Sales of meals and snacks away from home continue to increase

The market for food away from home continues to grow - from $183 billion in sales (excluding sales tax and tips) in 1987 to $290 billion in 1997. Over the decade, sales of these foodservice establishments increased an average of 4.8 percent annually, or about 1.7 percent per year when adjusted for inflation.

Today's busy consumers do not always have the time to plan, prepare, and eat meals at home. That plus more disposable income due to two-earner families, more women in the workplace, and less leisure time make convenient and value-priced meals prepared outside the home quite a popular alternative. Home meal replacement (HMR) is also a growing trend. These complete "home-style" meals are prepared in stores and provide convenient, wholesome, cost-effective, and preparation-free dining either on the premises or at home.

Commercial (for profit) establishments constitute the largest sector of the foodservice market, accounting for 79 percent of the industry sales in 1997 (table 1). The commercial foodservice sector includes separate eating places - full-service restaurants and lunchrooms, fastfood / quick-service outlets, cafeterias, and caterers - and foodservice operations located in other facilities, such as lodging places; recreation and entertainment facilities; retail establishments (called retail hosts), like department stores and limited-price variety stores; and separate drinking places.

Noncommercial foodservice operators provide food in institutional and educational settings, such as school cafeterias, nursing homes, child daycare centers, and patient feeding in hospitals. The noncommercial sector accounted for 21 percent of total foodservice sales in 1997.

Fast Food the Largest Segment

Fast food accounts for the largest, and fastest rising, share of sales in the foodservice industry. Sales in 1997 reached $97 billion - outpacing the $83 billion of receipts earned by full-service restaurants and lunchrooms. However, that has not always been the case. Until 1987, restaurants and lunchrooms retained the largest share of sales (table 1). Fast-food outlets more than doubled their sales over 198797 and captured an increasing share of sales by separate eating places during the past decade - from 49 percent in 1987 to 52 percent in 1997.

The top five U.S. fast-food chains are McDonald's, Subway Sandwiches, Pizza Hut, KFC, and Burger King (table 2). McDonald's is by far the leading foodservice chain, with 23,132 units in over 100 countries and worldwide sales of $33.6 billion. Subway Sandwiches, a subsidiary of Doctors Associates, Inc., ranks second with over 13,000 units, followed by Pizza Hut with 12,834 units; KFC with 10,237 domestic and international units; and Burger King with 9,644 total units.

The top five U.S. chains are also tops in the international arena, but in a different order. McDonald's still ranks first, followed by KFC, Pizza Hut, and Burger King. Subway is the fifth largest restaurant chain abroad.

Many fast-food chains are also establishing themselves in nontraditional sites, such as supermarkets, convenience stores, mobile kiosk operations, push carts, sports centers, and educational institutions. This expansion strategy takes food to where the consumer is.

Two other segments in commercial foodservice increased their sales [TABULAR DATA FOR TABLE 1 OMITTED] from 1987 to 1997 - retail hosts and recreation and entertainment. Retail hosts more than doubled their sales from 1987 to 1997. The growth of coffee bars and warehouse clubs is responsible for much of this growth, as well as increased sales at gasoline/convenience stores as major oil companies pursue development of more outlets that include foodservice. The growth of multi-theater movie cinemas in high-traffic shopping malls as well as increased attendance at sports centers and theme parks is responsible for increased growth in recreation and entertainment facilities.

Most Noncommercial Segments Also Showing an Increase

Over the last decade, noncommercial foodservice sales grew 46 percent, from $42 billion in 1987 to $61 billion in 1997. Sales over the decade nearly doubled in the education sector, increasing 71 percent in elementary and secondary schools and 73 percent in colleges and universities. Much of this growth was due to increases in enrollment in primary and secondary schools and in colleges and universities, as large numbers of baby boomers' children make their way through the education system.

Table 2

Top Five Restaurant Chains in the United States and Abroad, 1997

                        Units                         Total sales,
Chain                  U.S.    Abroad    Countries       1997

Billion
Number dollars

McDonald's           14,204    8,928        109          33.6
Subway               11,462    1,874         61           3.2(1)
Pizza Hut             8,998    3,836         83           4.7
KFC                   5,120    5,117         79           4.0
Burger King           7,584    2,060         56           9.8

Notes: 1 Subway's total sales are for 1996. Source: Restaurant
Business, selected issues, and company annual reports.

Food sales nearly tripled for child daycare centers between 1987 and 1997 clue to an increase in the number of centers. Sales doubled for correctional facilities as the number of inmates grew over the decade.

Sales declined in only one segment of noncommercial foodservice. Hospital foodservice dropped 7 percent between 1987 and 1997, which could be due to a trend toward self-operated foodservice facilities.

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

COPYRIGHT 1998 U.S. Department of Agriculture
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