Home Hospitality What is the food service industry? All your questions answered

What is the food service industry? All your questions answered


From humble beginnings of guilds and roadside inns in the early middle ages over the first à la carte restaurant opening in France in the 18th century up until today’s multi-trillion dollar industry, food and beverage service industry has grown to become a major factor in shaping the world we live in. Influential restaurateurs and bar owners have a huge impact on consumption trends and can help shape the future of food. Never before has the sector known such rapid change in consumer behavior as now in times of digitalization, social media and growing ecological awareness. The challenges and opportunities ahead are manifold. This article aims to give a definition: “what is the food service industry” and an overview into what’s at stake in F&B as we move into a new decade full of uncertainties.

What is the food and beverage service industry made of?

Food service industry definition

The food supply chain generally starts with agricultural businesses producing the food stuff that is then processed and served to individual consumers. Therefore, the F&B service stands for the integral last step of a long chain that ends with a meal on a plate or a drink in a glass. Full-service restaurants, bars, pubs, fast food outlets, caterers, and other places that prepare, serve and sell food or drink to the general public are all part of the industry. The choice of self-service, full-service and take-away means many service delivery options. While the different categories of outlets serve a variety of different customer segments and each has its particular challenges, recent developments are having a global impact on all players in this space.

Development of the modern food service industry

Global awareness about the harmful impact of our current food system on climate and world hunger is rapidly increasing. As a result, the opinions and behaviors of consumers around the globe are changing – and the industry must change with it. A growing number of restaurant patrons place a lot of importance on organic and local production of their meals‘ ingredients. There are many examples to show a shift in customer interests. Veganism, for instance, is a trend that has shown no slowing down in virtually all major markets as illustrated by the surge in Google search numbers for the term over the period of 2015-2020. In 2020, the global vegan food market reached a value of about USD 15.4 billion. The global vegan food market size is projected to be worth around USD 65.4 billion by 2030 and registering growth at a CAGR of 10.41% over the forecast period 2022 to 2030, according to a report published on Global Newswire.

Many diners are also becoming more conscious when it comes to the impact of what they eat on their personal health. Already, finding vegan, GMO, gluten- and dairy free options on menus is more of a norm than an exception. This shift in interests combined with the advent of food delivery apps, social media food influencers, and self-order kiosks has resulted in an industry at a crossroads. Businesses will have to continuously adapt to these growing new trends. Additional pressure on incumbent food corporations is coming from a soaring number of F&B start-ups. Agile and innovative, these newcomers are chomping at the bit to disrupt an industry that has been dominated by established behemoths for a long time.

Food and beverage industry: What are its different sectors?

From the snack bar at the local cinema up to the gastronomic restaurant in a Hong Kong skyscraper, the F&B service industry offers a lot of diversity. In general, there are two categories of commercial food service and non-commercial food service.

Commercial operators

Commercial operators have the primary goal of selling F&B products. They represent the main segment of F&B operations.

Quick-service restaurants

  • Drive-through outlets
  • Outlets within retail stores
  • Fast food restaurants

Limited service restaurants

  • Self-service restaurants
  • Takeaways
  • Food trucks

Full-service restaurants

  • Fine dining restaurant
  • Family restaurants
  • Ethnic restaurants
  • Casual restaurants

Catering & banqueting

  • Catering companies
  • Conference centers
  • Wedding venues
  • Festival food coordinators

Drinking establishments

  • Bars
  • Pubs
  • Nightclubs
  • Cabarets

Non-commercial operators

Non-commercial food service establishments serve F&B products, either as an addition to other services or for non-profit reasons.

Institutional

  • Hospitals
  • Educational institutions
  • Corporate staff cafeterias
  • Cruise ships
  • Airports and transportation terminals & operations

Accommodation foodservice

  • Hotel restaurants and bars
  • Room service

Vending machines and automated food service

How big is the food service industry?

The global market for Food Service Industry was estimated at $3 Trillion USD in the year 2020, which had taken a tumble due to the Covid pandemic according to research in this report. The global food service market size is growing again and is forecast to reach a whopping $4.1 Trillion USD by the Year 2026 growing at a CAGR of 5.4% over the analysis period. Making up more than 4% of the world’s GDP, the industry is a major contributor to economic development worldwide. Across all continents, F&B service outlets are part of the daily lives of billions of customers as a place for them to get food or simply spend some quality time with their friends and family.

