Food Service Market Size, Share & COVID-19 Impact Analysis, By Type (Full Service Restaurants, Quick Service Restaurants, Institutes, and Others), By Service Type (Commercial and Institutional), and Regional Forecast, 2022-2029

The global food service market size was valued at USD 2,323.29 billion in 2021. The market is projected to grow from USD 2,540.05 billion in 2022 to USD 5,194.60 billion by 2029, exhibiting a CAGR of 10.76% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with food service experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of -31.5% in 2020 as compared to 2019.

COVID-19 IMPACT

Transportation & Logistics Disruptions Caused Shortages in Supply of Raw Materials

The outbreak of the COVID-19 had unprecedented challenges on all stages of the food service supply chain. The COVID-19 impacted the farm production, food processing, food service, transport and logistics, and the final demand among consumers.

In many nations, restrictions on people's mobility have restricted the availability of seasonal workers for planting and harvesting in the fruit and vegetable business. Furthermore, the challenges in transport and logistics disrupted the movement of products; however, the effects varied by mode of transport and type of product. Transport and logistics problems have therefore been most pronounced for perishable high‐value products, such as fruits and vegetables, and minor for bulky products, such as grains and oilseeds. The fruits and vegetables sector is also affected by quarantine measures and delays in border inspections. Thus, the shortage in supply of raw materials affected the food preparation in restaurants, catering, and hotel services. Moreover, the social distancing rules and sickness-linked labor shortages reduced the availability of number of chefs or key cooks in this industry.

LATEST TRENDS

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Rise in the Trend of Vegan Food Consumption Supports Market Growth

Vegetarianism is a new food trend that is growing strongly globally. Vegans don't eat any animal products and vegans don't eat any dairy products or eggs, and many of them don't eat honey, while avoiding animal-derived ingredients. The term flex is often used to describe people who still consume meat and dairy products but are looking to reduce their consumption. Diets based on large amounts of fruits and vegetables have a positive impact on consumer health. The vegan diet is plant-based and has grown in popularity over the past few years. Health is the primary reason for choosing a vegan diet. 

Even though vegan diet was only limited to vegetarian population in earlier days, its now popular among to all the veg as well as non-veg consumers. Trend of veganism is also visible in fast food sector as customers are demanding vegan alternatives for burgers, sandwiches and breads.

DRIVING FACTORS

Increased Presence of the Food Services Institutions to Boost Market Growth

The food service industry has evolved due to the rise in the trend of away from home food consumption. The use of advanced techniques and technologies has also helped the food service providers to increase their production and streamline their activities to enhance the overall efficiency.

The surge in migration and urbanization has exposed the consumers to numerous cuisines. Furthermore, the growing advertisements regarding ethnic cuisine and rising interest in multiple cuisines have fueled the growth of this industry. The emergence of new types of businesses to staff catering the food demand in the institutes such as corporate office, old age homes, orphanages, and hospitals further boost the food service market growth. Moreover, institutional catering is considered significant in developing nations such as India, Singapore, South Africa, Qatar, and UAE.

Therefore, the rising adoption of food service and catering in institutes boost the market growth.

Increased Expenditure on Dining Out to Drive Market Growth

The rise in dual-income households and increased expenditure on dining out have supported the growth of the global market. In addition, the speedy expansion of the various food service outlets has gain popularity in developing and developed regions. The growing inclination of millennial population towards fast food consumption trends further increase their spending on quick service restaurants industry including franchise.

Apart from the increased spending from domestic consumers, spending from tourists on hoteling and restaurants is also contributing towards the growth of various regional markets. With tourism industry blooming over the last few years, hotels and restaurants are launching various new cuisine types in local markets to attract tourists from specific countries. This factor helps them in attracting tourists as well as domestic consumers who are curious to try new international cuisine types. Therefore, the growing spending on dining out is likely to boost the growth of this market.

RESTRAINING FACTORS

Slightly Negative Impacts of Online Food Delivery May Hamper the Market Growth

Some of the negative aspects of online food ordering are keeping customer away from adopting it. Along with the many other benefits of food delivery, some glitches come with it. For example, one of the difficulties with online food orders is that the quality of the food delivered is often lower than the quality of the meal in a restaurant. In addition, home delivery apps face difficulty during heavy network traffic. In addition, food from delivery services is often packaged in plastic packaging, which usually won't be too appealing compared to the food neatly placed on your plate in a restaurant.

Another downside of meals on wheels is that using these services can cost extra money to the consumers. While food delivery is free in most countries, if order value is below a certain amount, customers may have to pay for delivery even if ordered food is very cheap.

SEGMENTATION

By Type Analysis

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Full Service Restaurants Segment Holds Major Market Share Due to the Variation in Food menu

By type, the market is divided into full service restaurants, quick service restaurants, institutes, and others. Full service restaurants include sit-down establishments which serves customers with table service in brick and mortar and has a full meal menu in their offerings. They offer menus in multiple selection types which may include breakfast, lunch and dinner. Fine dining establishments and casual dining restaurants are the major contributors to this segment.

By Service Type Analysis

Commercial Segment to Hold Major Share Owing to High Spending on Dine-outs

The commercial segment includes full service restaurants, quick service restaurants, and dining out/takeaway edible service systems. Restaurants, cafes, fast food centers, food chains, food trucks, and online food ordering are examples of commercial edible services. Institutional food service is a comparatively new concept in the industry developed in the 20^th century, whereas commercial food service has been in the industry since its inception. As families' disposable incomes are increasing, consumers are spending more on hoteling, eating out, cafes, and other places. Considering the trend of millennial consumers to choose quick service restaurants, major fast eatable chains, such as Domino's, Pizza Hut, KFC, Starbucks, Burger King, Taco Bell, Subway, McDonald's, Wendy's, Papa John's Pizza, and Chipotle Mexican Grill, are taking this opportunity to mark their presence in various international markets. This trend is expected to boost the market growth during the forecast period.

