At its recent virtual Marketing & Sales Conference, IFMA hosted a session on the association’s latest 2024 and 2025 Food Away-From-Home (FAFH) Industry and Segment Projections.

• The International Foodservice Manufacturers Association predicts the total restaurant segment will grow 0.5% compared to 0.8% last year in terms of operator purchases in dollars.
• Quick service restaurants are expected to grow 0.7% while fast casual will be up 1.3%, an upward revision of the organization’s 0.9% growth projection for fast casuals issued in February.
• IFMA slashed its inflation projection for 2024 from its February prediction of 5% to 3.8%.

IFMA began this year projecting that the FAFH industry would grow 0.9%, on a real basis. It takes into account that the industry’s on-site segments (like colleges & universities and healthcare foodservice with their built-in clientele) look to remain traditionally steady - outpacing growth of the more volatile restaurant segment.

Looking at specific restaurant categories:

QSR (2024: +0.7%; 2025: +1.0%) is expected to finish with a good 2024 and to have a solid 2025 relative to other segments (though lower than pre-pandemic average growth). QSR of course relies heavily on its value proposition with consumers, and despite headlines about how many consumers now consider fast food a “luxury,” the reality is that the segment has the lowest price point among restaurants.

Fast casual (2024: +1.3%; 2025: +1.6%) operators have done a masterful job of pivoting to suburban locations and dinner occasions, which has helped them bounce back from their pre-pandemic reliance on urban locations and daytime work populations consuming lunch. They have also successfully leveraged their heavy reliance on technology to improve digital ordering, which has in turn improved their loyalty programs and repeat business. The segment benefits from a more well-perceived workplace environment and culture than QSRs, which has helped it compete in a very tight labor market.

Midscale (2024: -0.7%; 2025: -0.5%) continues to struggle and is forecasted to have some of the lowest projected real growth of all foodservice segments in 2024 and 2025. Consumers learned to cook more at home during the pandemic and so midscale offerings, which tend toward comfort foods and familiar items, have had less appeal as consumers returned to restaurants. The lower price point for a dine-in experience will be a positive for the segment as consumers face continued food-away-from-home inflation that is higher than at-home inflation. Lower income consumers have cut back the most on their foodservice spend so far in 2024 and that is directly impacting midscale restaurants as their patron base skews toward lower- and middle-income households.

Casual dining (2024: 0.0%; 2025: +0.3%) continues to prove it is the segment that doesn’t give up and consumers continue to view these types of restaurants as desirable venues for recognizing life events, celebrations, and socializing (which we are more eager to do now than ever after having endured a pandemic). The segment continues to get additional revenue from off-premise offerings with increased curbside, delivery, family meals and off-premise alcohol though the share of revenue from off-premise has peaked and is likely to continue to fall in 2024 and 2025.

Fine dining (2024: +0.2%; 2025: +0.5%) operators are benefiting from the fact that consumers are eager to get back to experiences and many have pent up demand and the disposable income to pay for them. Lower-income consumers are cutting back the most with their dining at restaurants but are a small share of fine dining patrons. Labor shortages have impacted fine dining, though not as badly as other full-service segments since workers and waitstaff generally have more experience and are paid higher wages.

When it comes to these last few months of 2024, IFMA feels confident in its February industry predictions. Overall, FAFH should see 0.9% growth for the year.

Source: Restaurant Business