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Foodservice Industry Continues to Battle for Market Share

Sales increase despite visits remaining flat.

Despite flat traffic levels, foodservice spending increased 3 percent for the year ending April 2015, according to The NPD Group. The market research firm attributes this growth to the fact that operators continue to increase prices to offset rising expenses in such areas as labor and food.

The relationship between inflation for food at home and food away from home tends to provide a short-term benefit to one side of the food space or the other, and it currently gives foodservice a very slight advantage, reports NPD. In 2014, the average cost of a restaurant meal per person was $6.96; the estimated per person average cost for an in-home prepared meal was $2.31. The U.S. Census Bureau recently announced that foodservice spending exceeded grocery spending for the first time ever, but the research didn't include spending at big box food retailers.

Annual per capita foodservice visits are at 190, which represents a decline of 3 visits per person per year from 2013, according to NPD. Adults, ages 25 to 34, who are more likely to have families, have cut back the most on restaurant visits, making 50 fewer visits per person per year over the past several years, according to NPD. Additionally, the youngest adults, ages 18 to 24, made 33 fewer visits per person per year in 2014 than they made in 2007. Based on NPD's food consumption research, Millennials ate 8 more meals at home last year compared to prior years while all others ate one additional meal.

"It's a battle for share within the foodservice industry and a battle for food dollars between in-home and away-from-home dining," says Bonnie Riggs, NPD restaurant industry analyst. "In order to grow, foodservice manufacturers and operators need to have a clear understanding of consumer expectations and then they need to meet those expectations. If they don't someone else will."