French food service sector growing at a steady pace

01.11.2011 By: Transfer Latin Business Consultancy, based on BMI

The French hotel, restaurant and institution food service market is one of the largest sectors of the French economy. The country ranks first in Europe, and third worldwide after the United States and Japan, in overall expenditures on food and related items. France accounts for 17,6% of the European foodservice industry's value, with a total value of US$47,2 billion.

The most significant resemblance of the status of this industry is that despite of the economic crisis, overall sales in the French hotel, restaurant and institution (HRI) sector have shown a steady year-over-year growth rate of 2,9% between 2005 and the beginning of 2010.

The HRI-industry can be divided into two categories: institutional catering and commercial catering. The French foodservice market is clearly dominated by the latter. Traditional restaurants, hotels and resorts, leisure parks, cafeterias, cafes, brasseries, fast food outlets and street vendors represent 78% (US$36,8 billion) of the French HRI sector. Leaders on the French commercial catering market are McDonald's France, Financiere Quick SAS and Agapes Restauration, respectively having sales of US$ 4,8 billion, US$ 1,1 billion and US$ 0,988 billion on the French market.

Institutional catering represents 22% of the HRI sector. Institutions that provide education, healthcare, business catering, schools, hospitals, factory restaurants, and air and sea catering together currently sell more than US$ 10,36 billion a year. The institutional catering market has increased during crisis while it encouraged workers to eat frequently at company-provided cafeterias for low-cost meals. Moreover, the increasing requirements of feeding the aging population kept demand strong for institutional catering. The three major players are (representing 82% market share): Group Sodexho France, Group Elior and Compass Group France, respectively having sales numbers of US$ 3,2 billion, US$ 2,2 billion and US$ 1,6 billion.

The French foodservice market is characterized by a strong degree of competition and therefore food companies have to provide good food at low prices to be able to gain market share. However, it does not frighten new (international) entrants from trying to target the market. The French Foodservice sector is very dynamic and consumers are switching easily. This makes it possible for new entrants (food suppliers) having the right strategy to rapidly gain a significant market share. Furthermore, there is a general trend that French households spend a relatively high proportion of their household budget on food purchases, and just switch to other selling points if their financial situation obliges them to do so. Additionally, there is a growing demand for fast food which is mainly consumed during lunch time, like soups, fruit juices, sodas, etc.

It is partly because of the above mentioned characteristics that the French foodservice market is still booming. In 2013, the performance of the industry is forecast to be positive, with a stable yearly growth rate for the five-year period 2008-2013, which is expected to drive the industry to a value of US$ 49,2 billion by the end of 2013. The last report on the industry showed that France saw foodservice traffic increase in the first quarter of 2011 with 2%. These promising growth rates create an opportunity for foreign companies to get involved in this industry. In general there is high demand for suppliers of reasonably-priced, high quality and innovative products, including fish and seafood, bison and other meats, fresh (organic) fruits, including grapefruits and exotic fruits, vegetables, fruit juices and soft drinks, wine, sauces and salad dressings, soups, spices, dried fruits and nuts, frozen foods, snack foods, ethnic food products, breakfast cereals, rice and pulses, desserts, as well as gourmet products and confectionery. Demand for these products is rising and there is need for more suppliers. Apparently, institutional catering growth does not depend on the country’s economic situation and commercial catering sales grow steadily although consumers switch selling points. These developments indicate possibilities for foreign companies to get involved and serve the market.

TRANSFER supports companies active in the foodservice industry and is planning to organize a trip for suppliers and other parties operating in this sector. Would you be interested in participating, please let us know. If you have any queries or suggestions, please do not hesitate to inform us.