In many countries, the Food service industry constitutes a large portion of GDP, that any disruption in this industry would cause impaction for the global market.
The Food service industry is born to serve food products or food supplement services to customers out of their homes. Basically, it can be divided into two groups. One is the offer food product, another focus on distribution, equipment, and additional services for dinners.
The food service industry in the context of digital transformation
History of food service industry
Obviously, the development of Food service industry has placed for thousands of years. However, the modern Food service industry is believed to take an impression from the early 19 century, when capitalism and socialism separated the world into two extremes.
From the last 20 century, the Food service industry experienced more advanced development in the urban areas, rather than rural neighbors. In terms of food consumption, an average of 13% of food, acquired by city living, came from food services distribution. In comparison, other locations only purchased 3% of food from this distribution, according to the report done in the 1960s. Currently, that gap has steadily closed up. Along with the urbanization globally, the speed of food service development in many village sides seems to be faster than that in the city.
Additionally, due to the open policy in business and economics, the Food service industry in capitalism is more innovative. Whereby, the food services business could be found in many places, including shopping malls, buildings, hotels, resorts, and more. By contrast, in some socialist countries, the implementation of food control polity suffered difficulty Fortunately, the Food service industry across the world enjoys a fair playground thanks to the international trade agreement and economic openness policy.
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Importance of food service in the market
In the hospitality industry, the importance of food services is undeniable, dominating the more considerable portion of the profit structure in the whole market. Despite the destruction of the COVID19 outbreak, the market size for the restaurant business only was estimated at US1.2 trillions last year. In expectation, the restaurant sector would worth over US$ 1.7 trillion globally by 2027.
Additionally, the workforce employed in the food service for hospitality also claimed the significant parts. Evidently, it took 10% of the total American workforce in 2020. It means several millions of people would be unemployed without having a job in the hospitality Food service industry.
Related article: How coronavirus outbreak changes food industry globally
Food service industry models and examples
In practice, political institutions have a profound impact on Food service industry models. Evidently, the contribution of public ownership limits the development of contracted food service providers, while it supports the domination of state-owned food service enterprises. In which the market powers are imbalanced, leading to a lower variety of Food service industry models operating in the market.
Take a typical market as the source of research. For understanding the business models of the Food service industry in hospitality, it could be divided into two groups:
1. Commercial food services
|Quick services||Provide low-cost food with a price average under US$ 8.00 Example: MacDonald’s|
|Street food||Comes in counter-based in the small street-side presence. Example: Halal Guys, The Taco Truck|
|Quick casual||Focus on the menu quality with an average cost range from US$ 8.00 to US$ 12.00 Example: Noodles, Pei Wei|
|Family food services||The homestyle cooking offer three meals menu with an average check from US$ 6.00 to US$12.00 Example: Perkins, IHOP|
|Theme food||Serve moderate-priced meals focus on a specific style or theme. Example: Applebee’s, Chili’s|
|Casual upscale food services||Offer more leisure in dining pace for launch and dinners. Casual upscale invest more on space decor and bar space. Jekyll & Hyde Club|
|Fine dining food services||Strick on provides high quality in both food and services. Definitely, it comes at an expensive price. Great American Restaurants, Hillstone Restaurant Group|
2. Non-commercial food services
Separating from commercial food services, the non-commercial business model in the Food service industry can be found when food services are not the primary products. In other words, non-commercial food services offer food as supplement options. The principal difference between commercial and non-commercial food service models relates to the way of success calculation. Expressly, the sale performance of e-commerce food services was audited by their revenue, while non-commercial food services are calculated by the customer volume.
In practice, non-commercial food services are wraps into two groups:
- Self-op: companies or organizations would directedly manage the food services themselves
- Contracted food services: companies or organization would outsource their demand to a food services vendor.
For instance, there are several businesses in practices that need the help of non-commercial food services:
- Common business: in practices, companies employed food services to feed their employees. The Food service industry for common business is not limited to meal prep. It also offers a convenience store, vending, or special services for even operation.
- Food services for schools, colleges, universities, or institutes: Similarly to food services for companies/businesses, school food services aim to serve students and staff, mainly for breakfast and lunch. However, campus food services include mini groceries, cafeterias, dining halls, and a self-operated school kitchen.
- Food services for hospitals and clinics: mainly offer meal boxes for patients, employees, and guests. Most of the food services in hospitals have a limited menu that dinner has a shortlist of options to select.
- Food services for sports: commonly come with restricting requirements in nutrient and energy supplements.
- Food services operations for entertainment business (movie, parks, recreations, etc.): providing snacks, favorite drinks, or sit-down dining catering in the box suites.
- Food service industry in the military: specialize in up-scale dining options with special diets. According to the requirement of security, military food services have to follow strict rules and processes.
- Food services for transportation business (airline, truck, trains, and cruises): with limited storing space, it only offers fine dining meals with pretty limited options, including snacks, meals, fine food and beverage.
Future of food service
The food and beverage industry is claimed as a lucrative business, including both before and after the pandemic outbreak. Accordingly, the Food service industry is not the exception. Last year, we heard a lot of positive insight regarding how food and beverage technology protecting most businesses away from the depression of COVID19. This decade is expected to leverage that victory by adding more technology innovation.
Food service trends
The economy of experience in the Food service industry:
As services, businesses are not only serving food but experience or the art of eating. The trend affects the way restaurant or dining space décor as well as menu design. To be specific, diners in this decade have a high perspective of a healthy diet that the Food service industry has a huge incentive to focus on wholesomeness and calorie content.
Moreover, organic products have become more popular these days as an increasing trend in environmental concern from the community. Customers believed that Consuming organic products is healthy while contributing to protecting the environment. Besides, local pride can be an intelligent marketing strategy that the restaurant promotes its services by using local ingredients to attract Neiborhood dinners.
Pricing strategy based on experience:
In this trend, food service models set prices based on food supply and demand. Expressly, businesses in the Food service industry apply multi pricing schemes, differencing for weekdays and weekends, or office hours and extra hours.
Food ticket or food subscription is also an effective model to follow that food services providers offer reservation options by payment in advance. In this case, businesses get early money to shorten capital turnover, while customers could get a more affordable price for their purchase.
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Food and beverage software
Radiofrequency Identification (RFID): RFID is born to simplified the food payment process. Instead of bringing a physical wallet, dinners could use a wrist band in making payment. When using RFID technology, every payment detail could be embedded into the band for touchless payment. Besides, this technology expresses more convenience for restaurants to apply a table-order system in secured payment. Not only wrist bands, but RFID could also apply to other wearable devices, which could be the trendy jewelry for gen Z in the future.
On-demand food delivery services: The food and beverage technology seemingly reorder the Food service industry that some location-based restaurant lost their profit into cloud kitchen concepts. Virtual food ordering platform integrated with delivery services refers to the new playground in the market. As the product of food and beverage software, it requires more participation from software development sectors. Accordingly, on-demand food delivery currently leverages location-based technology to speed up the serving time and offer a seamless experience for customers. Currently, customers could handily track the position of drivers and check the estimated time for their orders.
Related article: Building the successful on-demand food delivery app
Additionally, autonomous delivery is also another significant trend in the Food service industry. Robot, drone, or other driverless vehicles would replace shippers in deliver customer orders. In the long-term, the above trends enable delivery companies to use resources properly, by minimizing human error in value chain supply.