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Food Marketing System in the U.S.: Food Service

Contents
 

This chapter presents information on foodservice outlets—facilities that serve meals and snacks for immediate consumption on site (food away from home)—beginning with an examination of the size of this growing market and the major market segments such as fast food and full-service outlets. Next, recent issues in the foodservice industry are identified, including diet quality, nutrition labeling, and holding down costs.

A Large and Growing Market

The foodservice industry is nearly equal in size to food retailing:

  • The food marketing system, including food service and food retailing, supplied about $1.24 trillion worth of food in 2010.
  • Of this total, $594 billion was supplied by foodservice facilities.

 
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Commercial foodservice establishments accounted for the bulk of food-away-from-home expenditures in 2010. This category includes full-service restaurants, fast food outlets, caterers, some cafeterias, and other places that prepare, serve, and sell food to the general public for a profit. Some are located within facilities that are not primarily engaged in dispensing meals and snacks, such as lodging places, recreational facilities, and retail stores.

Schools and nursing homes are types of non-commercial foodservice establishments. Such establishments are often called "institutional" foodservice facilities.


 
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Full-service and fast food restaurants—the two largest segments of the commercial foodservice market—account for about 77 percent of all food-away-from-home sales. Full-service establishments have waitstaff, and, perhaps, other amenities such as ceramic dishware, nondisposable utensils, and alcohol service. In contrast, fast food restaurants use convenience as a selling point; they have no waitstaff, menus tend to be limited, and dining amenities are relatively sparse.

Over the past few decades, the market for fast food has grown more rapidly than that for food in full-service restaurants. As part of their growth strategy, fast food companies built more outlets closer to consumers’ homes and work places to make it more convenient for consumers to purchase meals and snacks. Many restaurant companies opened outlets in nontraditional locations such as department stores. In addition to convenience, a household's demand for food-away-from-home is affected by its income and demographic characteristics (see The Demand for Food Away From Home: Full-Service or Fast Food?).


 
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Any shift in market share between fast food and full-service restaurants could influence the mix of foods and services offered by both types of restaurants. For example, if trends favor full-service restaurants, the market could shift to include more full-service restaurants that offer a wider range of menu selections and dining amenities. In response, fast food restaurants might introduce comparable foods and services.

Recent Issues

Diet Quality

Food away from home is increasingly important to the American diet. The rising consumption of meals and snacks at food service establishments reflects a growing demand among consumers for a variety of foods, convenience, and the entertainment value associated with eating out. However, restaurant foods, on average, tend to be higher in calories and lower in some key nutrients than foods prepared at home (see The Impact of Food Away From Home on Adult Diet Quality; Let’s Eat Out: Americans Weigh Taste, Convenience, and Nutrition; and Away-From-Home Foods Increasingly Important to Quality of American Diet).

A welcome sign is that restaurants are now offering more healthful choices for nutrition-conscious consumers. Eating out was long associated with eating more lettuce and potatoes, but less of other types of vegetables and fruits, such as grapes, apples, and citrus. Now, even fast food chains have added vegetable salads and fruit-based items to their menus (see Understanding Fruit and Vegetable Choices: Economic and Behavioral Influences).

Nutrition Labeling

Many State and municipal governments, including New York City, have passed laws that require chain restaurants to provide caloric content and other nutritional information at the point of sale. In 2010, the Federal government moved to establish a uniform, national standard—foodservice establishments that are part of a chain of 20 or more locations under the same name will be required to disclose the number of calories in standard menu items adjacent to the name on the menu in a clear and conspicuous manner. Other nutritional information may be provided upon request in writing. The U.S. Food and Drug Administration is formulating these regulations. (see Will Calorie Labeling in Restaurants Make a Difference? and Nutrition Labeling in the Food-Away-From-Home Sector: An Economic Assessment).

Some restaurants were already providing nutritional information before State and municipal governments passed mandatory labeling requirements. Subway Restaurants, for example, lists the caloric content of many of its sandwiches on drink containers. Burger King and McDonald's voluntarily provide similar information on the back of place mats, on posters, in pamphlets, or online.

 

For more information, contact: Hayden Stewart

Web administration: webadmin@ers.usda.gov

Updated date: September 23, 2011