Foodservice Sales Reflect the Prosperous, Time-Pressed 1990's

Food Review, Sept-Dec, 2000 by Charlene C. Price

The 1990's were certainly a time to eat out. Foodservice sales grew by 49 percent, from $228 billion in 1990 to $339 billion in 1999. The big growth was in sales by commercial foodservice establishments that prepare, serve, and sell meals and snacks to the general public. Their sales more than doubled, from $178 billion in 1990 to $275 billion in 1999 (table 1).

Commercial foodservice establishments accounted for 81 percent of total foodservice sales in 1999. They include separate eating places, such as full-service restaurants and lunchrooms, fast-food/quick-service outlets, and cafeterias. Fastfood/quick-service outlets and restaurants dominate the foodservice industry. The two segments' combined sales of $218.1 billion accounted for 64 percent of total foodservice sales in 1999 (compared with 63 percent in 1990). Commercial foodservice sales also include caterers and foodservice operations located in other facilities, such as lodging places, recreation and entertainment facilities, department stores, and separate drinking places.

In the commercial sector, retail hosts showed the largest sales increase over the decade, rising from $9.7 billion in 1990 to $20.5 billion in 1999--a 112-percent increase (fig. 1). Retail hosts represent a variety of stores, such as department stores, drug stores, book stores, gas stations, and grocery stores that offer prepared meals and snacks designed to be eaten inside the store.

Sales nearly doubled for recreation and entertainment facilities during the 1990's. Attendance at sporting events continued to grow, and multiplex cinemas generated high traffic in shopping malls. Theme-park attendance was up, as new and improved attractions built repeat business. Theme parks, ball parks and stadiums, and other recreation and entertainment facilities continued to upgrade the quality and variety of their food offerings.

Cafeterias and separate drinking places where alcohol is served had the smallest increases in sales for the decade, just 11 percent each.

Things were not so robust for the noncommercial sector. Noncommercial foodservice sales grew by 29 percent between 1990 and 1999. Noncommercial foodservice operations prepare and serve meals and snacks as an adjunct, supportive service in institutional and educational settings, such as schools, nursing homes, child daycare centers, and to patients in hospitals. Noncommercial sales grew from $50 billion in 1990 to $64.5 billion in 1999 and accounted for 19 percent of total foodservice sales in 1999. Much of the increase came from foodservice operations in schools, colleges, and universities.

Foodservice in child daycare centers increased as the number of children in daycare centers continued to grow over the decade. Sales nearly doubled for associations (membership organizations, such as booster clubs, fraternal lodges, and citizen associations) and correctional facilities. Transportation showed the smallest increase in sales (5 percent) between 1990 and 1999.

Sales in two noncommercial sectors fell during the decade. Hospital foodservice sales declined by 11 per cent, and sales from vending machines fell 3 percent. Foodservice sales for military troop feeding and extended-care facilities ended the decade at the same level as the beginning.

Fast-Food Places Are Everywhere...

During the 1990's, people wanted quick, convenient meals. Fast-food outlets more than doubled their sales over 1990-99, and captured an increasing share of sales by separate eating places during the past decade--from 50 percent in 1990 to 53 percent in 1999.

Over the decade, fast-food companies found new ways to market their products. Consumers may eat while they shop, watch a ball game, or fill their gas tanks because fast food outlets are found in gasoline stations, department stores, convenience stores, and supermarkets. McDonald's, for example, has out lets inside nearly 200 Chevron and Amoco service stations and in nearly 700 Wal-Mart stores across the country. Convenience stores have also teamed with fast-food chains. Many convenience stores, such as 7-Eleven and Circle K, have either a fast-food kiosk in the store, or the stores sell branded fast-food items from Subway, Taco Bell, Blimpie, Burger King, Dunkin' Donuts, Pizza Hut, Godfather's Pizza, Baskin-Robbins, and Arby's.

Fast-food products are served in elementary and secondary schools across the country, as well as on college campuses. Pizza Hut and Taco Bell, the leaders in school foodservice, are in schools nationwide. Subway, Domino's, Chick-fil-A, Arby's, Little Caesar's Pizza, and McDonald's also offer some products in school lunchrooms.

As the U.S. market becomes saturated, fast-food outlets continue to increase internationally. McDonald's, one of the first U.S. fast-food chains to go abroad, operated 12,328 international units in 1998 (the latest year for which we have data). Other top U.S. chains operating abroad include KFC (with 5,291 outlets), Pizza Hut (with 3,814 outlets), and Burger King (with 2,316 outlets).