The path I’ve been learning so far for food products to grow is to start with farmers markets or other direct sales, then move into self-distribution to retail locations, then move up to working with a distributor and brokers. Getting into restaurants is a variation and leads into the discussion of targeting “Food Service” vs “Retail”. What exactly does that entail? The key seems to be finding segments where a gatekeeping purchaser makes a narrow product selection to offer to their audience. No marketing investment required to the end consumer – they have few enough choices they’ll likely try your product.
I found an old paper written on the Food Service Industry from the perspective of developing a hospitality career. They identified up to 12 segments for the food system based on a breakdown from the International Foodservice Manufacturer’s Association. Market research firm CHD also makes similar breakdowns here.
The big breakdowns seem to be Commercial (retailer & restaurants) vs Non-Commercial (also called Institutional). Sometimes included in Non-commercial, sometimes separated out is Military & Prisons & Schools. The key to non-commercial is that it’s food service at an establishment whose primary business is something else (vs restaurants). They’re not in the business of providing a wide variety of comparable choices to the end consumer in the way a retail establishment is. A detailed segment version might break into:
- Employee feeding (aka “Business & Industry”)
- This breaks into cafeterias where employees may or may not pay for their own meals. Also includes break rooms and vending. Might include meeting/event catering.
- Much of this market is contracted out to 3rd parties. Think Aramark.
- School systems (primary/secondary)
- Here you’re participating in school lunch programs – I’m thinking prepared food.
- Colleges & Universities
- Here there’s a mix of faculty (employee cafeteria) student meal plans (so a pre-committed budget but variable consumption) snack bars and vending. Catering again. A mix of prepared food and packaged food.
- Daycare
- Transportation
- Airline meals, transit concessions
- Military
- Some prepared food. Commissaries. Canteens and snack bars.
- Nursing Homes
- Elder care
- In-home meal delivery, elder day care sites
- Hospitals
- A complex array of cafeteria, meal delivery, concessions.
- Correctional institutions
- Vending
Market-research firm Technavio divides the prepared-food system into 4 categories by how the preparation is done. This is an interesting framework for thinking about how your product might fit into a food service model.
Conventional – food is prepared onsite and kept at service temperature until served.
Centralized – sounds like what I’ve heard described as a commissary model. Food is prepared at a centralized location and then distributed to kitchens for service, may be frozen, chilled or held hot for transport.
Ready Prepared – food is prepared ahead and chilled or frozen and then reheated on demand for serving.
Assembly serve – the teaser I read didn’t go into the detail of how they define this category, but perhaps this involves pre-prepared products from vendors that get assembled into a final result. We’re also still missing individual meal service or kits.
Their full report is available for $1000. Looking ahead, they called out mobile food service (IE Food Trucks) and delivery plus ghost kitchens as trends to watch.
It seems likely to me that each channel of foodservice will have differing requirements on shelf-life, ability to do refrigeration, quantity packing, sales, order & payment cycles. The IMFA looks like they have a one-day seminar designed to cover the current state of the industry. Next one is June 16, 2020 – let’s check it out!
Shaulablog 