Foodservice Forecast: Trends, Challenges, and Opportunities in 2024

Foodservice Forecast: Trends, Challenges, and Opportunities in 2024

Learn about the 2024 Trends in the Foodservice Industry

Recently, Datassentials hosted the webinar “Simply Smarter Webinar: S5E10 – State of the Menu.” During this webinar, the presenters discussed and reflected on industry trends based on research from Datassential’s team. 

“Simply Smarter Webinar: S5E10 – State of the Menu” was a valuable resource for foodservice professionals who want to stay ahead of the curve on the latest menu trends, as well as make informed decisions based on tracked consumer habits. If anything is certain, it’s that nothing is certain! As the economy continues to settle after the upheavals of the pandemic, particularly for the restaurant industry, and we head into an election year, many business owners are looking for insight on how to navigate the bumpy waters. With so much to take into consideration, it’s important to build a strong team around your foodservice industry business. For distributors looking for a competitive edge in their supply chain and pricing, become a partner with Honor Foods. 

Contents

  1. Foodservice Industry And Economic Forecasts
  2. Consumer Spend In The Foodservice Industry
  3. Casual Dining

Foodservice Industry And 2024 Economic Forecasts

The current foodservice industry is seeing a lot of changes due to multiple economic factors. According to the webinar, the main operating challenges in 2024 will be, “Rising food costs, rising labor costs, inflation, staffing recruitment and retention, and ingredient shortages and unavailability (supply chain).” While ingredient shortages may be an increasing concern, there are solutions. One way to avoid an ingredient shortage with your foodservice clients is by partnering with a redistributor. Distributors who partner with a redistributor have more access to ingredients and products, streamlined shipping routes, and better pricing opportunities. You can mitigate the risk of ingredient shortages by partnering with Honor Foods

Much of the data on restaurants for 2023 is still tied to the aftershock of the pandemic. The Datassentials team reported that “Restaurant opening and closings have stabilized post-pandemic, but we have yet to see any substantial increase to pre 2020 levels.” There are a number of factors that continue to impact the foodservice industry negatively. The industry headwinds, factors or events that slow down growth or cause negative effects on profits and revenue, include: labor challenges, supply chain obstacles, remote-first work policies, and student debt repayment. For labor challenges, Datassentials reported that “Foodservice unemployment increased from 5.2% in June to 6.6% in July.” This means that there are less job openings and indicates a lack of growth within the industry. In fact, “foodservice has flattened, down 29.6% from 2020 real growth,” according to the report. The webinar hosts analyzed this data by adding that foodservice already had its ‘recession’ in 2020, and now we see that pent-up post-pandemic demand. So although consumers arguably shouldn’t be spending in the current economy, the consumer desire to experience things is why the foodservice industry isn’t as low as other industries. 

Adding to those statistics, the foodservice industry is up against rising prices and shrinking disposable income. Reported inflation assumptions are 7% average 2023 and predicted 5% average 2024. For specifically the food rate of inflation, Datassentials reported Away From Home (AFH) – 7.1%; Food and Beverage (F&B) – 4.9%; and at-home – 3.6%. The analysts running the webinar discussed the state of a rolling recession. A rolling recession is a circumstance in which different industries shrink at different times while the overall economy manages to stay above water. While the foodservice industry navigates increasing prices and tightening wallets, distributors are increasingly looking for more and more competitive prices. Many have turned to a redistributor to get those prices, because, with a redistributor, distributors don’t have to buy large quantities of products, but can instead purchase what they need through the redistributors relationship with the vendor. 

The industry forecast isn’t all negative! The industry tailwinds, factors, and events that help increase growth or cause positive effects on profits and revenue, include: continued pent-up demand from COVID-19, people are craving experiences, technology, and AI, and off-premise upgrades such as curbside stations are here to stay. There are still many drivers encouraging people to make foodservice visits. The webinar reported that consumers are seeking tasty, crave-able menu options, putting enjoyment and convenience first. Consumers are not as interested in health and affordable. So while the foodservice industry deals with competition from inflation and rising costs of living, it’s helpful to know that people’s decisions aren’t as impacted by price as they are by the desire to have a great experience. 

Consumer Spend In The Foodservice Industry

After hearing so much about decreased disposable income, the next question is – where are consumers cutting back? The Datassentials webinar reported that:

  • 48% said meals/dining out
  • 46% said clothing, shoes, apparel
  • 36% said grocery shopping
  • 35% said travel, other areas
  • 20% said none

Both food categories rank high on the list of spending cuts. Foodservice businesses such as restaurants and grocery stores will see less indulgent treat purchases, like chocolates and bottled tea, and more staples to get the bread and butter, quite literally. Consumers are becoming price-conscious in all sectors, making it even more important to have a competitive edge on pricing with Honor Foods redistributor.  

