USA Food Service Market Outlook to 2028

USA Food Service Market Overview

• The USA Food Service Market was valued at USD 825 billion in 2023, propelled by the increasing demand for convenient dining options, growth in the quick-service restaurant (QSR) sector, and rising consumer spending on dining out. The market encompasses a variety of segments, including full-service restaurants, quick-service restaurants, catering services, and institutional food service.
• Major players in the USA Food Service Market include McDonald's, Yum! Brands, Starbucks, Restaurant Brands International, and Dominos Pizza. These companies maintain a strong market presence through expansive networks, innovative menu offerings, and strategic marketing campaigns. They focus on enhancing customer experience and leveraging technology to streamline operations and improve service delivery.
• States like California, Texas, Florida, and New York lead the market due to their large populations, high levels of tourism, and diverse food preferences. These regions also experience high consumer spending on dining out, driving demand for various food service options.
• In January 2023, Orchestra Private Equity acquired a 100% stake in KFC Korea from KG Group for around USD 50 million. As part of the deal, Orchestra PE signed a master franchise agreement with Yum! Brands to secure the rights to open KFC franchise stores in South Korea.

USA Food Service Market Segmentation

The USA Food Service Market is segmented by type, channel, and region.

• By Type: The market is segmented into Full-Service Restaurants, Quick-Service Restaurants, Catering Services, and Institutional Food Service. In 2023, Quick-Service Restaurants (QSR) held the largest market share, driven by consumer preference for fast and convenient dining options. Major QSR chains like McDonald's and Taco Bell lead this segment with extensive networks and diverse menu offerings.

• By Channel: The market is segmented into Dine-In, Drive-Thru, Takeout, and Delivery. Delivery services have seen noteworthy growth, especially post-pandemic, due to the increased demand for contactless dining options. The rise of food delivery platforms such as DoorDash and Uber Eats has further accelerated this trend.

• By Region: The market is segmented into West, East, South, and North USA. The South region, particularly states like Texas and Florida, dominates the market in 2023 due to its large population and high levels of dining out. The regions diverse food culture and substantial tourism also contribute to its leading position.

USA Food Service Market Competitive Landscape

• McDonald's: McDonald's is set to expand its presence substantially, with plans to open over 1,600 net new restaurants by the end of 2024. This aggressive growth strategy demonstrates the company's confidence in its market position and commitment to capturing additional market share in the fast-food sector
• Starbucks: In December 2021, RBI completed the acquisition of Firehouse Subs for USD 1 billion. This strategic move expanded RBI's presence in the U.S. market and added a popular fast-casual restaurant brand to its portfolio. Further, RBI continues to focus on growing its Burger King brand in the U.S. In 2023, Burger King opened over 100 new restaurants in the country.

USA Food Service Market Analysis

Growth Drivers:

• Increased Demand for Health-Conscious Options: The rise in consumer awareness regarding health and wellness is influencing the market. As of 2024, majority of U.S. consumers actively seek out healthier food options when dining out, according to the USDAs Dietary Guidelines. This trend is driving foodservice operators to enhance their menus with nutritious choices, such as plant-based and organic foods. Fast-food chains and full-service restaurants are incorporating these options to meet growing consumer preferences, contributing to the markets expansion.
• Expansion of Digital Ordering Platforms: The adoption of digital ordering and payment systems is transforming the food service landscape. In 2023, digital ordering platforms accounted for over USD 100 billion in transactions in the U.S. alone, online ordering accounted for 27% of all orders in the U.S driven by the increasing use of mobile apps and online platforms. The National Restaurant Association reports that majority of consumers now use digital ordering for takeout or delivery, which is expected to continue growing as technology advances and becomes more integrated into daily consumer habits.
• Rise in Food Delivery and Subscription Services: The food delivery sector has experienced substantial growth, with subscription meal services gaining popularity. In 2023, the number of food delivery subscription subscribers in the USA is estimated to be around 30 million. This figure reflects the growing popularity of subscription models within the food delivery sector, which includes services like meal kits and other regular food delivery options. This surge is driven by consumer demand for convenient, personalized dining experiences that cater to busy lifestyles and diverse dietary preferences.

Challenges:

• Labor Shortages and Rising Wage Costs: Labor shortages have been an important challenge for the food service industry, exacerbated by high turnover rates and increasing wage demands. The U.S. food service sector is experiencing a workforce shortage, which is intensifying pressure on operational efficiency and profit margins. This challenge is further compounded by rising wages in the sector, making it increasingly difficult for businesses to maintain service quality while controlling costs.
• Supply Chain Disruptions and Rising Ingredient Costs: The food service industry continues to face challenges from supply chain disruptions, affecting the availability and cost of ingredients. Global supply chain issues, coupled with higher transportation costs, have led to an increase in food prices, particularly for key ingredients such as meat and dairy. These disruptions are putting strain on food service providers, who must navigate higher costs while managing menu pricing to remain competitive.

Government Initiatives:

• Food Safety Modernization Act (FSMA): The FSMA, enforced by the FDA, continues to shape food safety practices within the food service industry. Updated in 2023, the FSMA requires food service providers to implement advanced preventive controls and improve traceability systems. The Acts emphasis on proactive measures aims to reduce foodborne illnesses and enhance overall food safety standards across the sector.
• Healthy, Hunger-Free Kids Act: The Healthy, Hunger-Free Kids Act, updated in 2024, focuses on improving the nutritional quality of meals served in schools. This initiative mandates higher standards for nutrition and increased access to healthy foods for students. The Act influences institutional food service providers by promoting healthier meal options and setting stricter nutritional guidelines for school cafeterias.

USA Food Service Market Future Outlook

The USA Food Service Market is expected to experience continued growth by 2028, driven by advancements in technology, evolving consumer preferences, and increasing investments in delivery and convenience services.

Future Market Trends:

• Expansion of Personalized Dining Experiences: By 2028, personalized dining experiences will become a standard offering in the food service industry. Advances in AI and data analytics will enable food service providers to offer tailored menu recommendations and customized dining experiences based on individual customer preferences. This trend will cater to the growing demand for personalized services and enhance customer satisfaction.
• Enhanced Focus on Digital and Contactless Solutions: The future of the market will see a heightened focus on digital and contactless solutions. By 2028, digital ordering, payment, and delivery systems will become more sophisticated, with advancements in technology improving the efficiency and convenience of these services. The integration of contactless solutions will continue to shape consumer expectations and operational practices in the food service sector.