Food Service Contractors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 3,400 food service contractors in the US provide food and beverage services to institutional, governmental, commercial, or industrial locations on a contract basis. Companies typically serve customers under long-term contracts, although some provide catering services for one-time events. Key customer segments include colleges, hospitals, long-term care facilities, schools, business and industrial (B&I), correctional facilities, recreational facilities, and military facilities. The industry is highly concentrated; the top 20 firms account for about 82% of industry sales.
Variable Costs
Food service contractors are vulnerable to variations in input costs, particularly food and labor expenses.
Sustainability
Food service providers are embracing environmental responsibility through a variety of methods, including local sourcing and waste reduction programs.
Industry size & Structure
The average food service contractor operates multiple locations, employs 156 workers, and generates about $13.8 million annually.
- The food service contracting industry comprises about 3,400 companies, employs about 531,000 workers, and generates about $47 billion annually.
- The industry is highly concentrated; the top 20 firms account for 82% of industry sales.
- Large companies include Compass Group, Sodexo, and Aramark. Some large companies are owned by foreign corporations, have global operations, and generate revenue in the billions of dollars. Medium-size companies generate between $100 million and $1 billion annually, while small companies generate less than $100 million annually.
Industry Forecast
Food Service Contractors Industry Growth
Recent Developments
Nov 20, 2024 - Rising Payrolls
- Employment by food service contractors rose 1% in September compared to a year ago, while the average industry wage rose 1.9% over the same period to $21.13 per hour, according to the latest US Bureau of Labor Statistics data. Employment by the industry is cyclical, typically peaking in September, when students head back to school. Sales for the US food service contractors industry are forecast to grow at a 4.57% compounded annual rate from 2024 to 2028, comparable to the growth of the overall economy, according to the Interindustry Economic Research Fund.
- Food waste is a growing global crisis and problem for commercial food service operators, QSR reports, noting that the US alone generates 63 million tons of wasted food annually, with the vast majority of it ending up in landfills. One remedy for the food waste crisis is anaerobic digestion (AD), a technology that presents restaurants and food service operators with an opportunity to handle wasted food sustainably and cost effectively, while helping them to comply with organic waste regulations. AD is a natural process in which bacteria break down organic matter in the absence of oxygen. It begins with mechanically removing plastics and packaging – like clamshells and produce stickers – to produce a liquid slurry that’s then fed into a digester where energy is captured, and nutrients are extracted for reuse. The water used in this process can be repurposed for irrigation or treated to return safely to the environment.
- The new school year is bringing changes to lunchroom menus, the USDA reports. Building on updated nutrition standards announced in April, school meals are being updated to include less sugar and allow for greater flexibility with menu planning. Schools now have more options to serve protein-rich breakfast foods such as yogurt, tofu, eggs, nuts, and seeds, which will help take sugar off menus while supporting vegetarian diets and other food preferences. Schools in Maine, for example, have stopped offering breakfast bars that are high in sugar, and at lunch, are serving either USDA meats or meats from local butchers. Maine school meal programs are also serving vegetables, eggs, potatoes, fresh sausages, and bacon from local farms. The USDA’s updated standards include an expansion of the geographic preference option, which permits child nutrition program operators to specify "locally grown," "locally raised," or "locally caught" when procuring unprocessed agricultural products.
- Labor will be a pressing challenge for college dining services in the years ahead, according to the National Association of College and Universities Food Services. The new NACUFS “Campus Dining: 2030 and Beyond” report warns that attracting and retaining student workers will continue to be an industry pain point and recommends food service providers explore the role of technology in mitigating labor shortages. A key finding, gathered from focus groups, is the use of technology, and robotics in particular. Examples include automated smoothie kiosks, robotic chefs, and smart vending options. Also, autonomous marketplaces using Amazon’s Just Walk Out technology eliminate the need for labor at the point of service and are popping up on more campuses. The report also cites the importance of culture and environment in attracting and retaining workers and the need to appeal to student labor with flexible work schedules and shorter shifts.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.