consistent gains on volumes and restaurant traffic,” she says.
This is an excerpt from the feature story of the July-August issue of Produce Blueprints Magazine. To read the whole issue, click here.
