In spite of lower gas prices, NPD research shows foodservice visit growth remained stalled — traffic has been declining to flat for the past several years —in the year ending April 2015 period, compared to year ago. Annual per capita foodservice visits are at 190, which is down 3 visits per person per year from 2013. Young adults are typically the heaviest restaurant users, but since the Great Recession Millennials have cut back dramatically on their visits to and spending at restaurants. 

Adults, ages 25 to 34, have cut back the most on restaurant visits, making 50 fewer visits per person per year over the past several years.  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 year 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.”  

Foodservice spending is up due to price increases, like rising food and operation costs. Additionally, a restaurant meal has historically cost more than an in-home meal, typically as much as three times more. The share of consumer dollars spent on food at home compared to food away from home has been close to 50/50 for several years. 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 is currently giving 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 US Census Bureau recently announced that foodservice spending exceeded grocery spending for the first time ever.

Consumption behaviors in the US have become less household-oriented and more individualized than previous generations and now over 50 percent of eating and beverage occasions happen when consumers are alone. Also contributing to consumers dining alone is that 27 percent of all households now consist of just one person — the highest level in US history, according to the U.S. Census Bureau. The number of solo eating and drinking occasions has wide-ranging implications for food and beverage marketers and foodservice operators in terms of new product development, packaging and positioning, restaurant seating design, menu development, and more.

From 2003 to 2013, consumption of fresh foods —  fruits, vegetables, meat, poultry, fish, and eggs — grew by 20 percent to over 100 billion occasions, and NDP says it’s the youngest generations, Generation Z and Millennials driving the trend.  In addition to eating more fresh foods, Generation Z and Millennial consumers are also interested in eating more organic foods. In terms of foodservice visits, Millennials prefer fresh ingredients and freshly prepared items – key differentiators among many fast casual vs. traditional quick service restaurant formats.  An aspect of freshly prepared that suits Millennials are menu components that are made to order or that can be customized.

“Visits to U.S. restaurants are forecast to grow less than one percent a year over the next decade, slower than the 1.1 percent a year growth in the country’s population,” says Riggs. “A greater share of visits will source to those 50 years and older in 2019, but as consumers age they become less frequent restaurant users. This means the restaurant industry will have heavier dependence on lighter buyers.”

Comprising approximately 28 percent of retail foodservice and generating $11.2 billion in sales, proprietary convenience-store foodservice has become a key area of opportunity across the country. Technomic's Convenience Stores Market Intelligence Report compiles exclusive data to understand market opportunities.

As the segment continues to face stiff competition and works to overcome consumers' negative quality and freshness perceptions, Technomic anticipates nominal growth of about 2 percent in both 2014 and 2015 (2.5 percent in 2014; 2.0 percent in 2015), and after adjusting for inflation, the overall segment will be flat. Yet convenience stores serve as a prime destination for younger generations and people seeking fast, on-the-go options, and there are plenty of winning chains and opportunities for growth.

Breakfast sandwiches continue to thrive on c-store menus, and their numbers climbed 20 percent from Q2 2013 to Q2 2014. More than 9 out of 10 consumers say the most important elements are taste and flavor of the food and food quality.

"As more c-store brands increase focus on offering a wider variety of fresh, high-quality foods and competition heats up across the segment, understanding the convenience store foodservice landscape has never been more important," says Technomic’s senior director Donna Hood Crecca.