Price, Charlene C.

English

Research Papers in Economics

Journal  of Food  Distribution  Research
Foodservice  Sales in the 90s
Charlene  C. Price
Economic Research  Service
U.S. Department of Agriculture
Rising  incomes,  more  women  in  the  work
force,  and  tightening  constraints  on  family  time
have  increased  the  demand  for meals  eaten  away
from home. This study focuses on away from home
eating during the  1990s--certainly  a decade of eat-
ing out. It is part of a larger study that looks at the
structure,  organization,  conduct,  and performance
of the foodservice industry.
The data presented here is a descriptive analy-
sis  of foodservice  industry  sales  by  foodservice
segment,  1990-99.  ERS food expenditure data was
used to make the comparisons.  Real change is
based on sales adjusted by the Consumer Price In-
dex for all Urban Consumers (CPI-U).
Table 1 shows that foodservice  sales grew from
$228 billion in  1990 to $339 billion in 1999-a 49
percent  increase.  The  big  growth was  in  sales  by
commercial  foodservice establishments that prepare,
serve,  and sell meals and snacks to the general pub-
lic.  Commercial  foodservice  sales  grew from $178
billion in  1990 to $275 billion in  1999, a 54 percent
nominal  increase,  21  percent  inflation-adjusted.
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.  Commercial foodser-
vice  sales also include sales by caterers and foodser-
vice  operations  located  in  other  facilities,  such  as
lodging  places,  recreation  and  entertainment  facili-
ties, department stores, and separate drinking places.
Table 1. Foodservice  Sales in the 90s.
Change
Industry segment  Sales  Nominal  Real
1990  1999  1990-99  1990-99
$Billion  Percent
Commercial foodservice  177,975  274,870  54  21
Fast-food outlets  74,361  118,228  59  25
Restaurants & lunchrooms  70,256  99,859  42  12
Cafeterias  3,542  3,929  11  -13
Caterers  1,484  2,160  46  14
Lodging places  10,449  15,961  53  20
Retail hosts  9,696  20,540  112  66
Recreation  and entertainment  6,624  12,464  88  48
Separate drinking places  1,563  1,729  11  -13
Noncommercial foodservice  50,071  64,476  29  1
Education:  16,125  24,328  51  18
Elementary and secondary  7,896  12,093  53  20
Colleges and universities  8,229  12,235  49  17
Military services:  1,884  1,954  4  -19
Troop feeding  1,052  1,054  0  -21
Clubs and exchanges  832  900  8  -15
Plants and office buildings  5,342  7,315  37  7
Hospitals  3,896  3,470  -11  -30
Extended-care  facilities  6,350  6,344  -0  -22
Vending  5,614  5,439  -3  -24
Transportation  4,821  5,060  5  -18
Associations  1,170  2,098  79  41
Correctional facilities  2,150  3,548  65  29
Child daycare centers  1024  2,114  106  62
Elderly feeding programs  143  177  24  -3
Other noncommercial  1,552  2,629  69  33
Total foodservice  sales  228,046  339,346  49  17
Note:  Foodservice sales exclude sales tax and tips. Real change is based on sales adjusted by the Consumer
Price Index for all Urban Consumers (CPI-U). Source, USDA, Economic Research Service.
198  1March  2001Research Updates  199
Noncommercial  foodservice  sales  grew  by  29
percent between  1990  and  1999.  Noncommer-
cial  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 patient feeding in hospitals (patient
meals).  Noncommercial  sales  grew  from  $50
billion in  1990  to $64.5  billion in  1999 and ac-
counted for 19 percent of total foodservice  sales
in 1999.
In  the  commercial  sector,  retail  hosts
showed  the largest  sales  increase  over  the  dec-
ade,  rising  from  $9.7  billion  in  1990  to  $20.5
billion  in  1999--a  112  percent  increase.  Retail
hosts  are  different  types  of stores  such  as  de-
partment  stores,  drug  stores,  book  stores,  gas
stations,  and even grocery  stores that offer fully
prepared meals  and  snacks  designed to be  eaten
inside the retail host Sales more than doubled for
