America Loves Frozen: A Snapshot of the US Frozen Food Industry in Foodservice

Frozen foods have become an essential part of foodservice operators’ day-to-day business, and growing demand might bring challenges to manufacturers and distributors alike. Through a study conducted by Datassential, The American Frozen Food Institute (AFFI) offers a rare glimpse into the industry and while the results show a competitive industry, it should be noted that there are a lot of aspects to improve.

Even if the frozen category has a very good overall penetration, especially among non-commercial foodservice (on-site) operators, significant growth could be achieved for the desserts and bakery categories. That phenomenon is expected because meats and vegetables are already extremely sought-after, and although the YoY growth is stable in those sectors, it would not bring a significant boost in sales.

The report states that innovation targeting labor cost (finding ways to decrease the labor necessary to prepare frozen menu items, like easier-to-cook ingredients) is somewhat missing in the frozen food sector, and offers great opportunities for those willing to invest. Packaging is another area where innovative ideas should be applied more frequently, as new solutions may increase the usage of frozen foods, but also reduce food waste. Most importantly, manufacturers should look to innovate the actual products, albeit this is not a decisive factor in one’s purchasing decision.

Interestingly, the study shows that all operators sometimes rely on one broadline distributor for frozen foods, with just little less than half of them utilizing multiple suppliers.

Who buys frozen?

An overwhelming number of restaurants and other commercial units purchase frozen foods and beverages (84%), and the value goes even higher when referring to non-commercial units like healthcare providers, lodging operators, hospitals, industrial and corporate catering companies, or colleges and universities (95%). Those who choose not to buy frozen food cite, among other reasons, that it lacks the quality of fresh produce.

When it comes to categories, Meat/poultry and Potatoes are bought by commercial and on-site operators on a regular basis. The average number of frozen categories purchased is 6.7 (out of the 13 defined in the report), and almost 8 in 10 operators say they buy frozen products year-round.

In terms of purchase connections, data shows that operators who buy Meat/poultry usually also acquire  Potatoes (84%), Vegetables (69%) and Appetizers (61%). There are also visible links between Soups and Meat/poultry acquisitions (90%), Breakfast baked goods and Potatoes (92%).

Referring to the latter category, operators widely choose Fries (91%), followed by  Tater tots (61%), Hash Browns (54%), Wedges (38%) and Chips (29%).

The report reveals a discrepancy between the purchases of uncooked and fully cooked frozen products. This is clearly the case with Seafood, where 62% of operators are more likely to buy uncooked products and only 10% choose the fully cooked option. The numbers are similar with Vegetables, Potatoes, and Appetizers. Even though operators are more open to buying fully cooked Meats/poultry frozen products (17%), most of them still prefer it uncooked (37%).

AMERICAN FROZEN FOOD INSTITUTE: POWER OF FROZEN IN FOODSERVICE
IMAGE: AMERICAN FROZEN FOOD INSTITUTE: POWER OF FROZEN IN FOODSERVICE

On average, 47% of the total purchases made by a foodservice operator in the United States are frozen. Potatoes again lead the way with 65%, followed by Appetizers (63%), Seafood (63%) and Dough (57%). At the opposite end are Vegetables (36%), Fruits (20%) and Beverages (19%).

The report also states that the majority of frozen foods and beverages are purchased at least two or three times a month. The Meat/poultry category has the highest buying frequency, 82% of purchases being made once a week or more. Baked desserts are bought least frequently, with just 37% of acquisitions carried out on a weekly basis or more often.

Building on the need for frozen

Even though frozen usage remained relatively stable, there are factors that would contribute to an increase in this area. The operators referred to greater product variety with enhanced quality and taste, a more competitive price without compromising these two attributes, packaging that would require less storage space in the freezer, and bringing the texture of frozen food closer to its fresh counterpart.

An overwhelming majority (88%) of foodservice operators rely on broadline suppliers for frozen food, with Sysco having a very strong presence (42%), followed by  US Foods (31%) and GFS (15%). An operator’s average number of suppliers is three, and the main reasons for that were stated as being product selection, the need to restock between deliveries and product availability.

In terms of national vs. private label brands, operators usually seek national (37%) or a mix of the two (42%). Breakfast baked goods is the least favorite category in private brands (14%), while Fruits purchases from national brands stand at 27%.

As operators purchase multiple frozen brands primarily to ensure the best price and quality, the taste is also very important, according to those interviewed. One-third of operators buy the same brand, and two-thirds choose multiple sources.

Shelf life, the main purchasing factor

IMAGE: AMERICAN FROZEN FOOD INSTITUTE: POWER OF FROZEN IN FOODSERVICE
IMAGE: AMERICAN FROZEN FOOD INSTITUTE: POWER OF FROZEN IN FOODSERVICE

Almost six in ten operators say long shelf life and all-round availability are the main benefits of purchasing frozen food. Convenience, easiness to prepare and product consistency are also taken into account when deciding on a purchase. The innovative side of products was only brought up by 6% of operators, which underlines the key findings of this report.

The analysis lists the main challenges faced by operators, by dividing them into aided and unaided. In both cases, limited or no freezer storage space is perceived as the main obstacle. Next, the most commonly mentioned unaided challenges were the defrost time (12%), taste/flavor (9%), limited package size options (8%) and the bulkiness of the packages (7%). When asked about aided challenges, operators named the preference towards the quality of fresh products (27%), the bulkiness of the packages (26%) and again the limited package size options (26%). It’s worth mentioning that 47% of interviewed foodservice operators say they have an issue with packaging and mostly prefer resealable, bulk bags. Other preferences refer to packaging designed to minimize food waste, vacuum-sealed packaging, and pre-portioned or individually-sized packs.

What makes frozen food so appealing to operators is flavor/taste, 19% of those interviewed naming it as the most important attribute, quality (15%), value for money (14%), and consistency (13%). Overall, there are a lot of important considerations that determine operators to widely choose frozen products, the study shows.

The report was conducted by Datassential, by interviewing 426 foodservice operators in the US, 68% of which independent. Almost a third of those annually spend between USD250,000 and USD500,000 of frozen food and beverages. The geographical divide shows a good distribution between East & West (20% and 16%, respectively), but also between Midwest (32%) and South (32%). Most of the operators that were asked to participate serve primarily American cuisine, followed by those offering mixed ethnicity cuisine, and pizza. The answers were provided by general managers (29%), owners (20%), managers (15%), purchasing directors (14%), chefs (8%), and others.

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