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A Slice of the $300b pie: The fast food opportunity in USA

Danny Bowles, Insight & Planning Specialist, International Markets

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Photo by Ragga Muffin on Pexels

Bord Bia has recently conducted a number of pieces of market research to understand how fast food (or Quick-Service Restaurants) are emerging from the pandemic into 2022. One of the markets where we have done this is the USA, the home of fast food (Bord Bia, 2022).  According to WARC (2022), US consumers will spend $300b on fast food in 2022, the size of Colombia’s whole GDP. Obviously, COVID-19 impacted the foodservice sector greatly; in 2019, US consumers spent $604b on foodservice, dropping to $480b in 2020 (Euromonitor, 2021). However, the fast food sector remained strong, with successful drive-in and delivery services. The challenges of COVID-19 also meant there was a great deal of consolidation amongst brands as bigger operators were able to snap up some of the more vulnerable smaller guys. 10 companies own 50 brands that account for 30% of US foodservice (Euromonitor, 2021). There is a $300b fast food opportunity in the US, made up of bigger and better opportunities. How do we get a slice of that pie?

Our Advantage

Let’s start with the good news. Operators are looking for new suppliers; almost half of the QSR buyers we spoke to said they will “definitely” source new suppliers in the next year. Not just that, 27% of all the buyers we spoke to would put Ireland as their first choice of import origin (Bord Bia, 2022). This puts Irish suppliers across categories at a great advantage.

Our Challenge

What about the less good news? It will take a lot of work to break into this market. At least this research will help you get a headstart! Breaking through in this channel requires a large investment of time, financial and human resources. In any buyer meeting you will need to understand logistics, the gap your offering fills, potential competitors, and be able to meet buyers in person, which is still the favoured way to interact with suppliers (Bord Bia, 2022). The first step is to develop a clear strategy and target. In such a big channel there is a need to segment. Through segmenting, you start to understand what are the trends most relevant for your target, and thus the operators best suited to your offering. For example, do you want to target the biggest mainstream operators as a secondary supplier? Or is your product best suited to more health-conscious fast food? Are you looking to supply more sophisticated fast casual operators? Diving deeper into this research and our brand profiles can help you on the way to answer these questions.

To help you develop a strategy, we have developed a list of key checklist questions:

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Source: Bord Bia, 2022, Insights for Growing in the USA QSR-Fast Casual Market.

Need to Knows

So what are some key market and channel dynamics that are vital to know to understand the market? Like everywhere else right now, operators are really feeling the pressure around staffing, consistency of supply and inflation. 95% of US restaurants have experienced significant supply delays or shortages in recent months, and 75% have had to make menu changes because of these challenges (US National Restaurant Association, 2021). When we asked buyers what Irish suppliers could do to encourage them to buy, demonstrating logistics expertise and capacity to supply was the most important. In relation to staffing, the buyers we spoke to are looking for “deskilled theatre”, products that are fool proof to prepare, but still delivers on taste and experience. If you review the US Foods online catalogue of products, many call out the ease of use in the kitchen of the product. Buyers are also looking for exotic efficiency. Consumers are looking for something new & exotic but restaurants don’t want to take too many risks right now. In this environment, sauces and dips, as well as craft drinks, can do very well. We also noted that 66% of the buyers we spoke to said Asian and Mexican flavours would be one of the biggest growers in the next 3 years (Bord Bia, 2022).

What Next?

This article has tried to give you a sense of the challenge, but opportunity, when thinking about the US fast food market. For anyone who wants to find out more and explore this opportunity, please get in touch with me for further insights and working through the development of a route to market strategy. I would also encourage you to contact the Bord Bia team in New York to help you understand the opportunity for your business.

 

References:

Bord Bia, 2022, Insights for Growing in the USA QSR-Fast Casual Market.

Euromonitor, 2021, Consumer Foodservice in the US.

US National Restaurant Association, 2022, 2022 State of the Restaurant Industry.

WARC, 2022, WARC Spotlight US on QSR: A snapshot of consumer data.