The following section aims to give some current statistics that will help to appreciate the awesome impact of the industry as well as insight into future growth and developments.

Key food and beverage service industry statistics

  • There are more than 14.9 million jobs in the US restaurant industry alone.
  • There are an estimated 16 million restaurants in the world.
  • Every second, McDonald’s alone serves 69 million customers.
  • More than 2,691.0m customers are expected to order food online by 2026.

Is the food and beverage service industry growing?

Currently, there are about 7.9 billion people living on this planet. The UN projects that this number will rise by 2 billion by 2050. Global wealth is also projected to increase by about 26% with emerging markets accounting for up to one third of that hike. These factors will inevitably lead to a substantial increase in worldwide food consumption. The F&B service industry will continue to benefit from this growth. More specifically, the F&B service market size is expected to steadily grow at a rate of 5.4% annually.

The global food service market size is growing again and is forecast to reach $4.1 Trillion USD by the Year 2026, a slightly scaled back projection due to the pandemic recovery. A large portion of this growth will be contributed by the surge in dining-out activity in emerging markets. Global consumption is forecast to reach $62 trillion by 2025, twice its 2013 level, with half of this increase coming from emerging markets countries.

The future of food: Where is food and beverage heading?

A paradigm shift has been observed in the perspective of the masses with respect to the food and beverage industry. People are now more nutrition-savvy, prefer sugar-free products, and are generally more inclined to maintaining good health. Supporting this is the fact that food products are not judged on quality alone, but also the nutritional content, the origin and the way they are produced. These new criteria have forced businesses to incorporate changes in the existing process and tackle some of the major challenges of the food and beverage market. The whole food industry has been evolving quickly over the past few years (and still is), trying to cope with these changes in consumption habits. In the race to remain competitive, food service businesses are adapting according to the main trends outlined below.

What are the top trends in the food and beverage industry?

Food and beverage online sales

Food delivery has become a global market worth more than $150 billion, having more than tripled since 2017 – in part due to Covid-19. Researchers have forecasted a drastic increase of over 65% in delivery demand. This means that food delivery, which was ranked 6th in outlet preferences for 2018, is expected to become the second preferred option after table service for 2030. According to the survey, there is also a growing demand for takeaway service (31% increase from 2018 to 2030). Consequently, the meal delivery service market is expected to grow by 15% in 2020. Expect delivery driver access, short-term parking, and delivery-specific menus to be commonplace at your favorite eateries very soon.

Delivery will gain even more momentum thanks to automation. Companies like Uber Eats and DoorDash have already started trials for their delivery drones or incorporated food delivery robots into their offering respectively. Businesses that want to stay relevant in this space will need to develop skills in search engine optimization and delivery applications as main tools.

Every customer experience should fill personal reviews on all large sites and should be viewed regularly. Furthermore, the “instagramability” of dishes will further grow in importance thanks to the increase in Generations X and Y’s buying power. Making their menu delivery-friendly will also be key. Food that can be transported easily and sustainable options such as organic and locally sourced products delivered in reusable or compostable packaging ordered through smartphone channels will drive growth in the future.

Here are some more tips on how businesses can get mobile-food-ready.

Health conscious food products

A new type of consumer is here: conscious and well-informed about what they buy. The decision to consume a product will be increasingly based on how it was made, where it came from and what processes were used to produce it. F&B businesses will have to show this new generation of customers that they are invested in creating a more sustainable future. This means more than just implementing lofty marketing campaigns. Every product and service will need to meet the expectation of ethical buyers. A study by Cone Communication showed that these practices can have a direct impact on the bottom line. It found that 88% of consumers will be more loyal to a company that supports social or environmental issues. What’s more, they are also willing to pay more for F&B operations that deliver on their claims.

The growing interest in ethically and organically sourced foods is not only linked to the impact on our ecosystems but also on the impact on consumer’s personal health. L.E.K. Consulting’s F&B study found that 63% of consumers are trying to eat healthy most or all of the time. This is giving lead to an unprecedented rise in organic food consumption. Case in point: the increasing popularity of organic wines in fine dining restaurants. Prepare to see a lot more similar products making their way onto your plates.

