The foodservice industry at a glance, 1985-95 - Annual Spotlight on the U.S. Food System - Industry Overview

The foodservice market continues to grow - from $158 billion in sales (excluding taxes and tips) in 1985 to $280 billion in 1995. Over the past decade, foodservice sales (food away from home) increased an average of 6 percent annually, or about 2.6 percent per year when adjusted for inflation. In contrast, retail food sales (food at home) showed only a 0.7-percent inflation-adjusted annual rise.

Commercial foodservice establishments posted $222 billion in sales in 1995, representing 79 percent of industry sales and reflecting an increase of 90 percent over a decade earlier (table 1). These establishments prepare, serve, and sell meals and snacks to the general public for a profit. Commercial foodservice establishments include separate eating places, such as full-service restaurants and lunchrooms, fast-food/quick-service outlets, cafeterias, and caterers; and those foodservice operations located in other facilities, such as lodging places, recreation and entertainment facilities, retail hosts (like department stores and limited-price variety stores), and separate drinking places.

The retail host segment showed the largest sales increase over the decade, rising from $5.5 billion in 1985 to $14.2 billion in 1995 - a 160-percent increase. Separate drinking places showed the smallest increase in sales (8 percent) over the same period.

Noncommercial foodservice operators accounted for about 21 percent of sales in 1995. These operations prepare and serve meals and snacks as an adjunct, supportive service in institutional and educational settings, such as schools, nursing homes, child daycare centers, and patient feeding in hospitals (patient meals). Noncommercial sales grew 43 percent, from $41 billion in 1985 to $59 billion in 1995.

Sales nearly doubled for college and university foodservice operations between 1985 and 1995 because of increased enrollments. Foodservice sales also nearly doubled in plants and office buildings, associations (membership organizations, such as booster clubs, fraternal lodges, and citizen associations), correctional facilities, and child day-care centers.

Military foodservice sales declined by 41 percent between 1985 and 1995 as the number of troops decreased. Hospital foodservice sales fell less than 1 percent during that same period.

Fast Food Expanding into Convenience Stores

Fast-food outlets continue to represent the largest and fastest rising share of sales among separate eating places. Sales in 1995 reached $91 billion - outdistancing the $88 billion earned by full-service restaurants and lunchrooms. Fast-food outlets nearly doubled their sales over 198595 and captured an increasing share of separate-eating-place sales - from 47 percent in 1985 to 49 percent in 1995.

Fast-food companies are teaming up with convenience stores to offer consumers branded fast-food products. Convenience stores are small grocery stores that sell a limited variety of food and nonfood products and are typically open for extended hours. Some convenience stores are associated with gas stations. According to a report by the National Association of Convenience Stores, fast food (both branded and nonbranded items) is the number two product sales category in convenience stores. Cigarettes are the top sales category. Approximately 14 percent of all convenience store merchandise purchases in 1995 were in foodservice, [TABULAR DATA FOR TABLE 1 OMITTED] [TABULAR DATA FOR TABLE 2 OMITTED] up from 10 percent in 1992. Fast food represented 2 percent of those purchases (see table 2).

Fountain drinks, hot beverages, and deli services (excluding frozen prepackaged sandwiches and fresh sandwiches) make up nearly half the foodservice purchases made in convenience stores. Branded fast food is one of the fastest growing foodservice trends in convenience stores today, rising from 0 percent of merchandise purchases in 1992 to 1 percent in 1995. This is an increasingly popular way for convenience store retailers to offer well-known restaurant foods while reaping the production, distribution, and cost advantages already in place at fast-food restaurant operations. The branded food is supplied by the fast-food chain and prepared and sold in the store.

The top 10 fast-food chains that currently supply to convenience stores are (in descending order): Subway, Taco Bell, Blimpie, Burger King, Dunkin Donuts, McDonald's, Pizza Hut, Godfather's, Baskin-Robbins, and Arby's.

Charlene C. Price is an economist with the Food and Consumer Economics Division, Economic Research Service, USDA.

COPYRIGHT 1996 U.S. Department of Agriculture
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