Food Service Contractors NAICS 722310

Mar 20, 2026 - Declining Cafeteria Usage

• New workplace eating data from ezCater shows companies and employees are increasingly divided over how lunch should be handled in hybrid work environments, creating challenges for foodservice operations. While office attendance is rising, cafeteria usage isn’t keeping pace, and more than half of organizations have already reduced café operating hours. For food service contractors, this signals declining demand for traditional on-site dining programs. More than a third (36%) of decision-makers say companies may decommission cafeterias in favor of more flexible options like food-ordering platforms. Cost pressures are also pushing companies to rethink long-term commitments to full-service cafeterias. At the same time, employers view food as a tool to encourage return-to-office behavior, creating demand for more adaptable solutions rather than permanent facilities. The shift toward flexible, on-demand meal programs presents both a risk to traditional contracts and an opportunity for contractors to innovate.
• The USDA has awarded $26.8 million through the Local Agriculture Market Program (LAMP) to expand local and regional food systems, the department reported in March. The funding supports farmers markets, local food businesses, and regional partnerships that improve processing, distribution, and access to locally sourced foods. For food service contractors, the biggest impact comes from the Regional Food System Partnerships (RFSP), which specifically aim to increase the use of local foods in institutional settings like schools, hospitals, and government facilities, creating opportunities for food service providers to integrate locally sourced ingredients into menus and strengthen relationships with regional suppliers. Moreover, investments in aggregation, storage, and value-added production through the Local Food Promotion Program (LFPP) can make local sourcing more reliable and scalable. Overall, the funding supports a shift toward local supply chains, requiring contractors to adapt procurement strategies while offering opportunities to differentiate through fresh, locally sourced menu options.

• Increases in food prices are outpacing overall inflation, according to the latest Food Price Outlook report from the USDA’s Economic Research Service (ERS). While the Consumer Price Index rose 2.9% on an annual basis in August 2025, the CPI for all food increased 3.2% year over year. Broken out, the food-at-home (grocery store or supermarket food purchases) CPI increased 2.7% YoY, while the food-away-from-home (restaurant and other food service purchases) CPI rose 3.9% over the same period. In 2025, overall food prices are anticipated to rise 3%, faster than the historical average, per ERS projections. By comparison, in 2026, overall food prices are expected to increase more slowly. Prices for all food are predicted to increase 2.7% next year, while food-at-home prices are predicted to increase 2.3% and food-away-from-home prices are predicted to rise 3.3%, per the ERS report.
• California lawmakers have passed a bill that seeks to identify and ban certain ultra-processed foods (UPFs) in school meals, Food Service Director reports. The bill (AB-1264: Pupil nutrition) would direct the California Office of Environmental Health Hazard Assessment to define UPFs and identify which ones are particularly harmful to children’s health. Once identified, schools would be required to begin phasing out those UPFs from their nutrition programs by July 1, 2029 and would have until July 1, 2035 to eliminate them. Beginning July 1, 2032, the bill would prohibit a vendor from offering restricted school foods and ultra-processed foods of concern to a school. The legislation Governor Newsom’s signature. Earlier this year, he signed a law banning certain food dyes from school meals beginning December 31, 2027. Other states, including West Virginia and Virginia, have also introduced and passed similar legislation.