Report: U.S. foodservice sales back on track for good growth

Growth in U.S. foodservice sales will bump up a notch in the next few years, according to a new economic analysis from Agriculture Canada.

The report said the U.S. is in a position to remain the largest global consumer market through the report forecast period (2040) due to its substantial population, significant representation and concentration of affluent consumers, and positive economic outlook.

In 2022, the U.S economy grew 2.1% in annual real gross domestic product, the report said. In 2023, economic development is anticipated to stabilize, with annual real GDP growing by 1.1%.

However, the long-term outlook is good for the U.S., according to the report.

Despite rising inflation and global economic uncertainties, the U.S is expected to remain the largest global consumer market in terms of total expenditure, as private consumption is expected to increase by 32% between 2022 and 2040, according to the report.

In 2022, the U.S population was 333.3 million with a median age of 38.9 years, and by 2040, the population will increase to 360.5 million with a median age of 42.4 years, the report said. By 2040, Generation Z (aged 30-45) will become the most prevalent consumer segment.

Expanding income inequalities in the U.S. continue to position the lower-income class segment as the majority of total consumers, the report said.

Foodservice growth

The foodservice market will continue to grow after setbacks during the pandemic, the report said.

“The U.S consumer foodservice industry initially experienced value declines from early government imposed pandemic restrictions related to on-premise dining, and increased inflation in 2022,” the report said, noting that consumer demand for restaurant dining and eating outside of the home increased as pandemic restrictions eased.

The foodservice (food and beverage) market in the U.S was valued at $680.2 billion in 2022, growing at an average compound annual growth rate of 3.6% from $568.8 billion in 2017. That is despite a 17.8% decline in foodservice sales from 2019 to 2020.

“The foodservice market remains in the recovery phase post-pandemic displaying promising growth of 21.4% evident in 2020 to 2021 as values sales increased from $496.8 billion to $603.2 billion,” the report said.

From 2022 to 2027, the report said U.S. foodservice sales will grow at a CAGR of 5% and reach $869.1 billion.

Growth by sector

Chain foodservice franchises reported sales of  $397 million and a 58.4% market share in 2022. That represents a CAGR of 5.3% since 2017, the report said.

Limited-service restaurant outlets represented the largest consumer foodservice category, with value of $341.6 billion and a 50.2% market share in 2022. The CAGR for the limited-service sector was 5.3% from 2017 to 2022, the report said.

McDonald's Corp. was the largest consumer foodservice company in the U.S., with value sales of $47.5 billion and a 7% share of foodservice sales in 2022.

The eat-in sector of the foodservice market totaled $226.5 billion in 2022, a 33.3% market share, according to the report.

Research suggests U.S. consumers prefer home-cooked food, but foodservice demand is strong as a lack of time is one of the biggest barriers to preparing and cooking food at home, the report said. Fourteen percent consumers report that eating at a restaurant is more convenient than cooking for themselves, while 20% report they intend to increase their visits to restaurants over the next year, according to Euromonitor research.

In other findings, the report said:

• From 2022 to 2027, all foodservice channels are anticipated to experience positive growth increases.
• Foodservice through leisure channels is expected to attain the largest increase in CAGR (10.1%) as sales are anticipated to reach $11.6 billion by 2027 from $7.1 billion in 2022. “This channel in particular, will serve to increase community engagement through the integration of organized sports and games with the consumer's dining experience,” the report said. “The Chicken N Pickle restaurant for example, features pickleball courts and a chicken-centered menu.”
• Foodservice through retail is also expected to experience moderate annual growth of 5.2% through 2027. “The channel plans to redefine the relationship of retail and foodservice partnerships by expanding digital food halls (ghost kitchens) through select retail outlets, enabling the consumer to order food from several restaurants via their phone or in-store kiosks for pick-up at a convenient location,” the report said.