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U.S. Food Service

Food service share of food dollar growing, at the expense of supermarkets. Relatively concentrated industry Multi-branding attempts Technological developments and impacts upon food service industry. U.S. Food Service. EconS 451: Lecture #5.

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U.S. Food Service

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  1. Food service share of food dollar growing, at the expense of supermarkets. • Relatively concentrated industry • Multi-branding attempts • Technological developments and impacts upon food service industry. U.S. Food Service EconS 451: Lecture #5 Source: U.S. Food Marketing System, 2002, ERS-USDA

  2. Food Service is Gaining on Supermarkets’ Share of Food Expenditure Source: U.S. Food Marketing System, 2002, ERS-USDA

  3. Distribution of U.S. Food Service: Commercial vs. Non-Commercial Source: U.S. Food Marketing System, 2002, ERS-USDA

  4. Top Five Food Service Chains Source: U.S. Food Marketing System, 2002, ERS-USDA

  5. Technological Developments • Restaurants developing presence on Internet: • 30% had Website in 1999 • 56% had Website in 2000 • Cybermeals: • Worlds largest online meal ordering service • Over 13,000 locations under contract • Exclusive online ordering service for AOL, Excite, Yahoo, Lycos • e-Vend-net: • Equipping vending machines for electronic communication to relay instant info on inventory and sales Source: U.S. Food Marketing System, 2002, ERS-USDA

  6. New MarketingStrategy for Food Service • Multiple Branding Concept • Welcome to Yum! Brands, Inc. • Brinker family restaurants - casual dining, catering, locations, jobs How does this help? What are the risks? Source: U.S. Food Marketing System, 2002, ERS-USDA

  7. Merchant-Third Party (38%) (Supervalu, Fleming) U.S. Food Marketing System U.S. Food Marketing System Distribution Channel Wholesaling Retail Manufacturing Ag. Producers Organizational Product Type Food Service Distributors Product Line Del-Monte LambWeston Frito-Lay Merchant (56%) Specialty (43%) Product Type Grain Beef Dairy Fruit Food Service Broadline (50%) (Sysco) Specialty (33%) (Costco) Systems (17%) (Ameri-Serve) MSBO (25%) General Line (25%) Misc. (32%) Agent/Broker (19%) Retail Stores Self-Distributing Retailer (34%) (Kroger, Safeway) Direct-Store Delivery Manufacturer (28%) (Frito-Lay, Dreyers Ice Cream, Coke) Source: U.S. Food Marketing System, 2002, ERS-USDA

  8. Questions to Ponder: Overall • Understanding the different degrees of concentration throughout the food marketing system, what are the likely consequences for producers, consumers? • How has technology changed different components of the food marketing system? • Explain how vertical and horizontal concentration alters the business landscape at each phase of the food marketing system. Source: U.S. Food Marketing System, 2002, ERS-USDA

  9. Summary! • Explain recent technological advancements in the food service industry and implications for consumers. • Explain the Multiple Branding Concept in Food Service and the pros/cons associated with this approach. • Understand the distribution of food service into Commercial and Non-Commercial sectors and how this has changed over time. • How has concentration changed the food service industry relative to other components of the food marketing system? Source: U.S. Food Marketing System, 2002, ERS-USDA

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