Review of 2014 Foodservice "State of the Industry" Report

Posted by IFMA January 20, 2015

Tagged in Consumer Planning Foodservice Category Management Foodservice Leaders Foodservice Supply Chain Industry Research Operator/Manufacturer Collaboration Presidents Conference

Leaders of the International Foodservice Manufacturers Association (IFMA), National Restaurant Association (NRA) and International Foodservice Distributors Association (IFDA) delivered their Foodservice "State of the Industry" Report at Presidents Conference in Phoenix, AZ this past November. Each presented SWOT analysis data outlining strengths, weaknesses, opportunities and threats pertaining to their respective memberships, which collectively addresses 85% of the foodservice industry in the U.S. alone.

Following are highlights of the 2014 "State of the Industry" Report Executive Summary. A PDF containing the entire summary is available as a complimentary benefit to IFMA members at the end of this article. 

Foodservice "State of the Industry" Report Overview
The foodservice industry has been pegged at $609 billion of consumer dollars, up $24 billion from a year ago, and foodservice's share of consumer's food spend is now 48%, which is also up from a year ago. By segment in 2014:

  • Retail foodservice has grown, with grocery foodservice and c-stores the key contributors to that growth.
  • Non-commercial foodservice is also up as an improved economy has meant lower employment and greater business and leisure travel, which benefits segments including business & industry and hotel & lodging.
  • Restaurants have been fairly flat, with growth experienced in innovative new concepts and in the fast casual segment, which has addressed the need for reasonable pricing, fresh ingredients and the ability to customize.

Following is an overview of perspectives offered by individual association leaders, as well as other industry experts who spoke during the "State of the Industry" Report at Presidents Conference 2014:

Manufacturers have deep knowledge and expertise, but lack visibility and channel partner collaboration best practices, said Larry Oberkfell, president and CEO of IFMA. The greatest opportunities are to collaborate more effectively, reduce waste and focus on true innovation. The greatest threats are the emphasis on price-driven RFPs, the blurring of channels, new competition and maintaining the viability of the current channel-based business model.

"They [manufacturers] believe there is a significant opportunity for industry-wide-adoption of insight and best-practice-driven collaboration models," Oberkfell said. Listen to Foodservice Manufacturer Analysis.

Distributors are a safe, reliable provider of products and services to operators and are a conduit for useful insights and information, said Mark Allen, president and CEO of IFDA. But distributors want to become more integrated in the entire supply chain, while facing increasing price competition and regulation.

"The opportunity distributors see is to become a highly integrated supply chain partner with greater linkage and connectivity with manufactuers and operators," Allen said. Listen to Foodservice Distributor Analysis.

Dawn Sweeney, president and CEO of the NRA, said restaurants of all kinds have enormous strengths of access, service, passion and commitment, but face challenging conditions with rising food and labor costs and shrinking margins. The opportunities are to better understand consumers, improve collaboration and drive innovation.

"As leaders, we need to embrace the future and instill in our organizations a deep, deep understanding and appreciation for the consumer," Sweeney said. Listen to Foodservice Operator Analysis.

Additional Industry Perspectives
Datassential and its Managing Director Jack Li have been partnering with IFMA's Consumer Planning Program to provide in-depth industry research looking at the 28 consumer dining occasions most frequented in the foodservice industry. Part of this research was unveiled at President Conference, where "winners" and "losers" in the 28 eating occasions were discussed. Consumer occasions experienced a positive shift in quick bites, cheap bites and last-minute meals, while occasions such as hanging with friends and social dining lost share of the consumer occasion.

"As an industry, we are not getting our fair share of food prepared away from home occasions; we have to start thinking about how we as an industry grow our piece of that pie, Li said. Listen to Consumer Analysis.

2015 Foodservice Industry Imperatives
Bill Hale, president and owner of The Hale Group, noted that three strategic imperatives will lead to more consumers choosing foodservice:

  1. Focus on the consumer.
  2. Collaborate to increase consumer demand for foodservice and industry efficiency. This collaboration involves embracing fact-based insights and implementing best practices. Industry collaboration must be marked by transparency and trust, and a focus on increasing the industry's share of away-from-home occasions.
  3. Embrace and lead change. Let go of the past and embrace the future.

In pursuing these strategic imperatives, the price is to "bend the curve" so that consumers increasae their foodservice spending. There is much opportunity in bending the curve, with over $50 billion in potential from incremental demand. There is also potential for $30 billion in supply chain savings. The "Bending of the Curve" [toward more profitable industry-wide growth] has begun, but there is much more work to do to accelerate it.

"Insights, collaboration, best practices, more targeted focusing of marketing and an imporved customer experience...all of those things allow us to capture the prize," said Bill Hale, president and owner of The Hale Group. Listen to Foodservice Industry Analysis.

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