Future Meat Technology

In October 2019, an Israeli start-up with the telling name of Future Meat Technology (FMT) raised 14 million USD for their pilot manufacturing plant. The company aims to reduce the cost of “growing” meat to as little as 10 USD per pound. This price tag could mean that we might encounter lab-grown meat on restaurant menus as early as 2022.

Another approach to reducing the environmental impact of our consumption aims at replacing meat products altogether. Impossible Meat and Beyond Meat are the firms at the forefront of this trend. Thanks to partnerships with restaurant chains such as TGI Friday’s or Burger King in the United States, their plant-based patties containing proteins sourced from peas or soy are surging in popularity.

Technology in food and beverage industry

Research by BRP Consulting found that 38% of dining experiences now involve smartphone or mobile devices – from initial research to sharing the experience on social media. A trend that restaurants have to take note of is how much millennials are looking for convenience. As proven by their reaction to mobile apps, particularly in the quick service segment, it is clear what this change in behavior means for restaurateurs. The more connected we get, the more often we are taking to solutions on our phones for decision making, ordering, paying, sharing and reviewing.

But technology is not only changing the way outlets are interacting with customers. Back-of-house operations are also streamlined through the application of big data and the Internet of Things (IoT). Large restaurant chains are already gathering data on customers to better understand their demographics, needs and wishes ultimately boosting satisfaction and average spending. Of course, the most crucial equipment in a kitchen like stoves, freezers, grills, etc. remain analog. By introducing IoT sensors in their appliances, restaurants can use real-time information to save resources and improve the longevity of their investments.

Main challenges in the Food & Beverage industry

Responsible solutions to ecological issues

The excessive consumption of single-use plastics when serving drinks and food and their improper disposal is going to be one the major challenges of the future in the F&B service industry. Particularly in the age of food delivery, food businesses will have to step up their game when it comes to using recyclable materials and encouraging their proper discarding. What’s more, restaurants and bars should start sourcing their entire supply from sources that do the same. In the long run there will be no alternative to this school of thought if consumers are to be continuously attracted and satisfied.

Waste management also makes up a part of this problem. The way food businesses use their raw products will have to evolve to include more responsible solutions. From Starbucks to McDonald‘s, many corporations are opting to ditch single-use plastics from their day-to-day operations – and the hospitality space is no different. Hotels and airlines find themselves with a unique opportunity to really impact the effects of global plastic consumption as they often provide disposable products on a mass scale.

Customer attention to product traceability

In past years, consumers have been paying increasing attention to the ingredients of their food. Distrust in how F&B service businesses source their produce is growing and has given rise to a demand for more “traceability”. Companies are more often than ever being asked to keep reliable data records throughout all production stages. The growing deployment of advanced technology, such as IoT to help with various tasks from weight measurement to temperature monitoring will be key in tackling this issue.

Public opinion and social media

The amount of information on the world wide web knows no bounds. Yet, all it takes for the reputation of a F&B business to get tarnished is one negative post on a social network going viral. Legal steps like defamation lawsuits often prove ineffective ways to tackle the problem. “Rating culture” has profoundly changed the character of customer interactions. Few guests will consider the implications of a negative review posted in a situation of momentary discontent. To improve the scores, managers may revert to pampering in particular already critical guests. Consequently, guest expectations and additional service offerings to gain positive reviews stimulate each other, ultimately working to the disadvantage of businesses. This challenge will further increase the importance of effective reputation management strategies for F&B businesses.

Why choose a career in the food and beverage industry?

Few industries are as diverse and fast-paced as the F&B service sector. In millions of restaurants, bars and pubs worldwide, customers are enjoying new delicious creations by innovative chefs and mixologists every day. Serving as a connector of people across all cultures, the industry is at the center of most human interaction. Everyone needs to eat and drink, so being in the business of providing these services will never go out of fashion. In fact, with the global population pushing ever-evolving consumer opinions and behavior, this places the industry at the forefront of innovation.

Choosing such a career puts you in the perfect position to make an impact on a large scale – and there are plenty of skills that can be acquired along the way. The non-exhaustive list below gives a small idea of how a career in F&B can aid your personal development.

