Food Service Market to Grow by USD 1.07 Trillion (2024-2028), Driven by Rising Demand for Dining Out, with AI Impacting Market Trends - Technavio

NEW YORK, Nov. 18, 2024 /PRNewswire/ -- Report on how AI is redefining market landscape - The global food service market size is estimated to grow by USD 1.07 trillion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of over 5.66%  during the forecast period. Increasing demand for food away from home is driving market growth, with a trend towards increased snacking and indulgence consumption. However, labor shortages in foodservice sector  poses a challenge.Key market players include Abela and Co. LLC, Aramark, Chick fil A Inc., Compass Group Plc, Dominos Pizza Inc., FOOD and LIFE Co. Ltd., Inspire Brands Inc., Jack in the Box Inc., Jollibee Foods Corp., Little Caesar Enterprises Inc., McDonald Corp., MOS Food Services Inc., Papa Johns International Inc., Performance Food Group Co., Restaurant Brands International Inc., Sodexo SA, Starbucks Corp., Sysco Corp., The Wendys Co., and YUM Brands Inc..

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Market Driver

The food service market is witnessing significant trends with the rise of third-party delivery services like Deliveroo and strategic partnerships between restaurant operators and hotel chains, independent business owners, and online delivery options. Urban areas with high population density are driving the demand for food service establishments, including child care centers, restaurants, cafes, and hotels. Technology and science are revolutionizing the industry with e-commerce systems, online ordering, and contactless payment. Consumer lifestyles are changing, with an increasing preference for vegan diets and vegan fast food. The restaurant industry is digitizing, with fast food consumption on the rise among working women and tourists. The hospitality market, including the HRI sector, is experiencing financial growth due to rising incomes, high aspiration levels, and increasing internet penetration. The demand for specialty beverages and proprietary coffee blends is also on the rise. Productivity and safety are key concerns, with the use of computers and technology in food preparation, serving, and cleanup. The food service industry is adapting to changing consumer preferences, border closures, and dine-in restrictions with limited menus and focus on quality of food, punctuality of delivery, and plastic packaging reduction. The market is also witnessing trends like franchising, foreign investment, and the growth of food courts and food malls in lifestyle areas. The future of the food service industry is bright, with opportunities in Tier 2 cities and the emergence of multi-brand outlets. 

The food service market in the United States has witnessed notable changes in consumer eating habits. Over the past decade, there has been a noticeable increase in the preference for snacks and light meals over traditional meals. This trend is driven by the hectic lifestyles of consumers, who often find themselves skipping meals and opting for on-the-go food. The snack industry has capitalized on this trend, offering a wide range of options, including healthy choices. For instance, Compass Group, a leading food service provider, offers doughnut sandwiches made with nutritious ingredients such as chicken, lettuce, and green vegetables. Another noteworthy trend is the growing popularity of bakery products for breakfast, with items like doughnuts, bread, rolls, pies, and pastries seeing an uptick in demand. These food items provide consumers with a quick and convenient option to start their day. Overall, the food service market is adapting to the changing needs of consumers, offering a diverse range of snack and breakfast options to cater to their busy lifestyles. 

