Market Information
United States

Overview of the Foodservice Sector in the US South Central States

June 2005

The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter.

EXECUTIVE SUMMARY

The United States South Central Region, comprised of Arkansas, Kansas, Louisiana, New Mexico, Oklahoma and Texas, offers strong export opportunities to Canadian food companies due to its favourable demographic characteristics and large population size. This market is experiencing a growing demand for a healthy, convenient, fresh, authentic and ethnically diverse food selection. Foodservice trends in this market are developing around the regions growing ethnic consumers.

The South Central Region has a consumer base of approximately 38 million people, or 13% of the total US population. Approximately 24% of persons living in this region are Hispanic. New Mexico has the highest percentage of Hispanic population at more than 42% of the states total population. Texas also has a large Hispanic community at more than 32% of the states population.

With Texas driving the growth in this market, the South Central foodservice market represents 12% of the national market. This region is home to the countrys largest foodservice supplier and one of the countrys largest operators of full service restaurants. It is estimated that by 2010 this will be a US$60 billion foodservice market, driven by renowned food service markets like, New Orleans and Dallas.

The regions growing Asian American population has been an additional catalyst to the growth for the ethnic food sector. Asian Americans are the fastest growing demographic segment in the country and Texas has the second highest population of Asian and Pacific Islanders in the US. There are approximately 900,000 Asian Americans currently living in the South Central Region.

The demand for ethnic cuisine has a strong influence on the foodservice sector in the South Central Region. As ethnic foods increasingly enter everyday diets and more companies chose to address the needs of the ever growing demographic segments the proliferation of ethnic foods in this region will continue. Other important influences include health and wellness attitudes, the demand for personalization and service, away-from-home dining trends, and at-home meal solutions. Each of these factors impacts the commercial and non-commercial foodservice sectors.

A variety of niche markets have been rapidly developing in the foodservice sector, such as quick casuals, upscale ethnic kitchens, and organic eateries, offering Canadian exporters diverse opportunities in this market. The trends of the South Central Region mirror many trends of the general American population, but in this region more than most there is a strong emphasis on addressing the needs of the large Hispanic population clustered in metropolitan regions of Texas and New Mexico.

QUICK FACTS

The South Central Region is a strong market for foodservice, accounting for almost 12% of national foodservice sales.
Opportunities are available across most South Central foodservice operations including quick service, full service, quick casual, universities and colleges, cafés and juice bars, and health-care institutions.
Prospects exist in the following areas: upscale ethnic foods, organic-certified foodservice ingredients and products, specialty seafood products, condiments, fresh "made-for-me" foods, home meal replacement products, natural or high quality beef, low carbohydrate desserts, juice bars, and exotic/healthy salad dressings.
Organic food and drink sales in the region were estimated to have expanded by 12% to US$11.75 billion in 2002.
The US ethnic food market is expected to climb to US $4.9 billion by 2008, within three major food categories: Hispanic, Asian, and emerging ethnic foods - i.e. Caribbean, Indian, Middle Eastern and Greek foods.
The National Restaurant Association estimates that by 2010, total sales in the US restaurant industry will exceed US$577 billion.
In 2003, the quick casual market was pegged at US$6 billion, growing 15-20% each year and is anticipated to double in the next five years to US$12 billion.
2005 sales for full-service and limited service outlets will rise by more than US$15 billion or almost 3%. Final prices could increase 3.5% due to increasing fuel prices, insurance rates, and labour expenses.
While more than half of consumers find meal portions usually large, some restaurants have begun to implement tasting bars and mini-cafes within their establishment. Restaurants offering smaller portion meals consequently offer more expensive beverages. Certain studies have shown that consumers want to have the option to choose their portion size.

South Central Region

The US South Central is a demographically diverse region. New Mexico and Texas have seen a large Hispanic boom, while Arkansas, Louisiana, and Oklahoma have seen a stronger presence of African Americans. Furthermore, between 2000 and 2050 the number of Asian Americans is expected to increase by 213%. In that regard, Texas is a key market as it ranks among the top ten states with the highest Asian American population.

Other changing demographics include: rising incomes, an aging population, smaller household sizes, and an increasingly high proportion of households containing single people or multiple adults without children. By 2020, these "empty nest" households are predicted to increase 5% and single adult households are anticipated to rise 2%. Along with higher disposable incomes, these changes are expected to positively affect the demand for food purchased away from home. Also, as more families become dual-earner households, they may have less time to prepare meals at home. In 2002, up to 50% of US families were dual-earner households.

This region is even more attractive given that North Americas largest foodservice supplier, SYSCO, is headquartered in Houston. Texas is also home to Americas largest operator of full-service casual dining restaurants, Brinker International, in Dallas. Alliances to bring chef or restaurant branded products to foodservice menus may be advantageous.

Distinct trends exist in each of the South Central states. Age, race, and income demographics vary from state to state and county to county. It is important to examine the impact these variations have on foodservice and consumption within each state.

STATE OVERVIEWS

Texas

Texas has a wealth of urban centers with populations over 1 million and is slowly recovering from economic difficulties experienced in 2001. The state appears to have a favourable business climate due to its young and fast-growing labour force, a relatively low cost of living, and favourable government taxation and regulations. The relative affluence of the population allows for greater away-from-home consumption.

Currently, there are an estimated 51,000 restaurants and bars in Texas. Restaurant sales are estimated to be over US$29 billion this year.

Texas has a population of approximately 22.1 million people, and a median age of 33 years.
Texas currently has the largest population growth for the South Central Region due to its high birth rate and high levels of immigration. From April 2000 to July 2003, the population has grown 6.1%.
Texas is on the verge of joining New Mexico in a majority-minority status; nearly 49.5% of the population is made up of a minority population including Hispanics (32%), African Americans (11.5%) and Asians (2.7%).
There are currently 11,000 cities in Texas, making it the US state with the greatest number of metropolitan centres.
The major cities are Dallas-Fort Worth with 4.6 million in population, followed by Houston with 4 million, San Antonio with 1.5 million, and Austin with 1 million.
As a result of immigration, neighbouring counties on the Mexico-US border such as McAllen, Brownsville and Laredo have experienced rapid population growth.
In 2003, Texas had a median household income of US$44,909.
The state experienced a significant increase in per capita income of 5.8% from 2003 to 2004, above the national average change. 2004 per capita income was US$30,222, ranking the state 32nd in the country.
In 2003, food away from home sales reached US$34 billion and is expected to increase 31% over the next five years.
Texas is in the lead for the South Central restaurant sector with over 50,000 establishments, and a 5.2% growth rate.

Oklahoma

Employment growth in Oklahoma is higher than the countrys overall rate since job recovery began in 2003. In 2005, job growth in the Oklahoma City metro area is estimated to surpass that of the state and nation and reach 1.8%. Tulsa should post a respectable 1% increase. The impact of high energy prices is less severe in Oklahoma than in non-energy states, as the state remains a significant producer of oil and gas and benefits during periods of high energy prices.

Currently, there are an estimated 8,600 restaurants and bars in Oklahoma. Restaurant sales are estimated to be over US$4 billion this year.

Oklahoma has a population of approximately 3.5 million, with a median age of 36 years.
Ethnic composition includes 7.9% Native Americans, 7.6% African Americans, 5.2% Hispanics, and 1.4% Asians.
In 2003, Oklahoma had a median household income of US$37,232.
Per capita income was US$28,089 in 2004, ranking the state 39th in the country.
In 2003, the food away-from-home sales reached US$5.1 billion and are expected to rise 23.6% over the next five years.

New Mexico

With its large Hispanic population, New Mexico could be considered a model for the future of food industry in the US. In the South Central Region, New Mexico appears to have the strongest growth potential for exporters interested in taking their business abroad, due to increased hotel construction and tourism, and gaming/entertainment/resort activities. The state has been able to maintain a steady economy during the recent national recession due to employment growth from several sources including the expansion at Los Alamos. Las Cruces, one of the fastest growing areas in the state, has recently increased its hotel construction level by 20% that may be a reflection of an increased demand in the tourism sector.

Currently, there are an estimated 4,100 restaurants and bars in New Mexico. Restaurant sales are estimated to be over US$2 billion this year.

New Mexico has a population of approximately 1.9 million, and a median age of 35 years.
From April 2000 to July 2003 the population grew 3.1%, growth was strongest around the Rio Grande Valley.
New Mexico currently has the highest Hispanic population in the region of approximately 42.3%. This is expected to rise to 55% by 2025. It also has the highest Native American population in the region at 9.5%.
In 2003, New Mexico had a median household income of US$37,889.
The state experienced a significant increase in per capita income of 6.2% from 2003 to 2004, well above the national average change. 2004 per capita income was US$26,191, ranking the state 47th in the country.
In 2003, food away from home sales had reached US$2.5 billion and is expected to increase 27% over the next five years.
New Mexicos restaurant sector is currently growing at a rate of 5.1%.

Louisiana

Louisiana is currently experiencing solid economic growth brought about in part by the states entertainment and leisure/hospitality sectors. Currently, there are an estimated 10,600 restaurants and bars in Louisiana. Restaurant sales are estimated to be over US$5 billion this year.