Skills that working in the F&B industry can teach you

Working an entry-level job in the F&B industry might appear unappealing to some, but the skills you will pick up through this experience can be varied and surprising. You will certainly realize the importance of a professional work ethic and many other skills that will make you attractive for your future employers!

An agile mind

In an F&B service setting, a lack of problems to solve will never be an issue. Whether it is a hair in a client’s plate of pasta, the kitchen equipment not working or a lack of personnel to cover a shift – it will be down to you to come up with solutions on the hop to ensure guests never find out how truly difficult running a smooth F&B service really is. Additionally, taking care of orders, adding up items for the bill and remembering daily specials will work wonders for your memory and mental fitness turning the next Sudoku into a piece of cake.

Become a true social chameleon

F&B service is a people’s business. On a daily basis you will be facing colleagues in your service or kitchen crew, suppliers and a multitude of different customers. Dealing with all these different types of interactions, whether it’s a difficult regular guest that always asks the most ridiculous questions or a head chef that keeps bossing you around at lightning speed, you will always have to find the right way to manage relationships of all types. Eventually you will learn to adapt your approach and always have the right thing to say.

Multitasking skills

Taking orders while clearing tables or preparing multiple dishes while processing incoming orders at the same time will have your multitasking skills up and running in no time. There truly is no better way to learn this skill than to get a job in a busy restaurant and deal with everything that’s thrown at you at once.

Become a time manager

The typical F&B outlet has very few days off. Rotating shifts will have you working during festive seasons and on weekends. Multiple tasks to be done and sudden changes to your work schedule are part of the regular issues that have to be managed. To get a hold of it all, you will quickly learn to manage your personal and professional calendar like a pro.

Learn how to make a sale

Is the bar you work at offering a holiday special or did the chef come up with a new creation that he/she wants everyone to try? It will be up to you to convince your guests to choose the options your employer wants to sell. Selling has always been an invaluable skill for anyone willing to succeed professionally. Like most great business people, you will have to start small. However, getting your first sales will not only feel great, but also get you noticed by management. And that’s the easiest way to move up the ladder.

Get the most out of working in a team

If you believe that true success can only be achieved if you handle everything by yourself, working in an F&B service environment will show you the opposite. In this industry you will quickly realize how important it is to be able to function as a team member. In fact, the highly collaborative approach of F&B businesses can teach you a lot about how to function with a large variety of colleagues, cultivating one of the most sought-after skills by employers.

Better your communication skills

On a busy night it can get pretty hectic in any F&B service establishment. So when you are communicating a client’s order to your colleagues or briefing your subordinates on the set-up of a large event, you will undoubtedly have to learn how to bring across your message as effectively as possible. Furthermore, in an industry where you face customers from every possible country, you will have plenty of opportunities to brush up your language skills. After all, just a few words in their native language can immediately make guests feel that they are well taken care of.

Pick up insider F&B skills

Even if you are not directly involved in preparing the drinks or dishes that are served to customers, you will form part of the production chain that gets those products done. Constantly being around a creative kitchen crew or barkeeper will in no time have you picking up new knowledge on how to store food appropriately to keep it fresh for another day, or how to prepare a delicious cocktail that you can use to impress your guests with when having your friends or family over for dinner.

Keep up the cleanliness

Keeping everything clean and in the right place is key when you are planning on serving hundreds of customers at an outlet. In the F&B industry you will learn from the best on how to organize your supplies and equipment to ensure a smooth operation. This way, making sure things are orderly and clean will become second nature to you in no time.

About EHL Group

EHL Group is the global reference in education, innovation and consulting for the hospitality and service sector.
With expertise dating back to 1893, EHL Group now offers a wide range of leading educational programs from apprenticeships to master’s degrees, as well as professional and executive education, on three campuses in Switzerland and Singapore. EHL Group also offers consulting and certification services to companies and learning centers around the world. True to its values and committed to building a sustainable world, EHL Group’s purpose is to provide education, services and working environments that are people-centered and open to the world. www.ehlgroup.com

EHL Hospitality Business School
Communications Department
+41 21 785 1354
EHL

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