Competitive, But Lucrative: France's Food Service Industry

AgExporter, Oct, 2000 by Roselyne Gauthier

A new French army is coming--and it's carrying burgers, fries and other U.S.-style delicacies. Imagine a battalion serving 7 billion meals each year, worth almost $50 billion. A field of conquest involving 160,000 restaurants, including cafes and fast-food outlets.

When you combine France's hotels, restaurants and industrial food services, you come up with an economic sector that provides 21 percent of the nation's jobs. Hotel and restaurant sales have grown steadily since 1994.

What will future growth be like? Overall estimates say 4.5 percent annually. The snack and fast-food segments will surge 13 percent as they replace school and university caterers. The hotel and restaurant segment is expected to grow by 7.5 percent.

It's true that this market is not easy to penetrate, and sales tend to fluctuate, as the strength of the U.S. dollar against the Euro has recently nibbled into U.S. exporters success in France. Some food exports, however, are still setting records despite the currency challenge.

Keys to the French Market

First, a bit of demographics will help you see where France's key markets lie. The population is aging; about 20 percent of the population is over 60. This may also be a factor in the growth of the institutional food sector, as seniors tend to need more health care--and hospital and nursing home stays.

Catering services are also growing in popularity as seniors want to spend less time cooking and more time enjoying life. They have fewer people to cook for, now that their children have left home, so catering becomes a more affordable choice.

Urbanization fuels growth in the restaurant industry as well. In the cities, where good restaurants are often next-door neighbors, people tend to dine out often.

French consumers are changing their daily eating patterns. Two trends that seem contradictory at first glance simply represent modern realities of France's labor market.

First, more women are on the job--they now make up about 40 percent of the workforce. With women at the desk instead of in the kitchen, the frequency of eating out and the use of catering services have increased.

Second, more French women may be on the run, trying to balance work and family. France has reduced the number of hours in its work week, freeing up time for leisure--and dining out.

Know the Suppliers

U.S. exporters are advancing their sales to France's commercial food service sector by working with importers, distributors, cash-and-carry stores and wholesalers.

For small and medium-sized export companies, these contacts are a must. Your partner in France will help with the paperwork relating to duties, import and sanitary certificates, labeling and other potentially complicated but necessary details.

In addition to knowing quality importers or distributors, it pays to know a little about the industries that cater to caterers--and to hotels, restaurants and other institutions.

Cash & Carry: These stores provide the food-service industry with the equivalent of a "quick stop," enabling a hotel manager to get the croissants his customers crave and quickly get back to serving. Since 1993, these outlets have realized growth rates ranging between 11 and 20 percent. They are exclusively open to businesses.

Their convenience, competitive prices and wide variety of food products make them a popular choice for the industry.

Large Wholesalers: Offering a great platform for all kinds of imported products, large wholesalers have strong standing in the hotel, restaurant and industrial food industry sector and also often provide foods to the retail sector.

Independent Wholesalers: These operations carry mostly domestic products-- and they tend to price them higher than do large wholesalers. They offer their customers an advantage in that many are specialized by product segment, and can tailor their services better than large wholesalers can.

Fast Thrills in Food

Food sales of U.S.-style, fast-food restaurants, led by McDonald's and followed by the Belgian chain Quick, are still rising. McDonald's most recent annual sales figures totalled $1.3 billion, with Quick trailing far behind with $400 million.

Perhaps because the fare is better attuned to the local palate, the growth of France's own fast-food industry outpaces that of foreign chains. The menu tends toward baguette sandwiches, quiches and salads.

Another good venue is institutional-style restaurant services that provide food at major events. While high-end French restaurants and hotels may prefer to buy domestically, the companies that feed the masses do it by buying imports wholesale.

For example, the food company Sodexho provided food during France's "World Youth Days in 1997. Compass, a British company, won the contract to feed hungry fans at the French stadium hosting soccer's World Cup in 1998.

A Traffic Light for U.S. Exporters

For a first-time exporter to France, the market can seem like a maddening matrix of rules and their exceptions. It may be easier to think of it like a traffic light. There are a few red-light foods that can't be exported, many yellow foods that face obstacles but could still be rewarding, and a few obvious winners--the green-light products.