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The global food service market size was USD 2,386.0 billion in 2020. The market is projected to grow from USD 2,525.4 billion in 2021 to USD 5,027.9 billion in 2028 at a CAGR of 10.34% during the 2021-2028 period. Based on our analysis, the global market exhibited a decrease in sales, registering a 31.46% year on year (YOY) dip in 2020. This could be mainly attributed to the nationwide lockdowns imposed in all the countries to avoid the spread of COVID-19. The rise in CAGR is attributable to the trend of ordering eatables online and the increasing spending of consumers on food consumed outside the home worldwide.
Innovation in the new types of services offered at restaurants, hotels, cafes, and dining out facilities has continuously grown in the last few years. Restaurant owners, hotel chains, and independent proprietors are focusing on expanding their services in every possible way, enabling online delivery facilities and adapting to the trend of home delivery of the eatables. New and creative business models are being implemented to tackle the problems faced by food service facility operators due to the COVID-19 pandemic. Innovative marketing strategies are expected to bring back the consumers in the food service system and enable them to spend more in this industry in multiple ways.
Moreover, online food ordering platforms are helping the local and small businesses make their menu available online and increase their consumer base. These initiatives will help strengthen the industry during the forecast period, which experienced tough challenges in 2020 due to COVID-19.
Spread of COVID-19 Across The Globe Restricted Market Growth
Europe, North America, and Asia Pacific are the largest markets of this industry in the world. However, HORECA, lodging, eating out, education institutes, and the entertainment industry stood still for most of the time in 2020 because of the COVID-19 pandemic. One of the world's largest countries in this industry, the U.S. and China faced significant challenges related to the hotel, tourism, and restaurant industries.
All the hotels, cafes, eating out facilities in China were shut from mid-January to March in the wake of the COVID-19 pandemic, and hence commercial dining services sales almost reached their all-time lowest levels. Even after lifting of restrictions, only a few services such as take away facilities, online food ordering, institutional catering such as hospitals and government offices was resumed, but the major contributor of the industry that is a restaurant and full-service cafes were not opened to avoid the spread of the disease till June-July months of 2020.
In the U.S., the COVID wave hit hard in the months between June to October of 2020. Almost all the dining out facilities were shut due to the spread of disease, and hence this industry was also impacted negatively. However, online ordering was enabled, and also food trucks were operative for take away facilities but they also did not record their average sales and were seeing dip in the consumer visits.
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Trend of Online Food Ordering Supporting Growth of Market
During the global 2020 COVID-19 outbreak, this industry observed the advantages of online delivery as it facilitated consumer access to prepared meals and enabled business owners to keep operating in the tough times for their businesses.
Financial growth, increasing disposable income, increased spending on food, and increasing broadband penetration are driving the global expansion of e-commerce systems. Consumers now are increasingly using online services as their disposable income increases, electronic payments systems have become more trustworthy, and the range of suppliers and their delivery networks' size is also expanding from time to time. With increase in online delivery platforms and adoption of these platforms from consumers in developing countries has changed the way consumers and suppliers interact mainly in COVID pandemic times. In developed regions, online ordering was already an established trend. Still, in developing countries such as India, Indonesia, Philippines, South Africa, Singapore, Qatar, Saudi Arabia, UAE, Turkey, Brazil, Argentina, and Chile, this trend mainly emerged in the wake of COVID-19 when the eat out facilities were shut.
Due to the Covid-19 outbreak and lockdowns in these developing countries, small restaurants and big businesses were both affected during and in the aftermath of the epidemic. Due to the online food trend, delivery services have been seen as the savior for most restaurants to stay resilient during this pandemic.
Since the COVID-19 times, the online ordering system can be seen as a vital necessity among the restaurant industry and other small business in the current situation. In the era of digitalization, consumers are moving on from the traditional ordering method to online ordering because it is easy, error-free, quick, and completely transparent. With the emergence of this trend, this industry is expected to experience a major boost during the forecast period, and is expected to benefit and create numerous growth opportunities for the new entrants in the market.
Increasing Demand Of Food Services In Institute Levels Boosts Growth Of Market
With changes in the socio-economic scenarios, foodservice and institutional catering services have also evolved as there is a much greater demand for lunch/dinners consumed outside the home. Scientific and technological advancement has also helped caterers and food producers in mass production to streamline their activities, be more effective, and improve safety. Moreover, the use of computers has also contributed tremendously. With increasing migration, urbanization, and globalization, exposure to various cuisines, the demand for multiple cuisines has increased. The advertisements regarding ethnic cuisine and growing interest of local people to try out new foods in institute levels such as corporate offices, government offices, education facilities, entertainment centers, hospitals, and travel facility hubs have further increased the demand for these items.
