July 19, 2016 | by S.A. Whitehead

A new analysis of the food service industry by Technavio shows that over the next four years the food service industry will grow almost 3½ percent overall largely due to a whole lot of action in the market around the fast casual restaurant sector, according to a news release. 

The new report does a deep dive into the data about today's food service operations in two categories: Retail food service, like quick-serve and fast casual restaurants, as well as a second analysis of the non-commercial or largely institutional food service sector that serves organizations like hospitals and educational institutions.  

Overall, Technavio's analysts forecast that food service in the U.S. will grow at a compound annual growth rate of 3.33 percent between now and 2020. The market's size is calculated in the research by revenue generated from the sales of food and beverages. 

The news release said that the company used a number of industry experts to analyze the market landscape and determine growth prospects over the next four years. A discussion of key market vendors is also included in the report, as well as a look at each brand's key strengths and weaknesses. The key vendors discussed, include: 

  • Aramark
  • Compass Group North America
  • Domino's
  • McDonald's
  • Restaurant Brands International
  • Starbucks
  • Subway
  • Yum! Brands

Other prominent vendors included in the report are Chick-fil-A, Dunkin' Brands and Wendy's.

What's driving, challenging and changing the market? 

As a result of its analysis, Technavio draws a number of key conclusions about what's behind the growth in food service, as well as which factors pose the greatest challenges to the industry, and which trends appear to be most likely to drive change across the industry. 

The company found that the primary driver for growth across the sector is, and will likely continue to be, an industry-wide shift to the fast casual restaurant model. The popularity of this concept is evident just about everywhere from complete chain re-conceptions like that occurring with the Captain D's rebranding, to whole product launches, like that of the Starbird chain, which refers to itself as a luxury QSR concept. 

As far as potential stumbling blocks on the road to 2020 for restaurants, Technavio's research indicates that the biggest challenge market-wide comes from an ongoing need to both maintain and standardize food safety. For proof of the devastation that this threat poses, you need look no further than Chipotle's repeated problems with potentially deadly pathogens, or you might even harken back to the days that doomed the former Chi Chi's brand, which went bankrupt 12 years ago after the largest hepatitis C outbreak in U.S. history, that claimed four lives and was traced back to green onions at a Pennsylvania location of the chain. 

The Technavio researchers also found that the biggest trend affecting food service over the next four years is that toward the nation's increasing obsession with all things healthful and gluten-free. This trend is already prompting movement in huge chains like Pizza Hut, which recently moved to eliminate all BHA/BHT from the meat it serves by the end of this month, as well as eliminating artificial preservatives from cheese and antibiotics from chicken by the end of March next year. In fact, just yesterday, the Papa Murphy's take-n-bake chain became the nation's first to eliminate chicken raised with antibiotics from its menus. 

Topics: Business Strategy and Profitability, Financial News, Food & Beverage, Food Safety, Operations Management

S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.

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