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March 4, 2021

Where Can Growth Be Found in the Foodservice Channel?

Tony Treadway

Finding growth in the foodservice channel.

We Found 2021 Hot Spots!

Few industries were hurt worse than restaurants by COVID. We’ve heard of the heartbreaking impact on workers, respected restaurant chains, and the suppliers who have been negatively impacted. Let’s look at what recovery looks like and where pockets of opportunity exist this year for any company serving this extraordinary marketplace.

Technomic is a data analysis company that surveys the industry, and they published newly updated projections in late February based on a “best case” and “worst-case” scenario that surrounds how quickly the government can push out vaccinations to consumers. We will take the “middle case” approach that centers between the best-and-worst case numbers.

Overall, the foodservice industry will see a 15% rebound over 2020 in sales. That sounds like a big number but compared to 2019 before the pandemic, the industry will still be down in dollars by nearly -4% among commercial restaurants and bars and -10.5% among non-commercial operators such as K-12 and colleges and universities. So where should food manufacturers focus their sales efforts to capture opportunities? Here are some tips:

Fast Food Remains Strong – Weathering the pandemic better than any other segment, overall growth in recovery won’t show huge growth but it is where volume will remain. Projections are for +16% growth in Q2 2021. When comparing 2019 to 2021, the fast food segment and supermarket delis will be the only two segments to truly grow in sales (the fast-casual sub-category will be down from 2019 slightly).

Full-Service Restaurants Awaken – One of the hardest hit by the pandemic in 2020, Q2/3 of this year will see an extraordinary rebound depending upon the region of the country still affected by government lockdowns and restrictions. Yet the business will still be down compared to 2019 by -9%. Focus sales efforts to this segment to the casual dining sub-set which will have a better recovery than midscale restaurants.

What About Non-Commercial? Target Healthcare and Colleges. – As elective surgeries return so will visitors to hospitals and senior living never slowed down during 2020, so focus your sales efforts here. Meanwhile, colleges and universities are planning for full campuses this fall and your best opportunities for non-commercial growth will be found here. Other than plants and fulfillment centers, there is no need for addressing Business & Industry.

Travel & Leisure Growth Will Be Slow – Been seeing some commercials for Disneyworld? The projection for growth with the leisure category will be up as high as +251% in Q2 this year as schools close for the summer and families pack their bags for vacation. However, business travel will have a much slower recovery.

A Big Boom In Catering! – Typically, the hardest targets to find, catering business will boom as weddings, events, and parties will rebound by as much as +81% according to Technomic. Find growth as well among commercial operators whose catering business will be busier supplementing businesses whose lunchrooms are closed but some workers need to be fed.

Chasing Ghost Kitchens And Their Virtual Brands – It is a new opportunity that everyone is still getting their arms around. The pandemic bred alternate uses of restaurant kitchens and third-party delivery services, like DoorDash, to help create virtual brands with no storefronts. Finding ways to penetrate what is projected to be a $5B virtual brand business by 2025 can be a big opportunity for some foodservice providers.

Creative Energy offers segment expertise within every foodservice segment. Our messaging strategies and deployment of lead-generating tactics can help suppliers find growth within these segments to make 2021 a good year in sales. We’re here to help.