What’s on the menu? Foodservice update Q3 2024

The US is the largest foodservice market in the world. For years, it has also enjoyed steady growth in volume and value. Such dynamics have facilitated the creation of large players that, from a strong local base, have extended abroad. Today, North American names are well represented among the leading brands on all continents. However, recent trading conditions in the US have been lackluster. Will the US remain a source of global restaurant names? In this quarterly, we analyze the information disclosed by North American listed restaurant groups and what recent numbers mean for the global competitive landscape.

In the US, consumers remain under significant financial pressure, particularly those in lower income brackets, where the cost-of-living crisis has eroded savings and brought about record-high credit card debt. Foodservice demand has seen precipitous declines, with transactions down 5.5% YOY in Q2 2024. This is likely the worst the declines will get, provided the economy manages a soft landing – helped by interest rate cuts. Restaurant operators are increasing their promotional activity, hoping to drive a rebound in demand, even at the risk of undermining margins.

In Europe, summer trade remained in line with the turnover trend of the previous months. Affordability may be gradually improving, but not fast enough to prevent consumers from remaining cautious. Plus, their priorities remain elsewhere: holidays come first. We don’t expect any substantial change soon. The good news comes on the cost side, where the worst seems to be over. Only staff costs are likely to keep increasing, although at a slower pace than in the recent past.

In China, consumer sentiment remained subdued in recent months. However, per capita consumption began to stabilize in Q3 2024. Major players shifted their focus to product innovation to attract customers, rather than increasing promotions. Thanks to their value-for-money positioning, Western quick-service restaurant brands are more resilient and stayed on track with planned network expansion. Casual dining brands faced more pressure. Those with better value propositions outperformed but remain cautious about scaling up. To overcome domestic growth constraints, many brands are seeking international expansion. Brands with strong supply chains and skilled personnel are also considering a multi-brand approach.