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 Market Challenges

• The food service market encompasses various segments like third-party delivery services, child care centers, restaurants, hotels, cafes, and more. Restaurant operators, hotel chains, and independent business owners face challenges in storage, preparation, serving, and cleanup. Urban areas with high population density and increasing urbanization require productivity and safety measures, including computers and e-commerce systems. Food consumption trends include the rise of veganism as a food trend, with vegan fast food and vegan menus becoming popular. The industry is digitizing, with online ordering systems and strategic partnerships between food providers and delivery services like Deliveroo and McDelivery. Small businesses and retailers are also adapting to changing consumer lifestyles, with an increase in out-of-home food consumption. The food service industry is experiencing financial growth due to rising incomes, high aspiration levels, and tourism. However, challenges include border closures, punctuality of delivery, and the quality of food. The use of plastic packaging is a concern for the environment and consumer health. The hospitality market, including hotels and fine dining establishments, also faces competition from limited menu quick service restaurants like burger and pizza chains. Innovations in cuisines, specialty beverages, and proprietary coffee blends continue to drive growth in the sector. The HRI (hospitality, restaurant, and institutional) sector is a significant contributor to employment and economic growth. The food service industry is constantly evolving to meet the changing needs of consumers, with a focus on health, hygiene, and convenience.
• The food service market may encounter challenges due to labor shortages in several countries during the forecast period. Jobs in the food service sector often offer low wages and limited opportunities for career advancement, making them less desirable. Consequently, the number of individuals willing to work in restaurants and fast-food outlets is decreasing. In the US and Japan, for instance, restaurants are experiencing significant labor shortages. Factors contributing to this issue include the lack of job security and inadequate benefits, such as sick leave and health insurance, which are more common in other industries.

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Segment Overview 

This food service market report extensively covers market segmentation by  

1. Service 
• 1.1 Conventional
• 1.2 Centralized
• 1.3 Ready-prepared
• 1.4 Assembly-serve
2. Sector 
• 2.1 Commercial
• 2.2 Non-commercial
3. Geography 
• 3.1 APAC
• 3.2 North America
• 3.3 Europe
• 3.4 South America
• 3.5 Middle East and Africa

1.1 Conventional-  The conventional food service system is a time-tested approach used by many vendors in the food industry. In this system, ingredients are prepared and served on the same premises, ensuring customers freshly made meals tailored to their preferences. Depending on the food type, it is kept heated or chilled until served. This system is widely used in schools, universities, restaurants, and cafeterias, where consumers value freshly prepared food and flexible menu options. Skilled labor is employed to produce the food, and the conventional system's high-quality offerings continue to attract customers. The preference for freshly prepared meals in dining establishments is expected to fuel the growth of the conventional segment in the global food service market during the forecast period.

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Research Analysis

The Food Service Market encompasses a wide range of establishments and services, including child care centers, restaurants, hotels, cafés, and more. Third-party providers play a crucial role in the industry, offering services such as storage, preparation, and serving to help businesses streamline their operations. Facilities must adhere to strict health and safety regulations for food handling and preparation. Distribution is another essential component, with both traditional and online options available. Restaurant operators and hotel chains partner with food delivery services like Deliveroo and strategic partnerships such as McDelivery to expand their reach. Service types vary, with full-service restaurants offering a more extensive menu and table service, while quick service restaurants focus on speed and convenience. Institutes and educational institutions also contribute significantly to the market.

Market Research Overview

The food service market encompasses a wide range of establishments and services, including third-party providers for storage, preparation, and serving in various facilities such as child care centers, restaurants, hotels, cafes, and more. Distribution plays a crucial role in ensuring the timely delivery of ingredients and finished meals. Urban areas with high population density and rising incomes have seen significant growth in the food service industry, driven by changing consumer lifestyles, digitization, and the increasing popularity of online delivery options. The market caters to various cuisines and dietary trends, such as veganism, which has led to the rise of vegan fast food and specialized food courts and malls. The industry is influenced by factors such as productivity, safety, technology, employment, health, hygiene, and e-commerce systems. Strategic partnerships between restaurant operators, hotel chains, independent business owners, and food delivery services like Deliveroo and McDelivery have become commonplace. The market is diverse, with offerings ranging from full-service restaurants to quick service establishments, and includes institutes, retailers, providers, and franchising opportunities. The hospitality sector, including the HRI sector and tourist spending, also plays a significant role in the food service market's financial growth. The quality of food, punctuality of delivery, and plastic packaging are key concerns for consumers, while the rising trend of out-of-home food consumption and the influence of foreign investment and border closures continue to shape the industry landscape.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Service
• Conventional
• Centralized
• Ready-prepared
• Assembly-serve
• Sector
• Commercial
• Non-commercial
• Geography
• APAC
• North America
• Europe
• South America
• Middle East And Africa

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

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SOURCE Technavio