Non-Commercial Foodservice Trend 2014: Captive No More?

College and university operators battle external operations, while health-care segments expect nice gains

By  Robert Lillegard, Freelance writer
Abbie Westra, Editor-in-Chief, Convenience Store Products

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While many commercial segments are expected to experience healthy sales gains this year, the forecast is a bit gloomier on the non-commercial side of the industry.

The National Restaurant Association (NRA) is projecting a –0.5% real growth change for the college and university managed services sector and –1.1% for self-operated locations, for an overall segment drop of 0.7%. That’s compared to a 2.1% projected growth for quick-service restaurants and a 2.7% increase for retail-host restaurants, which includes convenience and grocery stores.

Things look slightly sunnier for other segments. Managed services in hospitals and nursing homes are expected to see a 2.9% real growth change from 2013 through 2014, while self-operated hospitals and nursing homes are expected to experience a 0.6% and 0.5% increase, respectively.

While hospitals, long-term care, senior living and nursing homes are experiencing a boost from the aging population, colleges and universities are feeling the pressure of outside forces. Commercial foodservice segments leapt out of the recession with an aggressive hunger to regain lost ground, thus creating compelling options for students to venture off campus.

Meanwhile, the slow economic recovery is keeping demand from the workforce low during the crucial lunch segment. People are bringing their own lunches—if they’re lucky enough to be working at all.

“A lot of it has to do with business and industry and high unemployment,” says Bonnie Riggs, restaurant industry analyst for The NPD Group. “We’re not going to see much growth in lunch until we see the employment situation improve.”

The NRA projects managed services at manufacturing and industrial plants to see a 2.1% real growth change this year, and 0.7% at commercial and office buildings. Self-op employee restaurant services is expected to experience a 0.2% loss.

Those operators who are doing well are becoming more aggressive in their approach. Justin Massa, founder and CEO of Food Genius, says the competitive landscape is spurring non-commercial operators to new creativity. He points to a college in Indiana that took on a Brazilian steakhouse theme for a week.

“Gaucho pants, swords, the whole nine yards—[in] college dining,” he says. For non-commercial to succeed, operators need to think like consumers. “If all they think about is their own segment, it’s a losing battle, because consumers don’t [make eating] decisions in a segment,” Massa says. “We think about not ‘grocery store or restaurant?’ but ‘cook or not cook?’ ”

NEXT: Data! C&U Growth & Expectations

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