recreation  and  entertainment  facilities  between
1990  and  1999.  Attendance  at  theme  parks,
sports  events,  and  multiplex  cinemas  in  malls
contribute  to  this  increase.  Cafeterias  and  sepa-
rate drinking places  where alcohol  is  served had
the smallest increases in sales for the decade, just
11 percent, respectively.
In the noncommercial  sector,  foodservice  in
child daycare  centers increased  as the number of
children  in  daycare  centers  continued  to  grow
over the decade.  Sales nearly doubled also for as-
sociations  (membership  organizations,  such  as
booster  clubs,  fraternal  lodges,  and citizen  asso-
ciations) and correctional  facilities. Transportation
showed  the smallest increase  in  sales  (5  percent)
between  1990  and  1999.  Sales  in  two  noncom-
mercial  sectors  fell  during  the  decade.  Hospital
foodservice  sales  declined  by  11  percent,  and
vending sales fell 3 percent.
Fast Food Outlets/Restaurant Sales Dominate
Fast  food  outlets  and  restaurants  dominate
the foodservice  industry.  The two segments  had
combines  sales of $218.1  billion  and  accounted
for 64 percent of total foodservice  sales in  1999
(compared with 63  percent in  1990). Though to-
tal fast food sales reached $118 billion in 1999,  a
59  percent  increase  over  1990  sales,  real  sales
rose 25 percent, when adjusted for inflation-1.7
percent in 1999. Restaurants had  a nominal  sales
increase  of 42 percent,  but real  sales  were only
12 percent. During the 1990-91 recession, people
ate  out  less  often  and/or  ate  at  less  expensive
eating  places.  Foodservice  sales  were  sluggish
throughout  the  restaurant  industry,  but  particu-
larly in  fast  food places,  restaurants  and  lunch-
rooms,  lodging  places,  retail  hosts,  and  recrea-
tion and entertainment  places. The economic re-
covery brought  about higher incomes  and robust
spending in the mid- and late-1990  s, thus a sig-
nificant  increase  in  foodservice  sales  in  these
segments.
Foodservice  Sales Reflected
the Economic Growth of the 1990s
Adjusting  foodservice  sales  for  inflation
over the decade provides a more accurate picture
of how  "real"  sales  grew.  For  example,  during
the  1990-91  recession,  real  (inflation-adjusted)
sales  by  the  top  five  commercial  foodservice
segments-fast-food/quick-service  places,  res-
taurants  and  lunchrooms,  lodging  places,  retail
hosts, and recreation  and entertainment places-
were  sluggish  as people  ate  out  less  often  and
kept a sharp  eye on menu prices.  Real  foodser-
vice  sales began  to pick up  in  1993  as the  eco-
nomic recovery brought higher incomes.  Just as
with  nominal  (unadjusted  for  inflation)  sales,
fast-food/quick-service  outlets  saw  their  real
sales outpace those of full-service restaurants and
lunchrooms.  Real  sales  at quick-service  estab-
lishments rose 25  percent over the decade,  com-
pared  to  the  12-percent  increase  for  leisurely
dining  at full-service  restaurants.  Robust  spend-
ing  at  retail  hosts  and  at  recreation  and  enter-
tainment  places  in  the  mid-and  late-1990s  in-
creased real foodservice  sales in these  segments
by 66 percent and 48 percent.
Outlook for 2000
A majority of the foodservice  segments  will
see  increases  in  meal  and  snack  sales  in  2000.
Foodservice  sales  are projected  to grow to  $376
billion in 2000.  Sectors predicted  to show  strong
growth  are  retail  hosts;  recreation  and  entertain-
ment facilities;  the transportation  market,  schools,
colleges and universities,  and companies that pro-
vide  foodservice for  office  buildings.  If past per-
formance  is any indication  of the future,  correc-
tional  facilities  and  child  daycare  centers  should
also be areas of continued growth in 2000.

FOODSERVICE SALES IN THE 90s

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Research Papers in Economics