New types of businesses are emerging considering the need to cater to the institutional levels such as providing food at the workplace and institutions providing care for different target groups, such as hospitals, old age homes, orphanages, and hostels. Other institutions where food is routinely provided are a school, college, office, prisons, and feeding programs undertaken by the Government or voluntary sector to improve the health and nutrition of specific groups.
In developing countries such as India, Singapore, South Africa, Qatar, and UAE, institutional catering is now considered one of the significant aspects. Educational institutions, hospitals, and government offices invest more in providing on-premises meals to students, patients, and employees. Institutes are focusing on providing quality meals, and hence numerous opportunities are present in delivering quality and on-time food to these institutions.
Besides these institutions, many private industries also provide meals to their employees as part of their welfare activities. Workers receive free lunch & dinner at a much lower price than its actual cost, with the rest of the cost being borne by the company. In industrial, institutional, and welfare outlets, the objective is mainly to provide a necessary service. Such market trends are now emerging more than ever as employee welfare is seen as one of the essential aspects while calculating any company's goodwill.
Increased Spending On Food Consumed Out Of Home To Drive Growth Of Market
Household income growth and the rise of dual-income households in the majority of the regions are the major factors attracting consumers to consume more outside food. Apart from these factors, the fast expansion of varied-format outlets is also gaining popularity across major and emerging markets globally, while franchising remains one of the most popular growth models. With the majority of the millennial population leaning towards fast food consumption, their spending on quick service restaurants is increasing over their spending on traditional family restaurants. Considering the popularity of fast food in the young population, many International quick-service brands and hotel brands are expanding their presence in the foreign markets. Foreign investment, rising incomes, high aspiration level, increasing young population, increasing tourism, and changing consumer consumption patterns also benefit the growth of this industry. Opportunities for foreign food exporters to supply into the HRI sector are improving as demand for many regional ethnic foods is also increasing. These factors are emerging as major factors that are boosting the market growth.
After-effects of COVID-19 To Remain For A More Extended Period
This market is mainly based on the spending of consumers on meal consumed outside homes. But due to the COVID-19 pandemic spread in 2020, many workers have lost their jobs. The COVID-19 pandemic significantly affected labor market metrics for every state, economic sector, and significant demographic groups.
In April 2020, the unemployment rate reached 14.8% in the U.S., which was the highest rate observed since 1948. In July 2021, unemployment remained higher (5.4%) than in February 2020 (3.5%). The labor force participation rate declined to 60.2%. The labor force participation rate was 61.7% in July 2021, 1.7 percentage points below the level in January 2020, before the pandemic and the economic recession. The COVID-19 pandemic has impacted economic sectors disparately.
The leisure and hospitality sector in the U.S. lost the most significant number of jobs since January 2020 and exhibited some of the highest unemployment rates throughout the pandemic. Additionally, the education and services sectors and the government have also exhibited some of the largest losses in jobs since January 2020. With a greater number of consumers losing their jobs, the majority of the consumer group focused more on health and hygiene products in 2020. This trend is expected to prevail for a longer run in coming years as consumers spend their savings and earn wisely. While looking at the number of jobs lost worldwide, consumer spending is expected to be limited in this sector. Thus, considering these effects, recovery of the market to the Pre-Covid levels of 2019 is delayed and is expected to exert some more challenges related to the market's growth during the forecast period.
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Full Service Restaurants Segment Holds Major Market Share Attributed to Variety of Menu Available in Full Service Restaurants
The segment includes full service restaurants, quick service restaurants, institutes, and others based on type. The full service restaurants segment dominates the market with the highest food service market share owing to the availability of a wide range of food items on the menu. Families, corporate meetings, and gatherings generally prefer going to full-service restaurants to have a variety of food items available for every individual. As family outings are becoming more frequent, the number of full service restaurants is also increasing. In addition to the food, alcohol providing full service restaurants are also growing. Consumption of alcohol is rising year on year and catering to the need, more such restaurants are opening.
Another sub segment, which includes online food delivery and unorganized food services such as street vendors, is expected to showcase a promising growth on account of an increase in online food ordering worldwide. In countries such as the U.S., China, Japan, UAE, and India, online food ordering has been increasing since the last couple of years, mainly after the COVID-19 outbreak. Hence, this factor offers promising growth opportunities for global market growth.
Commercial Food Service Market to Hold Major Share Owing to Wide Number of Restaurants Present Globally on Commercial Service Basis
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. Institutes food service is a comparatively new concept in this industry developed in the 20th century, whereas commercial foodservice has been in the industry since its inception. As the 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 of this market during the forecast period.
