The Subsidy Story
Forty-five percent of operators reported that their subsidies have increased in the past year, up from last year’s survey, in which only 26% saw an increase. Eighteen percent saw a reduction in their subsidies and 37% said theirs remained the same. Operators in the central region of the country were the most likely to report an increase, at 64%. Most operators (53%) expect their subsidies to remain the same in the next year, while 31% expect their subsidies to increase and 16% expect them to decrease.
Forty-five percent is the average subsidy.
The region with the highest average subsidy is the West, at fifty-eight percent.
Operations with annual purchases of $5 million or more have a higher average subsidy than their smaller counterparts: 54% vs 44%
Locations that are self-op are significantly more likely than contract-managed ones to be subsidized: 89% vs 60%
Locations in the West are significantly more likely to be subsidized than the rest of the country: 100% vs 60%
Late-day dining not top priority
B&I locations are not likely to offer dinner or late-night foodservice options for their customers. Operations that serve 5,000 or more meals/transactions per day are the most likely to offer dinner service (56%), along with those operators in the West (43%). Conversely, those in the South are the least likely to offer this option, with only 5% of operations open for dinner. Similarly, no operator in the South offers late-night dining.
Eighty-three percent of operators who strongly agree or agree that businesses now view on-site foodservice programs as an important benefit to pitch to their prospective employees. Locations with annual purchases of $5 million or more are significantly more likely than those with smaller annual purchases to report they strongly agree with this statement (64% versus 27%, respectively).
Average daily meals/transactions
There was a minimal overall decrease in average total meals, dropping from 4,349 last year to 4,202 this year. Just as in last year’s survey, contract-managed locations are significantly more likely to serve more meals than self-operated ones.
What challenges are you facing?
Although off-site competition remains the No. 1 challenge, fewer operators report they are facing an issue with more off-site competition equaling decreased participation, 40% last year versus 28% this year.
Revenues up for most
The majority of operators (62%) reported an increase in their foodservice revenue in the past year, which is slightly higher than last year (59%). Operations in the West are the most likely to report an increase (86%), while in the remainder of the country, an average of 60% reported an increase. Midsize operations (those that serve between 1,000 and 4,999 meals/transactions per day) were the least likely to report a drop (6%). For those operations that had an increase in revenue, the average jump was 9%. Operations that tallied a decrease reported an average drop of 13%, slightly higher than last year’s downturn of 10%.
Get local
Operators pegged the use of locally sourced foods as the No. 1 food trend to grow in the next two years. It seems, however, that operators are less optimistic on the growth possibility of vegetarian menu items; 59% expect this trend to grow this year versus 67% last year.
Eight percent: The average food purchases that are organic, for those operations that purchase organic food items. Large locations (those that serve 5,000 or more daily meals) are significantly more likely than smaller ones to purchase organic items for their operations (14% versus 4%, respectively).
The year to come
Foodservice staff: Overall, 64% expect the size of their foodservice staff to remain the same in the next year. Operations that serve more than 5,000 meals/transactions per day are significantly less likely than operations with fewer daily meals to expect their staff size to remain the same (22% versus 70%, respectively).
Menu offerings: Just as in last year’s survey, this is the area operators are the most bullish on increasing. Locations that serve 5,000 or more daily meals/transactions (75%) and those in the Northeast (73%) are the most likely to expect their menu options to increase in the next year.
Space allocated for front of house: As the average number of daily meals served in operations increases, so does an operator’s likelihood of saying front-of-house space will increase; only 5% of operators who serve fewer than 1,000 daily meals expect an increase compared with 44% of operators who serve 5,000 or more. Operators in the West are the most likely to expect an increase (57%) in this space.
Space allocated for back of house: Similar to front-of-house space, as the average number of daily meals served increases, so does the likelihood that an operator will expect back-of-house space to increase in the next year. Thirty-three percent of operators who serve 5,000 or more meals daily expect an increase versus 5% for those who serve fewer than 1,000 daily meals.
Customer base: Fewer operators expect their customer bases to increase this year than last year (37% versus 43%, respectively). Another shift is the percentage of large operations (those serving 5,000 or more daily meals) who expect their customer base to decrease (44% this year versus 11% last year). Those in the Northeast are significantly more likely than other regions to expect a decrease (33% versus 7%, respectively).
Equipment budget: This is the business area that took the biggest hit in terms of operators expecting an increase. Last year 36% of operators anticipated an increase, compared with 29% this year.
Food/beverage budget: This is the area that saw the biggest jump in operators’ optimism from last year. Thirty-nine percent of operators expect an increase, versus 27% last year. Locations that are subsidized are significantly more likely to expect an increase in their food and beverage budget than those that are not subsidized (50% versus 19%).
Produce top dog
When it comes to locally sourced items, produce once again is the No. 1 choice. Baked goods took a hit this year versus last; there was a 10-percentage point drop in the number of operators sourcing this category locally this year. Operators in the West are significantly more likely than other regions to purchase baked goods from local sources (86% versus 49%, respectively). Locations that serve 5,000 or more daily meals are significantly more likely than smaller locations to purchase dairy locally (100% versus 43%, respectively). Only 9% of operators do not purchase any items locally. For those operators who do purchase locally sourced items, the average is 19% of their food purchases. Locations in the West (34%) and Northeast (26%) have the highest percentage of locally sourced products in their operations, compared to the South and Central regions, which, on average, purchase 13% of locally sourced food.
How does your client view in-house foodservice operations?
Nearly half of operators report that their clients view foodservice as an important employee benefit, so it is not a key area for budget cuts. Not surprisingly, subsidized operations are more likely to report this than those not subsidized (60% versus 26%).
