Global Restaurant & Food Services Industry Overview
Restaurants and food service companies serve meals and snacks for immediate consumption.
Restaurant types include self-service, assisted service, service at table, takeaways and home deliveries. The industry also includes catering services, for example for companies, institutions and events. Cafés and restaurants represent the leading market segment at over 50% of overall industry value.
The global market was valued at $2.6 trillion in 2013, having grown at a compound annual growth rate (CAGR) of 5% from 2009 to 2013, according to Euromonitor.
Food Services Key Markets
The U.S., China, Japan and Europe are the key food services markets.
- The U.S. is the largest food services market. It accounted for 25% of the global market in 2013, according to estimates based on National Restaurant Association data.
- China, the second largest market globally, held a 20% share in 2013. It experienced the fastest global growth rate (11%) in 2012-13, according to Agriculture and Agri-Food Canada (AAFC).
- Japan accounted for 14% of the global food services market in 2013. Japan is famous for high quality dining, however the market has been growing slowly with growth of less than 1% in 2012-13.
- The U.K., France and Germany were major food services markets in Europe, collectively worth 9% of the global market in 2013. These countries and Japan, however, saw growth of 2% or less in 2012-13, according to AAFC.
Food Services Key Players
The global food services market is fragmented. The top ten players accounted for only 5% of the market in 2013, according to company presentations.
Compass Group and McDonald’s are the top players globally, specializing in catering services and fast-food restaurants respectively.
- Compass Group is a U.K.-based food service provider. It offers food and supporting services across 50 countries, employing around 500,000 people. It had revenues of $28.3 billion in 2013. Its main business is food and drinks services within healthcare facilities, old people’s homes, education centers, sports facilities and other organizations.
- McDonald’s is the second largest player in the industry, with revenues of $28.1 billion in 2013. It has 35,000 local restaurants serving 70 million people in more than 100 countries each day, and employs more than 1.9 million people. It is a self-service restaurant chain which primarily sells burgers (made from beef, chicken, fish or vegetables), fries, soft drinks and ice creams. In recent years the company has responded to the trend towards healthy eating by introducing salads and wraps.
Food Services Market Forecast
Global food services industry revenues will rise from $2.6 trillion in 2013 to $3.4 trillion by 2017, growing at a CAGR of 7%, according to Euromonitor.
Asia Pacific and Latin America are forecast to be the key drivers of this growth.
Key Trends and Strategies for Growth in the Restaurants and Food Services Industry
Four trends are shaping the food services industry.
- Digital Technology is a Key Communication Tool.
Digital technology is allowing food services companies to communicate with and understand their customers. Companies use a range of social media sites, such as Facebook and Twitter, to communicate with customers.
Search engine optimization is important as more people search online for food options, particularly through mobile devices.
Restaurants should encourage customers to post photos, events, customer polls and recommendations to increase customer engagement. Careful media monitoring is also important as social media has the potential to damage as well as enhance companies’ reputations.
In addition, mobile applications which make customers aware of the restaurants in the area where they are located will help them to attract more traffic.
- Customers Want Faster and More Convenient Dining
Customers are increasingly time poor and reluctant to go through a formal dining experience, reducing the attractiveness of ‘at table' service restaurants. As a result, customer traffic is expected to increase for fast-food restaurants, gourmet coffee ‘shops’ and donut outlets.
Restaurants should use digital technology to cut service times for customers. Moreover, in-store tabletop tablet computers and menu boards enhance brand value.
- Healthier and More Varied Food Choices Required
Consumer preferences have shifted towards healthier and higher-quality cuisines. For example, the rapid growth of alternatives to dairy products such as soy milk, almond milk and frozen yoghurt reflect this trend. Changing demographics and global travel are also increasing consumers’ taste for a wide range of ethnic cuisines. The main industry players modify their menus to accommodate different customer preferences. An example is the way McDonald’s offers chicken burgers but not beef burgers in India.
Food service companies need to be strongly aware of these trends in developing their menus.
- The Chinese Middle Class is becoming a Key Battle Ground for Foodservice Companies
With the increasing buying power of the expanding Chinese middle class, major Western food service brands are taking an increasing share of the Chinese market, thereby reducing the share of independently operated small restaurants/street stalls.
To gain greater market share in emerging markets such as China, international food services companies should consider entering strategic deals. International firms can also make small acquisitions in new markets to enhance their local expertise and product portfolios. Domestic firms can enter into defensive mergers to acquire greater market share in their home country.
Leading Industry Associations
- International Foodservice Manufacturers Association (www.ifmaworld.com)
- National Restaurant Association (www.restaurant.org)
- Food Service Europe (www.foodserviceeurope.org)
- Foodservice Industry Association (www.foodserviceindustry.com)
- Foodservice Packaging Association (www.foodservicepackaging.org.uk)