Forecasting Slow Growth & Positive Future for Food Away from Home

 

By Phil Kafarakis, IFMA President & CEO 

August 2024 

 

• IFMA predicts the total restaurant segment will grow 0.5% compared to 0.8% last year in terms of operator purchases in dollars. The growth is sparked by ongoing demand from higher income consumers to dine out.
• Quick service restaurants are expected to grow 0.7% while fast casual will be up 1.3%, an upward revision of the organization’s 0.9% growth projection for fast casuals issued in February.
• Collectively, on-site segments in 2024 are projected to grow 2%, largely because their recovery from 2020 was slower than that of restaurants. The College & University and Lodging segments are expected to lead on-site growth at 2.0 and 2.8%, respectively. The Business and Industry segment continues its slow recovery, although overall volume is still well below pre-pandemic levels.

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At our recent virtual Marketing & Sales Conference, we hosted a session on the association’s latest 2024 and 2025 Food Away-From-Home (FAFH) Industry and Segment Projections. 

 

While it’s not equivalent to peering into a crystal ball, forecasting the leaps and dips in business growth can be tricky. We all learned that in 2020 when the unexpected happened on a truly global scale. And business paid a heavy price. Consumers are still on edge and markets are fairly twitchy too. The pandemic may be behind us, but what’s around the next corner?

 

We began this year projecting that the FAFH industry would grow 0.9%, on a real basis. Nobody would argue that that’s a fairly cautious overall-industry projection. It takes into account that the industry’s on-site segments (like colleges & universities and healthcare foodservice with their built-in clientele) look to remain traditionally steady - outpacing growth of the more volatile restaurant segment.


The recent slowing of consumer store traffic is creating challenges for restaurants, who obviously rely completely on consumer behavior. And it seems clear that those consumers, especially lower income ones, are looking to limit their foodservice spending choices. 

 

Our industry is coping with turbulent times. Consumer confidence and purchasing patterns may trend up if energy prices trend down and/or inflation eases (it was recently announced that inflation dipped to below 3% for the first time since 2021). That confidence may drop if global and political unrest surges. Everyone is keeping an eye on the horizon.

 

However, when it comes to these last few months of 2024, we at IFMA feel confident in our February industry predictions. Overall, FAFH should see 0.9% growth for the year. Is that overly optimistic? At IFMA, we don’t think so.

 

It looks as though even the total restaurant category, including full-service and limited-service restaurants, will grow 0.5%this year (on top of 0.8% in 2023). This minimal growth comes from continued demand from higher income consumers for restaurant occasions.

 

Collectively, on-site segments in 2024 are projected to grow 2%, largely because their recovery from 2020 was slower than that of restaurants. The College & University and Lodging segments are expected to lead on-site growth at 2.0 and 2.8%, respectively. The Business and Industry segment continues its slow recovery, its overall volume is still well below pre-pandemic levels. 

In February, we will update our forecast with a look at the remainder of 2025. We appreciate the partnership with Datassential, a leading foodservice research firm, who worked with IFMA to create the projections, and our five IFMA Foodservice Leadership Councils, who validated them.

 

IFMA members can access all projections, including data on the Retail Foodservice category, through the IFMA Scope® portal, which provides an interactive and immersive view of real-time segment and market demographic information to aid in business planning.

 

Our goal is to provide the most up-to-date, relevant insights and information for our membership and the community. Our forecast presentation that was delivered at the 2024 IFMA Marketing & Sales Conference can be accessed through early November by conference attendees here. 

 

If you missed the conference, you can purchase access to key session recordings from our IFMA Foodservice Education Center. Check out the IFMA website for details – ifmaworld.com.