Consumer spending is barely increasing year over year, once accounting for inflationary growth. This is due to increased rent, loan rates, and student debt repayment all while seeing little salary increase. Datassentials provided the numbers on why there is very little real growth despite margins increasing…

  • 2022: inflationary growth $52.80 vs real growth $35.80. 
  • 2023: inflationary growth $55.20 vs real growth $0.60. 
  • 2024: inflationary growth $42.20 vs real growth $1.80.

The US economy is largely consumerism-based, but that doesn’t have to mean physical commodities. Consumers are craving experience, especially the millennial generation. Datassentials reported that consumers crave experience…

  • To satisfy a specific craving (53%)
  • For ambiance/ to get out of the house (50%)
  • To socialize (42%)
  • For convenience (36%)
  • To try something new (28%)
  • Out of habit (17%)
  • To save money (14%)

The foodservice industry does not stand alone. A headwind for one sector can be a tailwind for another and vice versa. However, at the moment, overall debt in the country is at an all-time high. Student debt repayments have resumed after a more than two-year pause. Mortgage rates, housing prices, and rent costs are all peaking and increasing disproportionately to actual income. Oftentimes, when consumers begin to restrict spending, businesses eliminate the middleman to save costs. But in the case of redistribution, the middleman can actually save businesses money for using LTL shipping by consolidating orders from multiple manufacturers, optimizing delivery routes and minimizing transportation costs. Those in the supply chain of the foodservice industry can gain a competitive advantage by partnering with a multi-brand business like Honor Foods. Having a partner that also offers in-house brands such as Sommer Maid, Colony Lane, and Valley Fresh, will help distributors get variety and choice without spending extra.

Casual Dining

Many people first think of casual dining when they think of food service. Restaurants are a part of our weekly lives, if not more. The State of the Menu webinar reported that dining out has remained the same since August 2022, but data continues to show that fewer people are expected to dine out in November and February. Both months had 18% dips of consumers who expected to dine out less. Consumers are extra price-conscious during the holiday months, in addition to fewer outdoor dining options being available in colder climates during the winter. If you’re not sure where to focus on sourcing new businesses to distribute food products to, the webinar also concluded that the top consumer spend segments are: QSR (Quick Service Restaurants), followed by casual dining, fast casual, midscale, lodging, supermarket, convenience store. On the lowest end are: recreation, C & U, hospitals, K-12, B&I, fine dining, senior living, and long-term care. 

Some of these changes are post-pandemic reactions, while others are generational shifts. Young adults don’t cook at home as much and prefer dining out. As grocery prices rise, foodservice industry can stay competitive with pricing-based value propositions. Examples of adding value to the menu are bundled deals when purchasing a full meal with a side and a drink. People will spend more when they feel like they are getting a better deal. 

Labor challenges are in fact having an impact on consumer experience and constrain growth. Datassentials reported that “52% of consumers say restaurant service has declined over the last year.” With such high numbers, restaurant owners can take extra care to see they are providing better service in order to increase sales. Restaurants can also work to enhance their off-premise dining. Consumers still want restaurant-made food, without having to sit in a formal setting and leave a tip, as shown in the data that “off-premise sticks around – 22% of sales are off-premise vs 19% in 2019.” With all of the current operational challenges, don’t let stocking food products for your restaurant owners be one of them! Partner with HF to streamline business for your clients.

And that, is the State of the Menu in 2023! Don’t just keep up with the trends, stay ahead of them — become a valued Honor Foods customer, today. 

About Honor Foods

Honor Foods, a Burris Logistics Company, was founded in 1949 as a redistributor of prepared foods. Since then, Honor Foods has grown into a premier provider of frozen, refrigerated, dry, and dairy products representing more than 300 brand-name food suppliers and carrying more than 3,000 items. For more information about Honor Foods, please visit honorfoods.com

About Honor Foods

Honor Foods, a Burris Logistics Company, was founded in 1949 as a redistributor of center-of-the-plate foods. Since then, Honor Foods has grown into the Mid-Atlantic region’s premier provider of frozen, refrigerated, dry, and dairy products, representing more than 300 brand-name food suppliers and carrying more than 3,000 in-stock items. Honor Foods brands R.W. Zant and Sunny Morning provide additional beef and dairy expertise on the West Coast and in the southeast. In addition, our exclusive house brands — Colony Lane and Valley Fresh, have a well-earned reputation for top quality and value at competitive prices.

Great products and prices are just part of the Honor Foods value-add. We pride ourselves in having a Team of dedicated professionals who manage each partnership. Our commitment to your business needs is what makes us unique.