EconS 451: Lecture #5
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.
Source: U.S. Food Marketing System, 2002, ERS-USDA
Food Service is Gaining on Supermarkets’
Share of Food Expenditure
Source: U.S. Food Marketing System, 2002, ERS-USDA
Distribution of U.S. Food Service:
Commercial vs. Non-Commercial
Source: U.S. Food Marketing System, 2002, ERS-USDA
Top Five Food Service Chains
Source: U.S. Food Marketing System, 2002, ERS-USDA
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
New Marketing
Strategy 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
U.S. Food Marketing System
U.S. Food Marketing System
Ag. Producers
Product Type
Grain
Beef
Dairy
Fruit
Manufacturing
Product Line
Del-Monte
LambWeston
Frito-Lay
Wholesaling
Organizational Product Type
Merchant
(56%)
Specialty
(43%)
MSBO
(25%)
General Line
(25%)
Agent/Broker
(19%)
Misc.
(32%)
Distribution
Channel
Retail
Food Service
Distributors
Broadline (50%) (Sysco)
Specialty (33%) (Costco)
Systems (17%) (Ameri-Serve)
Food Service
Merchant-Third Party (38%)
(Supervalu, Fleming)
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
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 phaseSource:
of U.S.
theFoodfood
marketing system.
Marketing System, 2002, ERS-USDA
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