North America Food Service Market Size, 2020 (USD Billion)
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North America holds the major foodservice market share with the value of USD 934.9 billion in 2020. The increasing number of dual working households, increase in disposable income, presence of junk eatable chains, and overall economic growth of the region are the major factors that makes this region one of the largest market in this industry. In North America, the U.S. is the largest market; this is attributed to the habits of consumers on eating out the majority of the days in the week and growth of institutional catering since the past few years in the country. Apart from the U.S., Mexico is a promising country in this region in terms of CAGR, Mexico is expected to grow with the highest CAGR in this region owing to the increasing number of the millennial population, changing lifestyle of consumers in the country, and the increasing number of tourists visiting the country.
The Asia Pacific region is expected to experience the highest growth rate during the forecast period.
Growing urbanization and the expansion of the middle class population in the Asia Pacific region is fueling the sales increase of this industry. Food service industry in Asia is fragmented and majorly dominated by small-to-medium enterprises. Regional diversity greatly influences the many cuisines and consumer consumption trends in this region. Restaurants serving local eatables continue to be more popular than restaurants serving international cuisines, especially in Tier 2 and Tier 3 cities. Dining space, fine dining, high-end establishments, and food ordering/delivery apps are becoming highly popular, especially among white-collar workers and students. According to the USDA, in China in 2017, USD 30 billion worth of meals were ordered through these meal ordering/delivery apps, a 23.1 percent increase from the previous year, and online edibles orders in 2017 made up 5 percent of the total HRI revenue in China, and continued growth is expected in the years to come.
Europe is expected to exhibit a steady growth as compared to the other regions. In Europe, major foodservice institutions include restaurants, specialist coffee shops, hotels and resorts, quick-service restaurants, leisure parks, pubs, staff catering, education, health care, custodial (police, fire stations, and prisons), welfare (meals on wheels, daycare centers, and other such institutions). Germany is the largest market for the industry in Europe. The European market also faced many challenges in 2020 more than ever. In addition to the COVID-19, Brexit has also made this industry volatile in the U.K. Covid-19 has had a massive impact on the U.K. economy and on the food & hospitality industry. On March 20, 2020, the U.K. government required all pubs and restaurants to close their doors as the U.K. went into lockdown.
Sales plummeted overnight, causing total decimation of the on-trade (wholesale) sales to survive. Restaurants and pubs were then allowed to open for takeaway or delivery service only, with establishments having to put in place social distancing measures. While some outlets did better than others, business was very quiet for the majority, with most of the population living and working from home. But considering the popular destinations for travel are mainly in Europe, this industry in Europe is expected to recover and offer a steady growth rate during the forecast period.
The South American market is projected to witness stable growth owing to its vast geographical area, including various oceanic domains. The major markets for food service in Latin America are Brazil and Argentina. Eatable service industry in this region holds remarkable opportunities with the increasing number of tourists, increasing standard of living, and growth in foreign investments in the foodservice sector.
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UAE, Saudi Arabia, Qatar are the major markets in this region. Millions of religious pilgrims, foreign workers, and a developing tourism industry give the Middle East region a large and resilient hotel, restaurant and institutional sector. Changes in labor and social policy, along with evolving lifestyles of consumers in the region, are increasing the need for labor-saving food products and technologies. While demand at quick service restaurants has largely rebounded, partly due to home delivery apps, fine dining establishments have been slower to recover in COVID-19 times. With various international events such as FIFA WORLDCUP, CRICKET WORLD CUP, and BUSINESS EXPO lined up in coming years, the number of tourists is expected to increase. This factor is expected to boost the growth of the region.
As the food service industry was heavily hit due to the COVID-19 outbreak in 2020, market players were not ready to risk their businesses by entering volatile markets and making loss. But since the markets started to open, key players in this market also started expanding their businesses and developments in this industry were taking place. Imperial Dade, a U.S. based leading distributor of foodservice 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 time period.
An Infographic Representation of Food Service Market
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The market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading application areas of the product. Besides this, the report offers insights into the global food service industry 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 over recent years.
Value (USD Billion)
By Service Type
Fortune Business Insights says that the global market size was USD 2,386.0 billion in 2020 and is projected to reach USD 5,027.9 billion by 2028.
The market will exhibit steady growth, registering a CAGR of 10.34% in the forecast period (2021-2028).
By type, full service restaurants segment is expected to be the leading segment in this market during the forecast period.
Increasing demand of food services in institute levels and the rise of online food ordering are the key factors that are driving this market
McDonalds, Starbucks, and Marriott International are the major market players.
North America dominated the market share in 2020.
The rise of online food ordering in developing countries is expected to drive its growth.
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