REGIONAL INSIGHTS

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North America held the major market share 2021. In countries such as the U.S. and Canada, the operating cost of food service companies is increasing rapidly. The rise in labor wages and price of raw materials is putting significant pressure on the companies' profit margins. Hence, there is a significant drive towards digitization and automation in production and service areas. For instance, in 2021, Domino's partnered with Nuro, one of the leading self-driving delivery companies and launched an autonomous pizza delivery system in Houston. Customers can place prepaid orders, and Nuro R2 Robots deliver these products to the consumers.

The Asia Pacific region is expected to experience the highest growth rate during the forecast period.

Consumers in countries like Australia, Japan, and South Korea prefer to dine out in full service restaurants. Hence, the market share for such restaurants is comparatively higher than other types. The quick service restaurants exhibit the fastest growth in the market as these restaurants have higher speed and quick service time.

The food service industry of China is the second-largest in the world. The strong and rapid economic growth fueled industrialization in the country and further helped to create a vast middle-class population with more disposable income. As more people had the opportunity to enjoy meals in dine-in restaurants, this industry experienced significant growth over the past few years.

Europe is one of the significant players in the global market and the hospitality industry is huge in the region. Moreover, the hospitality industry has created multiple job opportunities for people staying in Europe. The growth of the European food service industry is supported by rising trend of eating out and busier lifestyle which increases the demand for prepared food items. Germany is the largest market in European. The key trends in the German food service market are convenience, regional production, health and wellness, and Asian and ethnic cuisines. The high spending capacity of consumers in Germany further boosts the growth of this market.

The South American region is one of the fastest-growing food service industries in the world, only second to the Asia-pacific market. Socio-economic factors, strong dine-out culture, and availability of cheap food options are some of the major factors contributing to the growth of the region. Among the different service types in the region, the full-service restaurants account for the largest food service market share, followed by the quick service restaurants.

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The Middle East & Africa region has experienced good economic growth in recent years. The Middle East region is home to a unique and profitable restaurant industry that is predicted to continue to grow strongly into the future. With one of the highest standards of living and the largest percentage of expats in the world, coupled with an ever-increasing number of tourists, diverse population of the region, and affluent as well as well-traveled consumers, this region create high demand for suitable dining options. Africa’s food service industry is growing mainly due to a growing middle class and an increasing population.

KEY INDUSTRY PLAYERS

As this industry was heavily hit due to the COVID-19 outbreak in 2020, market players were not ready to risk their businesses by entering into volatile markets and making losses. But since the markets started to open, market players also started expanding their businesses and developments in the industry were taking place. Imperial Dade, a U.S.-based leading distributor of food service packaging and janitorial supplies, announced the acquisition of Empire Distributors. Through this acquisition, the Imperial Dade platform will operate 91 distribution centers across the country.

In North Carolina, U.S. Krispy Kreme, Inc. partnered with its franchise partner Americana Group to open the donut chain’s first location in Egypt. In another move to attract more consumers, Pizza Hut and Beyond Meat in a partnership launched Beyond Pepperoni, a delicious plant-based version of Pizza Hut's pizza topping, and a first for both brands. The Beyond Pepperoni Pizza was made available as a test in nearly 70 locations across five U.S. markets for a limited time, only at Pizza Hut. Such product launches in new product categories and expansions through partnerships are expected to offer lucrative opportunities for the growth of the eatable service market during the forecast period.

LIST OF KEY COMPANIES PROFILED:

• McDonald's (U.S.)


• Starbucks (U.S.)


• Yum! Brands, Inc. (U.S.)


• Darden Restaurants, Inc. (U.S.)


• Restaurant Brands International Inc. (Canada)


• The Wendy’s Company (U.S.)


• Bloomin’ Brands, Inc. (U.S.)


• Papa John's International, Inc. (U.S.)


• Chipotle Mexican Grill, Inc. (U.S.)


• Domino's (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• May 2022: Outback Steakhouse restaurants planned to launch new restaurants with a modernized look on its dining space. The company launched three new restaurants in Fort Worth, Steele Creek, and Polaris, respectively


• May 2022: Domino's launched a new product offering named paratha pizza for consumers in India. This fusion dish is available in three flavors, cheese paratha pizza, paneer paratha pizza, and chicken keema paratha pizza.


• March 2022: Starbucks Corporation partnered with one of the leading companies in South East Asia, Grab. It aimed to improve its consumer service through this partnership by serving consumers in the Philippines, Thailand, Singapore, Malaysia, Indonesia, and Vietnam.


• August 2021: Quick service restaurant, Pizza Hut partnered with Hindustan Unilever to add the FMCG firm's Kwality Wall's ice cream and desserts to its dine-in and delivery and takeaway menu in India. With this partnership, Pizza Hut expects to increase its average order value by 10% for orders that have Kwality Wall's ice cream and desserts


• April 2020: In the wake of COVID-19, Domino's Pizza partnered with ITC Foods and launched Domino's Essentials. This service was made available for consumers first in Bengaluru and then in Noida, Mumbai, Kolkata, Chennai, and Hyderabad. This partnership between a QSR and an FMCG company aimed to serve the community by ensuring an uninterrupted supply of essential items without them having to step outside the safety of their homes.

REPORT COVERAGE

An Infographic Representation of Food Service Market

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The research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading application areas. Besides this, the report offers insights into the food service market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market in recent years.

Report Scope & Segmentation: