1. Get more info on this report!Trends in U.S. Foodservice ContractingJuly 1, 2011Unlike restaurants and food retailers, foodservice contractors may not be householdnames, but they participate in one of the most successful areas of the food andfoodservice industry. As detailed in Packaged Facts’ Trends in U.S. FoodserviceContracting, we believe its future is bright, forecasting enviable growth in education,healthcare, military, and sports and recreation markets, with more significant challengesahead for the business and industry segment.Trends in U.S. Foodservice Contracting provides insight on opportunities forcontractors providing food services to commercial, non-commercial and governmentlocations. We provide in-depth segment analysis for six key market verticals, includingmarket size and forecasting, innovation leadership case studies, and opportunityanalysis.The report also includes thorough competitive analyses of the four major foodservicecontracting players: Aramark Corp, Sodexo Inc., Compass Group PLC, and DelawareNorth Companies. Each profile analyzes foodservice strategies and innovations, as wellas sales trends, by market segment. The report also includes profiles of growing mid-size firms such as Guckenheimer Enterprises, Inc. Guest Services, Inc. Centerplate,and Thompson Hospitality.While certain aspects of foodservice are common to each market vertical, eachpresents unique differences and challenges. We view K-12 foodservice contracting trend momentum as positive, as foodservice contractors can leverage the need for money-losing school districts to provide meal service options that adapt to sweeping health and nutrition-driven regulatory changes. Balancing nutritional requirements with boosting breakfast and lunch participation. Momentum in college & university foodservice contracting is also positive, driven by a mixture of solid fundamental growth metrics and contractor innovation in addressing student needs and expectations. To leverage opportunity, foodservice contractors should focus on providing students with flexibility, variety and convenience; healthful and sustainable options; and refashioned dining halls fit for the 21st century.
2. Healthcare foodservice contracting trend momentum is also positive, as healthcare continues to grow revenue and employment while serving an aging population more apt to use its services. While opposition among some members of the hospital foodservice community is strong, we believe contract relationships built on serving the patient while controlling costs will grow solidly. Foodservice contractors should target the following key areas for innovation: wellness and nutrition (from targeted menu planning, to rebranding healthy restaurant concepts,) customer service, individualized care and room service; and grab- and-go options. Corporate foodservice contracting trend momentum is negative. For Business and Industry foodservice contractors, reliance on larger companies and declining usage provide significant obstacles to growth. However, solutions abound, from catering to smaller sites to targeting by generation to tapping into wellness. This report frames these “solutions” with rationales and examples. Military foodservice contractors are on the cusp of significant growth, as the federal government seeks to increase efficiencies and consolidate contracts. This report analyzes the evolving foodservice contracting relationships and opportunities with the Armed Forces, framed against “trend applications” we believe are important to growing military foodservice sales.TABLE OF CONTENTSChapter 1: Executive SummaryScope and Methodology ScopeMethodology Consumer survey methodology Market size and forecast DefinitionsContent SummaryShare of stomach: foodservice contractor sales analysisK-12 foodservice contracting trendsCollege & university foodservice contracting trendsHealthcare foodservice contractingCorporate foodservice contracting trendsMilitary foodservice contracting trendsChapter 2: Share of Stomach: Foodservice Contractor Sales AnalysisIntroductionPackaged Facts foodservice contractor market size & forecastGraph 2-1: Foodservice Contracting Sales, 2007-2012Bundling servicesA significant strategic shiftRevenue among “Big Three” foodservice contractors surgesTable 2-1: “Big Three” Foodservice Contractors, U.S. Contracting Revenue, 2009-11
3. Segment analysisCorporate and education markets dominate contract shareGraph 2-2: Foodservice Contract Management Contract Share, by Market Segment,2010Sales segmentationSegment sales trendsGraph 2-3: Foodservice Contracting Sales, by Segment, 2007-2012B&I more sensitive to macro-trends than education and healthcareGraph 2-4: Foodservice Contracting Sales, by Segment, Percent Change, 2007-2012Education foodservice contracting K-12 foodservice College and university foodservice Summary growth analysisGraph 2-5: Education Foodservice Contracting Sales, 2007-2012Healthcare foodservice contracting Self-managed hospital foodservice still holds sway Summary growth analysisGraph 2-6: Healthcare Foodservice Contracting Sales, 2007-2012Business & Industry foodservice contracting Summary growth analysisGraph 2-7: B&I Foodservice Contracting Sales, 2007-2012Military foodservice contractingGraph 2-8: Military Foodservice Contracting Sales, 2007-2012 U.S. Army generates highest percentage of revenue Sodexo receives highest percentage of revenueTable 2-2: Top Five Military Foodservice Contracting Agencies, 2010Recreation and amusement foodservice contractingGraph 2-9: Sports & Entertainment Foodservice Contracting Sales, 2007-2012Chapter 3: K-12 Foodservice Contracting TrendsMomentum analysis: positiveGovernment budget constraints a mixed blessingCacophony of K-12 foodservice attention to shield it from budget axeBottom line: enter contractingPositive macrotrend: EnrollmentTable 3-1: PK-8, 9-12, and PK-12 Enrollment Trends, 2007-17Macro-trend application: health and wellnessNational School Lunch Program & Breakfast Program: scope of coverage Nutritional requirements Participation Program costsAdapting to government-driven health changesTask Force on Childhood Obesity Targeting food content Strengthening legislationAdapting to the Healthy, Hunger-Free Kids Act Food waste and funding issues may stifle possibilities
4. Incenting breakfast use Program availability reduces tendency to skip breakfast Convenient breakfast options increase participationK-12 foodservice innovation case studiesContracting success: District of Columbia Public Schools The perfect candidate: A debt-ridden school district in need Revamping menus Redesign by ChartwellsSchool innovation: San Francisco Unified School DistrictTable 3-2: San Francisco Unified School District, by the Numbers Student Nutrition Services Electronic POS system in place Slow food pilot program Nutrition initiatives: local, whole grains, and “featured” fruits and vegetablesTable 3-3: San Francisco Unified School District,Food Service Menu Highlights Portability innovationTable 3-4: San Francisco Unified School District,Grab n Go Breakfast Program, by the Numbers Super Choice menu rollout to bridge income-related issues Salad bar implementation Other initiativesChapter 4: College & University Foodservice Contracting TrendsPostsecondary foodservice contractor momentum: positiveAddressing student needs and expectationsHealthful offerings and technology provide drawsTable 4-1: Food & Foodservice Attitudes & Behaviors: All Users, Students & CollegeFoodservice Users, 2010Build flexibility, variety and convenience into meal planGrab and go flexibilityLate night flexibilityProvide healthful optionsAddress food allergiesLeverage social mediaInform and communicateObtain feedbackReinvent the dining hallGuest traffic driversTable 4-2: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by AgeOn-campus dining still lags the offsite competitionRamp up entertainment valueFoodservice contractors partners in remodelingInnovate with own-brand restaurant conceptsPractice sustainability Trayless and to-go cups University of Colorado at Boulder
5. University of Massachusetts University of Texas at AustinChapter 5: Hospital Foodservice Contracting TrendsHospital Foodservice contractor momentum: positiveContractors to benefit from budget pressuresPositive macrotrend: government fundingPositive macrotrend: aging populationTable 5-1: Population Projection, Age 65+ and Age 85+, 2010-2025Positive macrotrend: inpatient and outpatient guest footprintsTrend application: wellness and nutritionHealthy hospital foodservice: pro and con Pros to healthier hospital foodservice Cons to healthier hospital foodserviceWellness and nutrition initiatives on the upswingMenu strategy: disease-specific menusMenu strategy: probiotic menusRestaurant strategy: branding health The dilemma 30,000 McDonald’s in the U.S. but only 32 in hospitals The bottom line: healthy brands have room to growBranding health innovation snapshot: Mayo ClinicCustomer service, individualized care & room serviceCustomer serviceRoom service and individualized patient care Personal dining care, on demand Johns Hopkins Hospital Ronald Reagan UCLA Medical CenterHybridizing room service and retailThe need for speed and convenience Examples: Mayo Clinic, Childrens Hospital of Philadelphia, UCLA Medical CenterGrab and go!Minimizing disease transmission at expense of self-serviceSustainability and green initiatives Examples: Mayo Clinic Arizona, ARAMARK and AVI Food SystemsVariety and culinary explorationVariety Examples Central DuPage Hospital, Mayo Clinic, UCLA Medical CenterCulinary exploration Examples: Mayo Clinic and Cleveland Clinic Chefs on board Example: Tyson Food ServiceSpecial discounts and incentives to dine in the hospital Example: Grant Medical CenterVisual stimulation Driven by restaurant competition
6. Examples: Barnes-Jewish Hospital, Northwestern Memorial Food as visual stimulationFoodservice innovation profile: Cleveland ClinicPatient profileTable 5-1: Cleveland Clinic, Demographic Data, Treated DiabeticsFoodservice programs and services Multitude of dining options Ousting chains Pizza Hut leaves; McDonalds stays Management split between Sodexo and AVI Food Systems Room service an extra: get a Founders Suite Foodservice growth trends Emerging trends 2009-10 foodservice initiatives Future initiativesChapter 6: Corporate Foodservice Contracting TrendsFoodservice contractor momentum: negativeChallenge: reliance on larger companiesChallenge: declining usageMeal participation declines Lunch BreakfastChallenge: brown baggingBrown bagging trend maintains momentum through 2010Creating downward pressure on corporate foodserviceSolution: cater to smaller sitesEurests Simply Puur café concept Whole+Sum menuSolution: target by occupationConsumer research suggests that food attitudes vary widely by occupation Snacking Meal times Fast foodTable 6-1: Selected Food Attitudes, Full-Time On-Site Fortune 500 Employees, byOccupation, 2010 Menu selection by occupation application: NASA Jet Propulsion Laboratory Varying menus by occupation and locationSolution: target by generation The Millennial issueSolution: tap into wellnessA trend on the riseTable 6-2: Wellness Program Benefit Access, 2000-2010Healthy food promotion policies nearing majority statusApplication: AramarkSustainable and local Application: Thomas Cuisine Management
7. Application: Whitsons Culinary Group Application: Cerner Corporation Application: Hallmark Cards Application: NBC Universal Application: Guest Services, Inc.Going trayless to reduce portion sizeSolution: adapt to restaurant competitionFamiliarity and ease of use drive restaurant decision Convenience is King Among restaurants, convenience comes in many forms For employees, what does it mean?Restaurant density analysis provides insight Example: Aon CorporationDeveloping the foodservice retail space Application: Microsoft The Commons: the future of corporate foodservice? Application: Cerner Corporation AramarkOnsite brands Example: Sodexo Example: Thomas Cuisine Example: Whitsons Culinary Group Microsoft builds “local brands” Leveraging celebritySolution: leverage cost advantageAverage guest check trends Employment site examples: Whitsons Culinary Group Lunch Breakfast Corporate foodservice can leverage pricing advantage Datassential MenuTrends Direct menu pricing analysisTable 6-3: Average Entrée Price, Breakfast and Lunch Dayparts, QSR, FamilyMidscale, and Casual Restaurant Segments, 2008-2010 And increase supply volumeSolution: reinvent menus Value meal approaches: Compass & Thomas Cuisine Success story: Hallmark Success story: Microsoft The Commons hits some important notesMenu variety initiatives Whitsons Culinary Group: One contractor; a variety of menu concepts Sodexo sees promise with international cuisines A variety application: Microsoft A variety application: Jet Propulsion Laboratory Starbucks headquartersSolution: adapt to break time and meal time
8. Hours of operationTiming meals: an hour-by-hour analysis Worker break spontaneityEmployee camaraderie & morale Teaming up to slim down Flik melds food & atmosphere to enhance social responsibility & camaraderieFoodservice as oasis where people want to come to relax Success story: 30 RockSolution: reduce costs Reducing labor costsService and portability as means to cut costs Example: Whitsons Culinary Group Example: Thomas Cuisine Example: SodexoChapter 7: Military Foodservice Contracting TrendsMilitary foodservice contractor momentum: positivePositive macrotrend: employment trendsPositive macrotrend: domestic military spendingGraph 7-1: Department of Defense Budget, 2001-2012Contractor analysis: U.S. Marine Corp.Sodexo’s military foodservice leadership RGFSC I RGFSC I consequencesRGFSC II Sodexo’s contract halved into two Superior Services picks up other halfTable 7-1: U.S. Marine Corps RGFSC II Foodservice Contract, Selected MetricsContractor Analysis: Air Force Food Transformation Initiative Putting it in perspective: 91 million meals per year Bringing food service into the 21st century ARAMARK gets the nod Expected improvements Alaska base sees significant changeAir Force already weighing benefits Bottom lineTrend application: feed the family, not just the soldierFamily members substantially outnumber service membersTable 7-2: Ratio of Family Members to Active Duty Service Members Army breakdown: lots of kids!Trend application: give them a reason to stay on the baseRemember! Most Army members live off-postTable 7-3: Places of Residence of Active Duty SoldiersRemember: military members prefer off-site food options to on-site optionsOn-post vs. off-post food & beverage services comparisonTable 7-4: Comparison of Quality of On-Post and Off-Post Food and BeverageServices,
9. On Post versus Off Post Dining preferences, by daypart and by service optionTable 7-5: Frequency of Meals Eaten Out, Taken Out or Ordered In, by Daypart &Restaurant Service TypeRemember: borrow liberally from off-site foodservice options and atmosphereMarine Corps takes a few pages from college campuses Camp Lejeune borrows from Colorado State UniversityRemember: Leverage restaurant branding opportunitiesRevenue and brand analysis: AAFES ExchangeTable 7-6: AAFES Retail and Concession Sales, 2007-2009Growing restaurant operations 1,600 restaurants and countingTrend application: adapt to health & nutrition initiativesMilitary not immune to obesity epidemicA significant military medical concernMenu changes galore Change in the wind: Army Meal KitsChange in the wind: Army Soldier Fuelling InitiativeChange in the wind: Health education Marine Corps FUEL For Life JCCoE Goes for GreenTrend application: respect the environmentMarines lead the charge Marine Corps base goes greenAramark CorpFoodservice operationsChapter 8: Competitive Profile: Aramark Corp Food service sales analysis: 2011 Food service sales analysis: 2010 Food service sales analysis: 2009North America Business and Industry SectorSales analysis: 2009-11 Vending & Office Refreshments Operations On-Site Foodservice Event CateringStrategy: Workplace Productivity, Value-Added Services, Contract Design Workplace Productivity Value-Added Services Contract DesignNorth America Education SectorSales analysis: 2009-11K-12 Education Overview School Meal Programs Expanded Meal Opportunities Nutrition EducationK-12 Strategy: Health & Nutrition, Boosting Student Participation, Age Differentiation
10. Health & Nutrition Boosting Student Participation Age-Segmented Dining BrandsHigher Education OverviewResidential Foodservice Food Courts & Snack Bars Convenience Stores & VendingHigher Education Strategy: Green Thread Program, Health, Technology Green Thread Program Health TechnologyNorth America Health Care SectorSales analysis: 2009-11Patient foodserviceRetail foodserviceFacility servicesStrategy: partnering in patient care, custom menus, branding Partnering in patient care Custom menus BrandingNorth American Sports and Entertainment sectorSales analysis: 2009-11Summary sales analysisTable 8-1: Aramark by the Numbers, 2008-2011Sodexo Inc.North American Corporate FoodserviceChapter 9: Competitive Profile: Sodexo, Inc Sales analysis: 2009-11Cafes, Retail BrandsCateringOffice RefreshmentCorporate Foodservice Strategy: Sustainability, Celebrity Chef Partnerships, EmployeeHealth Employee Health Celebrity Chef Partnerships Sustainability Work/Life BalanceNorth American Education FoodserviceSales analysis: 2009-11K-12 Foodservice School Lunch Programs Age-specific dining programs Childhood hunger programs Nutrition EducationHigher Education Foodservice Residential Foodservice
11. Retail Foodservice Convenience Stores & VendingEducation Foodservice Strategy: Student Board of Directors, CustoMenu, Autonomy Student Board of Directors CustoMenu AutonomySodexos Retail Brand Group Pandini’s Jazzmans Café and Bakery Salsa Rico Original Burger Company Mein Bowl Bruegger’s Bakery Café licensing agreementMarket Trends and Sodexo Response Obesity and Health Globalization and Diversity SustainabilityNorth American Health Care Sales analysis: 2009-11North American Health Care Foodservice Patient dining services Visitor & staff dining services Retail foodserviceHealth care foodservice strategy: high-value custom offerings, nutrition services High-value custom offerings Nutrition ServicesMarket trends & Sodexo response Health care expenditures Patient consumerism Shortage of health care personnelSummary sales analysisTable 9-1: Sodexo by the Numbers: 2008-11Compass Group PLCCompass Group North America (CGNA)Chapter 10: Competitive Profile: Compass Group PLCAcquisitions Sales summaryFoodservice strategy Room for growth It Takes You - Eat Local Leveraging role of single-source provider Selective acquisitionsNorth America Business & Industry SectorCorporate DiningPremium/Executive DiningCatering and Event Services
12. VendingStrategy Focused Promotions and Value Offerings Kimco & Cross-SellingNorth America Education Sector K-12 Dining Private Schools Higher EducationEducation Strategy Health & Wellness Campus Community Dining ProgramsNorth America Health Care Sector Patient Foodservice Senior Living Foodservice Retail Foodservice Support ServicesStrategy Personalized Care Retail Branding Retail StrategySports & RecreationSummary sales analysis 2010 sales on the upswing Trend continues into 2011 U.S. operating segment performanceTable 10-1: Compass Group by the Numbers: 2009-11SubsidiariesDelaware North CompaniesSegmentsRecent performanceChapter 11: Small & Midsize Corporate Foodservice ContractorsSportservice Recent activityGaming Hospitality Group Recent activityTravel Hospitality Services Recent activityParks & Resorts Recent activityDelaware North Companies BostonCenterplateRecent activityGuckenheimer Enterprises, Inc.Table 11-1: Guckenheimer Enterprises, Inc., Selected MetricsGuest Services, Inc.