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 3,340 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.


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 187 workers, and generates about $10.3 million annually.

    • The food service contracting industry consists of about 3,340 companies that employ about 477,800 workers and generate about $34.7 billion annually.
    • The industry is highly concentrated; the top 20 firms account for about 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. Small companies generate less than $100 million annually.
                                      Industry Forecast
                                      Food Service Contractors Industry Growth
                                      Source: Vertical IQ and Inforum

                                      Recent Developments

                                      Feb 20, 2024 - Wage Hikes Spurred Hiring in 2023
                                      • Employment by food service contractors grew 6.6% in December compared to a year ago after rising 21.2% in the previous annual comparison, BLS data show. Companies have been staffing up to meet the resurgence in demand from institutional, governmental, and commercial customers, with hiring by food service contractors returning employment by the industry to pre-pandemic levels in 2023. Steeply rising wages – up 16.3% or $3 per hour – attracted workers to food service jobs last year.
                                      • 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.
                                      • The University of California, Berkeley has committed to 50% plant-based dining by 2027, Food Management (FM) reports. With an enrollment of more than 45,000 students, UC Berkeley is the first school in the 294,000-plus student University of California system to take the step, according to FM. The school is partnering with the Humane Society of the United States (HSUS) to transition to 50% of entrees offered in on-campus dining commons to be plant-based by 2027. To support the transition, HSUS will be offering free resources, including chef-led culinary training, student engagement and marketing support, and a curriculum of plant-based events over the next several semesters. Other universities that have committed to plant-based dining include Penn State, the University of Wisconsin–Madison, and The University of Texas at Austin.
                                      • A new California law limits the amount of added sugar and salt in school meals served in the state, Food Service Director reports. As of January 2024, meals served at California schools are limited to no more than 25 grams of added sugar per day to comply with the American Academy of Pediatrics added sugar recommendation. Moreover, the USDA also is considering including its own added sugar restrictions for school meals served under the National School Lunch Program. The new restrictions on added sugar are meant to help California combat rising rates of diabetes, particularly type 2 diabetes, in children, which is preventable. In 2021, California became the first US state to establish a universal school meals program with every K-12 student eligible to receive two meals every day at school free of charge.
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