U.S. Food Service Market Size, Share & COVID-19 Impact Analysis, By Type (Full Service Restaurants, Quick Service Restaurants, Institutes, and Others), and Regional Forecast, 2023-2030

The U.S. food service market size was valued at USD 824.61 billion in 2022 and is projected to grow from USD 905.13 billion in 2023 to USD 1,767.54 billion by 2030, exhibiting a CAGR of 10.03% during the forecast period.

The food service industry includes all establishments that serve food to people outside their homes it can be any form of delivery and takeaways. These include restaurants, food bars, canteens, university canteens, catering and vending machines, and hotels. The U.S. market is growing; the significant factors contributing to the growth of the food services sector in the country include the increase in demand for personalization in services and easier accessibility to a variety of food items. The popularity of new forms of restaurants, such as virtual kitchens and ghost kitchens specializing in delivering food to consumers, has witnessed significant growth in recent years.

Major companies like McDonald’s, KFC, and Taco bell are providing a wide assortment of food items at competitive prices to consumers. For instance, the Italian full-service restaurant Olive Garden provides a wide range of cakes and pastries, including black tie mousse cake, tiramisu, strawberry cream cake, warm Italian doughnuts, and Sicilian cheesecake with strawberry topping as a part of its menu. With the changing food preferences, more consumers are shifting toward food products that are healthy, nutritious, and environmentally sustainable. With veganism among the population, companies are revamping their menus and including vegan products in their current product portfolio. For instance, Papa John's International, Inc. launched vegan hot dog scrolls specially designed for vegan consumers. Hence, the number of food service outlets in the U.S. market has also increased significantly.

COVID-19 IMPACT

Sudden Disruption in the Supply Chain Has Affected Market Growth amid COVID-19

The COVID-19 pandemic significantly impacted the U.S. food service industry. In the U.S., the COVID wave hit hard in the months between June and October 2020. Almost all the dining-out facilities were shut down due to the spread of disease; hence, the food industry was also negatively impacted. According to the United States Department of Agriculture (USDAs), U.S. consumer food spending was 8% less in 2020 compared to 2019. The decrease in food expenditure was mainly due to the national emergency declared in the country to curb the spread of COVID-19.

However, online ordering was enabled, and food trucks were operative for takeaway facilities, but they also did not even record their average sales and saw a dip in consumer visits. The impact on travel and tourism also led to an adverse impact on the food service market. Thus, the shortage in the supply of raw materials affected the food preparation in catering, restaurants, and hotel services. Moreover, the social distancing rules and labor shortages reduced the availability of many chefs or key cooks in this industry.

LATEST TRENDS

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Digitalization Trend Is Further Fueling the Growth of the Foodservice Market

The wobbling global trade, changing political environment, and macroeconomic factors provide crucial challenges for market players operating in this market with their strategies, supply chain, business models, and employees getting stressed to different degrees after COVID-19. The repercussions of challenges faced by this industry after the COVID-19 pandemic are providing opportunities to find solutions to avoid more devastating effects on the industry. Increasing technological advancement, digitalization in the overall business process, and the need for new holistic approaches are the factors that will prove vital in the coming years in shaping the food service industry and bringing it back to normal pre-pandemic levels.

Millions of hotels & restaurants are in distress while reshaping their business strategies, and the consumption behaviors of consumers have substantially changed, further providing challenges to individual hotel owners. Manufacturers use innovation and adapting digitalization in their food chains to increase the productivity of restaurant processes. For instance, in 2021, Domino's partnered with Nuro, one of the leading self-driving delivery companies, and launched an autonomous pizza delivery system in Houston. Customers can place prepaid orders, and Nuro R2 Robots deliver these products to the consumers. Such digital transformations in business operations provide lucrative growth opportunities for this market.

DRIVING FACTORS

Increased Consumer Spending on Fast Food to Drive the Market Growth

In the U.S., fast food consumption is increasing due to the shortage of time to cook meals at home and the growth of fast food chains. The growing number of fast food chains offering international cuisine types is the center of attraction and the young population is the forefront consumers of fast food chains. With the increasing number of fast food outlets, young consumers are spending more on food outside the home.

According to the U.S. Department of Commerce, in October 2022, U.S. consumers' real personal disposable income increased by 0.4%. As family disposable income increases, consumers spend more on hotels, restaurants, cafes and other places.

Focusing on millennial consumers' preference for quick-service restaurants, leading fast-food outlets such as Starbucks, Domino's, Taco Bell, Pizza Hut, KFC, Burger King, Papa John's Pizza Subway, McDonald's, Wendy's, and Chipotle Mexican Grill food chains are seizing the opportunity by launching products that are vegan to meet the customer demand. Hence, increased consumer spending is driving the U.S. food service market growth over the forecast period.

