Many industry clients are relatively unaffected by economic fluctuations, protecting revenue.
New York, NY (PRWEB) July 20, 2014
The Food Service Contractors industry is benefiting from the increased propensity of businesses, healthcare facilities and educational institutions to outsource their foodservices. The industry's clients are seeking to reduce operating costs and deliver a high level of customer satisfaction to students and faculty, patients, employees and sports fans. As such, these operators are turning to specialist contractors to provide foodservices. Over the past five years, the industry has also benefited from renewed consumer spending on discretionary items, such as tickets to sporting, music events and concerts, as well as increased travel spending. According to IBISWorld Industry Analyst Andy Brennan, “Consumer spending is expected to rise an annualized 2.5% over the five years to 2014, helping push industry revenue up 2.9% per year on average over the same period.” Sluggish economic growth in 2014 will constrain industry growth, with the industry anticipated to grow a slower 1.7% the same year, to about $4.0 billion.
Even when the broader economy falters, the industry is buoyed by consistent demand from operators in downstream sectors such as healthcare, education and correctional facilities. None of these are subject to the whims of consumer or business confidence. Food-service contractors typically operate under three- to five-year contracts, meaning they have greater certainty of demand and can adjust their production to suit these contracts. The exception to this rule is contractors with exposure to consumer-driven segments like sports and leisure facilities, which tend to experience weaker demand when the economic outlook is uncertain and consumer spending tapers off. “The industry exhibited positive growth throughout the recession as other food-service industries declined, benefiting from greater outsourcing among core client segments,” says Brennan.
Consumer spending and corporate profit are both expected to grow over the next five years, causing consumers and businesses to increase their spending on foodservices. Consolidation is expected to continue during the next five years as large operators win a disproportionate share of large contracts as clients increasingly seek providers with the scale and sophistication necessary to satisfy customers. For this reason, the average industry profit margin will likely grow as larger contractors benefit from greater economies of scale. Consequently, industry revenue is expected to grow over the five years to 2019.
For more information, visit IBISWorld’s Food Service Contractors in Canada industry report page.
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IBISWorld industry Report Key Topics
The Food Service Contractors industry supplies foodservices under contract for a specific period of time. Industry establishments provide foodservices to airlines, railways and institutions, as well as establishments that operate food concessions at sports and similar facilities.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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