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.
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 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
Recent Developments
Apr 20, 2024 - Industry on a Hiring Spree
- Employment by food service contractors continues to grow rapidly, rising 8.1% in January compared to a year ago after climbing 10.6% in the previous annual comparison, according to the US Bureau of Labor Statistics. In 2023, employment in the industry rebounded to surpass pre-pandemic levels. Industry wages also continue to rise steeply. Per BLS wage data, the average industry wage topped $21 per hour in January, up 15% compared to the year-earlier period. Notably, the food service sector in Texas recently passed the health care industry as the largest private employer in the state, according to the Texas Restaurant Association. Still, despite the hiring spree and large wage bump, many food service contractors are struggling with a persistent labor shortage.
- A Long Island Hospital has launched a DoorDash-stye mobile app that lets patients order safe and nutritious meals using their smartphones or tablets, Food Service Director (FSD) reported in April. With more people accustomed to ordering food online, Stony Brook University Hospital’s food service provider, Stony Brook Medicine Distinguished Dining Services, adopted an app created by tech solutions provider CBORD that allows patients to order from the hospital dining menu. While there are 30 different diets (with expertly photographed food selections) that the app can filter through, it only displays items compliant with each patient’s diet and allergies, according to FSD. Nutrition information, including carb counts, is calculated, allowing patients to swap items when they reach their limit. Patients' families can also order meals for them from home.
- 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.
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