Foodservice Demands Offer New Opportunities

“Four Star” gourmet meals in hospitals? Room service in college dorms? Kiddie “Bistro” bags for school breakfasts, and visiting airline celebrity chefs, too? Today, Los Angeles schools enjoy Asian bowl meals, and 50% of school pizzas are branded. Even Loyola’s dining center’s C-store offers 1,500 convenience and gourmet retail items, 18 fresh “grab-and-go” stations and—from behind marble counters—chef-prepared fresh customized meals! It’s back to school for me!

Motivated by increased competition, consumer demands, and disappointment, too, institutional foodservice—too long a food industry stepchild to consumer products and restaurant fare—is undergoing a revolution. Despite the pressure of low margins, limited budgets, tough negotiations with contractors, and sometimes unreasonably restrictive government monetary and nutrition guidelines, operators are responding to consumer demand to upgrade food quality, creativity, and convenience.

While school foodservice sales—$12 billion according to Technomic Inc.—have been slow, the potential for future growth is enormous. About half of the nation’s 50 million K-12ers ate lunch via school foodservice last year, and 7 million ate breakfast. From increased recognition of the positive effects of regular meals on mental cognition, concern over low test scores, and renewed political focus on poverty-afflicted children, it is likely that increased support for school feeding initiatives will be forthcoming. North Carolina and Washington are already subsidizing breakfast and after-school snack programs, one of the fastest growing school foodservice markets.

The upcoming “Baby Boomlet, now entering grade school, is predicted to be as large as the Post World War II group. With minorities representing one-third of all school children, recognizing and responding to diversity as well as appealing to both what kids want to eat and what they should eat will offer more challenges—and opportunities—in the years ahead.

College kids are even more demanding. They expect food around the clock, gourmet coffee for breakfast, vegetarian options, and C-store items on site. Not surprisingly, cafeteria lines have given way to cutting-edge, on-campus restaurants, retail units, gourmet food stations, kiosks, and vending machines, a necessity for the nation’s almost 15 million grab-and-go college crowd. The majority of dorms are equipped with kitchenettes and microwaves, so that foodservice suppliers will be challenged to provide a significantly wider array of products to this $9-billion market. Those who offer total solutions for this diversifying market with benefit dramatically.

Similarly, military foodservice operators, faced with stiff competition from local restaurants and retail stores, are fighting back by enlisting on-site restaurant concepts and food courts and drafting nationally branded food items, franchises, and fast-food chains. Thanks to prime-vendor programs and less reliance on government-issued supplies, even chow lines are hosting more branded names. As the downsizing of the military continues, look for military operations to continue to diversify and upgrade their feeding options and for the atmosphere for outside suppliers to relax.

With the advent of nutraceuticals, institutional health care facilities, hospitals, and nursing homes will represent a highly lucrative market for food marketers. The potential to reduce the use of both OTC and prescription drugs through the development of condition-modulating foods and the opportunity to improve general health, immunity, and preventive strategies are incredible. There are 1.5 million nursing home patients and over 1 million staffed hospital beds. While growth in the hospital segment is barely noticeable and the duration of patient hospital stays continues to decrease, more are moving to a room-service menu approach to reduce costs and improve quality and service.

Today, 60% of all hospitals surveyed by Restaurants & Institutions in 1998 reported that they served more non-patient (50–85%) than patient meals, creating a demand for new and creative menu ideas and concepts to attract visitors and outpatients. For example, Johns Hopkins Hospital’s VIP wing allows visitors to dine with patients, Mass General’s Bloom Café offers cancer treatment center outpatients and visitors light food items and more than 150 teas, while New York’s Columbia Presbyterian menu competes with local restaurants highlighting sushi and ethnic wraps, among other specialties.

Americans’ growing affluence and appetite for excitement will increase the demand for higher quality, more creative, and healthier food in ballparks, theme parks, movie theaters, and country clubs. Heaping buffets, midnight dining, and unlimited eating are no longer enough to entice today’s sophisticated casino gamblers or cruise aficionados. No matter what the formality of play, they all crave culinary excitement, a continual commitment to upgrade, and first-class theatrical and food-based entertainment.

While airlines argue that they are in the transportation business, they are bending to improve on-board foodservice. Reacting in part to legislation allowing passengers to bring their own food on board, caterers are making Herculean efforts to improve food quality by featuring celebrity chefs, branded gourmet foods, and rotating menus. Manufacturers interested in sampling or introducing products to a very upscale crowd would do well to partner and participate in airline food programs, no matter what the cost.

From corrections facilities where daily food allowances can be as low as $2.20 per inmate to turnpike foodservices and VIP sky boxes, today’s sophisticated consumers will keep pressure on the institutional foodservice segment to offer new exciting, creative, and entertaining food fare. With America’s appetite for excitement—and new food tastes—institutional foodservice now has unprecedented options for expansion through truly new business opportunities and category management.

by A. ELIZABETH SLOAN
Contributing Editor