What is Foodservice?
Foodservice is the term used to describe the part of the food industry whose primary function is to provide meals for sale for consumption away from home. The foodservice market is generally considered to have two sectors:
Cost Sector:
Caterers within the cost sector traditionally do not derive substantial margins. Meal provision tends to be out of necessity, rather than as a result of a business opportunity being identified. Provision is governed by contract where pricing is controlled if not fixed.
e.g Schools, hospital, prisons, specialist care homes
Profit Sector:
This is the area of the foodservice market in which the potential business gains are the main motivator. Pricing is flexible. In the profit sector the majority of outlets can be classified as working within the hospitality industry.
e.g Restaurants, fast food, pubs, hotels, leisure venues
How much is the market worth?
The foodservice market was estimated to be worth £33.1bn in 2003 (Source: Horizon/Foodservice Intelligence). The charts below shows the split between the cost and profit sectors and the split between food and drink.
Source: Horizon/ Foodservice Intelligence 2003
The breakdown of market value by operator type is shown in the table below:
| |
|
Food Sales |
Share (%) |
| |
Restaurants |
4,557.30 |
19.9 |
| |
Fast Food |
6,029.70 |
26.3 |
| |
Pubs |
3,186.30 |
13.9 |
| |
Hotels |
4,761.80 |
20.8 |
| |
Leisure |
2,072.10 |
9.1 |
| |
Staff Catering |
927.2 |
4.1 |
| |
Health Care |
596.4 |
2.6 |
| |
Education |
609.6 |
2.7 |
| |
Services/Welfare |
150.3 |
0.7 |
|
Total |
22,890.70 |
100.0 |
Source: IGD Research, Foodservice Intelligence 2003
How many outlets are there if the foodservice sector?
There is an estimated 262,000 outlets operating nationwide. The breakdown by operator type is shown in the below table:
| |
|
Number of Outlets |
Share (%) |
| |
Restaurants |
25,474 |
9.7 |
| |
Fast Food |
29,050 |
11.1 |
| |
Pubs |
51,595 |
19.7 |
| |
Hotels |
48,276 |
18.4 |
| |
Leisure |
18,725 |
7.1 |
| |
Staff Catering |
20,874 |
8.0 |
| |
Health Care |
30,682 |
11.7 |
| |
Education |
34,515 |
13.2 |
| |
Services/Welfare |
3,064 |
1.2 |
|
Total |
262,255 |
100.0 |
Source: IGD Research, Foodservice Intelligence 2003
How well is the market performing?
Over the last two decades the foodservice market has grown significantly, driven by the profit sector, with the value of food sold far outweighing the growth in the number of meals sold.
However, in the last few years the rate of growth has slowed significantly and in 2003 it has actually declined by 1.1% in real terms against 2001. Some of the reasons for this slowdown are as follows:
- Other leisure pursuits are competing for consumers’ time and money
- An increase in snacking and eating “on the go” is resulting in a reduction in the number of formal meal occasion
- Improvements in the meal solutions offer provided by retailers, means that people are able to purchase high quality, low cost meal options to prepare and eat at home as an alternative
- There is a limit to how many times any one person can eat out
What will the foodservice market look like in the future?
Horizon/Foodservice Intelligence has made the following forecast for the foodservice market:
- The next four years will see a return to growth with the market reaching £35 bn by 2007, an annual increase of 1.4%
- Growth in the profit sector is forecast to be slightly stronger, that growth in the cost sector
- In terms of what Foodservice operators purchase, this is forecast to grow at the same rate as sales, creating a market worth 11.7bn in 2007.