RESTRAINING FACTORS

Associated Health Issues Owing to Excessive Consumption to Restrain the Market Growth

Over the last few years, consumers have been more inclined towards eating fried foods, dry foods, and various beverages. Food products are categorized into different types based on the raw materials and the techniques used in manufacturing. Unhealthy food impacts human health, leading to obesity, diabetes, cardiovascular disease, and high blood pressure-related issues. According to the National Salt and Sugar Reduction Initiative (NSSRI), diet-related diseases are among the leading causes of death in the U.S. The usual American diet is high in sodium and sugars, which can negatively affect health.

In the U.S., more than two-thirds of adults and nearly one-third of children are overweight or obese, and around one-third of adults have high blood pressure. These conditions increase the risk of major diseases like heart disease, diabetes, stroke, and cancer. Thus, consuming products that contain sugar in unregulated quantities can severely impact the health of diabetic people. Hence it hampers the growth rates of this market. But the government has taken several initiatives and imposed a tax on unhealthy products to decrease the consumption of such products. In February 2021, the NSSRI initiative announced sugar reduction targets for 15 food and beverage categories.

SEGMENTATION

By Type Analysis

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Quick Service Restaurants Segment to Lead Due to the Availability of variety of Food and Beverages at Competitive Price

The type segment is divided into full-service restaurants, quick-service restaurants, and others. The sales in the quick-service restaurants have been increasing significantly in recent years. Major companies, such as Nestle S.A., Starbucks Corporation, and Restaurant Brands International provide consumers with a wide assortment of beverages at competitive prices. These companies compete with coffee shops and bakeries by providing consumers with healthy, fresh, innovative, and premium coffee items. In February 2020, Starbucks Corporation agreed on a long-term partnership with Nestle S.A. in the U.S. to manufacture and distribute Starbucks-branded K-Cup pods. Furthermore, the popularity of new forms of restaurants, such as virtual kitchens and ghost kitchens specializing in delivering food to consumers, has witnessed significant growth in recent years. The popularity of these restaurants is increasing significantly among younger and affluent individuals.

KEY INDUSTRY PLAYERS

Players focus on innovation, product development, and the adoption of advanced technology. Manufacturers are launching different products to meet the growing demand. In North Carolina, U.S.-based Krispy Kreme partnered with franchise partner Americana His Group to open the first store for his doughnuts chain in Egypt. Pizza Hut and Beyond Meat have partnered to launch Beyond Pepperoni, a delicious plant-based version of Pizza Hut's pizza toppings to attract more consumers. Such new product category launches and partnership expansion are expected to present lucrative growth opportunities for the foodservice industry during the forecast period. 

LIST OF KEY COMPANIES PROFILED:

• McDonald's (U.S.)


• Starbucks (U.S.)


• Subway IP Inc. (U.S.)


• KFC Corporation (U.S.)


• Burger King (U.S.)


• Dunkin's (U.S.)


• Dominos (U.S.)


• Baskin Robbins (U.S.)


• Wallace (U.S.)


• Popeye's (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• October 2022: J.M. Smucker Co. offered their North American customers liquid coffee. The proprietary liquid coffee system efficiently delivers large quantities of premium coffee hygienically, making it the perfect solution for hospitals, universities, hotels, conference centers, and other out-of-home coffee customers.


• May 2022: Chipotle Mexican Grill introduced a new item, 'pollo asado', in the U.S. and Canadian markets. This product comprises grilled chicken, garlic, fresh lime, guajillo peppers and hand-chopped cilantro. This launch helped the company extend its product offerings in those countries.


• August 2021: Peet's Coffee introduced its first line of flavored coffee for home brewing with its new flavored coffee K-Cup pods. The new line features three crafted choices: caramel, vanilla cinnamon and hazelnut mocha. Such new product launches not only helps the company diversify its product portfolio but also help in generating higher profits.


• February 2021: Yum! Brands, Inc. and Beyond Meat, Inc. entered a strategic partnership to sell their plant-based chicken products in the U.S.  market. Products such as Beyond Fried Chicken are made available to consumers across KFC, Taco Bell, and Pizza Hut restaurants for a limited time.


• August 2020: Domino's launched new product varieties, namely chicken taco pizza and cheeseburger pizza, in the U.S.

REPORT COVERAGE

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The research report provides detailed market analysis and focuses on key aspects such as leading companies and product types. Besides this, the report offers insights into the food service market trends and key industry developments. In addition to the above-mentioned factors, the report encompasses several factors contributing to recent market growth.

Report Scope & Segmentation