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September 27, 2011

Written by: Nicholas Watson

Who should food manufacturers REALLY target to increase their market share? That depends on their product offering according to Cathy Kearns, General Manager of CHD Expert, “With today’s current economic conditions, marketing dollars must be spent wisely. By targeting specific operators that have a higher expenditure aligned with your product line, food service manufacturers will get the biggest “bang for their buck”.”



So what types of restaurants are buying what products?

It might be surprising, but full service independent restaurants account for 38% of the total purchases of food, beverage and disposable goods in the restaurant industry. This share equates to more than $50 billion. Most of these expenditures are in the protein (30%) and beverage (22%) categories. Not surprisingly, alcoholic beverages represent a large portion of the purchases in the beverage category. The problem here is that full service independents are the hardest to reach, and have the largest and fastest, turnover in the industry.

Limited service chains represent the second largest purchasers of food, beverage and disposable products at 34% of the total market. With the massive chains like McDonald’s and Subway it is easy to see why they would account for over $45 billion of the total market. However, their purchase patterns are much different from the full service independents. The LSR chains spend a higher percentage of their total expenditures on frozen foods and disposable products as compared to FSR independents. Of course, until McDonalds starts slinging Mojitos the limited service restaurants will always lag behind in the beverage category. You also don’t see fine china, cloth napkins and silverware at any of these chains. These facts intuitively make sense, but they are important to understand.

To put it plainly, a company manufacturing meat and other protein should target their marketing dollars toward the independent full service restaurants, which make up 41% of the entire protein sold within the foodservice market today. Conversely, a company manufacturing paper goods, and disposable items should focus more on the LSR Chain segment which makes up 50% of the entire disposables sold in food service.


For more information on food, beverages & disposables operator purchases please join our  Webinar on Wednesday September 28th at 3pm CDT:
https://www3.gotomeeting.com/register/219106910

Or for more information on the foodservice industry as a whole please send an email to the author mjsmith@chd-expert.co

 


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