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A Mid-Year Snapshot: The 2017 Foodservice Industry

And just like that we are halfway through 2017. And foodservice numbers are still strong. This year’s news headlines coupled with some of the overarching industry statistics have given us a good picture of where the industry is headed in 2017. To help us take a look back at a few of the things learned in these first six months, we have broken down some of the major challenges and opportunities of 2017 into three categories: By the Numbers, Technology and Consumer trends.

This week, we’ll tackle some of the industry’s trending data and give a basic understanding of the industry’s current economic state. Next week we will dive into both the technological and consumer trends of 2017 thus far.

By the Numbers

2017’s gradual economic improvement has helped the restaurant industry and will continue that trend through year end. The National Restaurant Association currently projects industry sales to reach $798.7 billion in 2017, which would represent a 1.7 percent gain over 2016. Table service restaurants remain the industry’s largest segment of growth and are projected to reach $263 billion in 2017, with quick service and fast casual sales following with a projected combined total of $233.7 billion. If these projections are to hold true, 2017 would represent the eighth consecutive year of sales gains for the industry as a whole.

Drilling down a little, mainstream fast casual chicken continues to drive the greatest percentage of growth, albeit with a projection for 2017 (16.5%) that is slightly less than its sales growth of 2016 (16.7%). In a recent report on the Top 10 fastest-growing chains by Nation’s Restaurant News, four of the Top 10 are chicken chains. These four chicken chains eclipsed brands in the Top 10 from other segments, including pizza, casual dining, limited service/sandwich, beverage-snack and limited service/specialty. In 2017, chicken is still king. The chart below compares the major fast casual segments between last year and the projections for this year.

An outstanding trend (as reported by Technomic’s Top 500 Report) that has continued into 2017 has been the growth of sales in the “specialty” segment, where sales have grown 9.6 percent in the past 12 months. The top specialties from this segment include “health focused,” barbecue and Mediterranean concepts. With most specialty brands showing solid growth, we have seen a new group of brands from this segment jump into Technomic’s Top 500 for 2017 including Mission BBQ, Snap Kitchen, Urban Plates, Modern Market and Salata. These up and comers are addressing variety and authenticity demands driven by adventurous millennials with unique palates and experiential demands.

Another theme that has been identified for 2017: foodservice lines continue to blur. Primary drivers continue to be supermarkets and with a definite uptick gained from their evolving approach, the C-store segment. Convenience store menu items are on the rise in both sheer number, but also in variety. They aren’t just hot dogs and doughnuts anymore. In-store experience is much more geared to providing ‘healthier’ and more complete options. With over 154,000 locations in the U.S. alone at the beginning of 2017 (FoodDIVE, Feb. 6, 2017) they simply cannot be ignored as a legitimate food outlet.

Supermarkets continue to fight for share of the stomach as well. Given their core audience is in the market for food anyways, the idea they can be a destination to order, sit down and enjoy a meal before/after/while shopping is gaining a lot of momentum. By moving past prepared and takeaway options, we see that many regional and few national chains of supermarkets are hitting their stride with this truer dining format. An example of an established ‘grocerant’ is Whole Foods Market. In certain locations, they offer a hot and cold food bar filled with fresh, unique, healthy options that you can choose to take home or eat-in store. According to USA Today, the ‘grocerant’ segment generated 2.4 billion visits and $10 billion in sales in 2016 by promoting restaurant-quality freshly prepared foods.

While it is easy to point out how the industry is changing, it becomes a little more difficult to answer the question of WHY it is changing the way it is. Millennials are unquestionably shaping the state of today’s foodservice industry. These statistics from Convenience Store Decision’s article on Five Food Trends Driven by Millennials explain very simply some of the trends that we will explore more deeply in part two of this mid-year report:

  • 48% of millennials say they prefer eating meals on-the-go
  • 44% say convenience is more important than cuisine
  • 68% prefer locally sourced ingredients
  • 66% are willing to pay more for food that comes from local producers
  • 67% say they love ordering healthy options at a restaurant
  • 63% say they love restaurants that offer “over-the-top” menu items

If you are experiencing these trends first hand in your day-to-day dining, look no further than the millennial demographic. In April 2016 a population estimate released by the U.S. Census Bureau confirmed that Millennials had overtaken baby-boomers as the U.S.’s largest generation. The number of Millennials being 75.4 million and Baby Boomers being 74.9 million.

Beyond assessing the restaurant industry based on sales and demographic demand, we can also evaluate growth based on the industry’s workforce. In 2017, restaurants will remain the nation’s second largest private sector employer, providing jobs for about one in every 10 working Americans. The total number of jobs across the industry is projected to rise to 14.7 million over the course of this year.

Based on the numbers, the foodservice industry continues to show promise and coupled with an improving economy its hopeful that we should see these numbers continue to rise into the next decade. However, without getting too far ahead of ourselves its best to focus on today and on how we here at Henny Penny can continue to manufacture quality products that can contribute to a flourishing industry.

Next week we will continue with our look at 2017 thus far with a rundown of the year’s stand out trends in technology and consumer behavior. Be sure not to miss it by subscribing to Our Take and receive an email alert when we post Part 2 of our mid-year review.

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