In Louisiana, New Orleans continues to be the states strongest foodservice market with trends revolving around seafood, Creole and Cajun creations. Louisiana is among the top 3 food destinations in the world, with over 3,200 restaurants in New Orleans alone, representing 30% of the states total. The tourism industry is a real catalyst for growth in Louisiana. With almost 12 million visitors per year, Louisiana is a rapidly growing port of call for the cruise industry. Roughly 47% of food dollars going to foodservice in New Orleans making this is an excellent destination for quality ingredients. There are approximately 1.3 million people in this metropolitan area, with millions more little more than a car ride away.

Louisiana has a population of approximately 4.5 million and a median age of 35 years and is by far the most densely populated state in the region.
Roughly 46 million people live within a 500 mile radius of New Orleans with a collective household income of US$1 trillion.
Ethnic composition includes 32.6% African Americans, the largest minority group in the state, followed by Hispanics (2.4%) and Asians (1.2%).
In 2003, Louisiana had a median household income of US$36,225.
Per capita income was US$27,581 in 2004, ranking the state 42nd in the country.
In 2003, food away-from-home sales reached US$6 billion dollars and are expected to increase 22% over the next five years.

Kansas

Kansas follows only Texas and Montana in total agricultural acreage. Beef is the single most valuable agricultural commodity. Local producers face high production costs brought on by the cost of beef testing standards and weather related losses. Floods, storms, and droughts are not uncommon and can negatively affect the states agriculture industry. Currently, there are an estimated 6,650 restaurants and bars in Kansas. Restaurant sales are estimated to be over US$2.8 billion this year.

Kansas has a population of approximately 2.7 million, with a median age of 36 years.
The largest minority group are Hispanics (7%), followed by African Americans (5.7%), and Asians (1.7%).
In 2003, Kansas had a median household income of US$43,339.
Per capita income was US$30,811 in 2004, ranking the state 28th in the country.
In 2003, the food away from home sales reached US$4.3 billion and is expected to rise 24% over the next five years.
2005 restaurant sales in Kansas are projected to reach US$2.8 billion.

Arkansas

The population of the Little Rock metropolitan area is predicted to increase 43% by 2030 to more than 830,000 persons. The regions population growth may be explained by the low cost of living in Arkansas. Currently, there are an estimated 5,500 restaurants and bars in Arkansas. Restaurant sales are estimated to be over US$2.3 billion. With rising income levels, lower than average cost of living and a young population Arkansas may provide a number of opportunities in the coming years.

Arkansas has a population of approximately 2.7 million, with a median age of 37 years. From April 2000 to July 2003 the population has grown 2%.
The largest minority groups are African Americans (15.7%) followed by Asians (3.2%).
In 2003, Arkansas had a median household income of US$35,800.
The state experienced a significant increase in per capita income of 6.5% from 2003 to 2004, well above the national average change. 2004 per capita income was US$25,725, ranking the state 49th in the country.
In 2003, the food away from home sales reached US$3.7 billion and is expected to increase 25% over the next five years.

THE FOODSERVICE SECTOR

In 2004, the National Restaurant Association estimated that annual sales in the country are expected to reach US$440 billion, with 12 million employees and 878,000 locations. This will represent the 13th consecutive year of real growth, with a 3% real increase in total restaurant industry sales from 2003. Restaurants and bars are the primary contributors earning US$280 billion in sales in 2004. While long term prospects look positive, the food service industry continues to face challenges such as rising business costs, higher food prices, natural disasters, shaky consumer confidence, uncertain foreign and domestic issues, as well as damaging reports of obesity-related issues which have impacted this region in particular.

Commercial Sector

Commercial food service providers account for nearly 80% of the away-from-home expenditures. Favourable conditions helping the growth of the foodservice industry include the narrowing gap between the price of eating out and eating at home and the rising number of dual-earner households. Unfavourable conditions hindering the growth of the food service industry include rapidly rising fuel costs and concerns for food safety bumping up commodity costs. It is estimated that the cost of food from producers has increased by 7% since 2003.

Seven out of ten restaurants are small, independent operations. In 2003, the top 100 companies controlled 52.1% of total chain restaurant sales, worth US$150 billion. Companies are developing an assortment of restaurants to satisfy various consumer preferences. This also allows companies to leverage risk and maximize revenue through diversification.

Quick casual restaurants are the hybrid between fast-food outlets and higher-quality sit-down restaurants. In 2003, the quick casual market was pegged at US$6 billion, growing 15-20% each year and is anticipated to double in the next five years. This food sector is especially popular with affluent baby boomers and young professionals who have experienced fast food fatigue, but who lead busy lifestyles. Many fast-food outlets are redesigning their menus to mimic the selection available at quick casual restaurants.

The home meal replacement market has become a battle ground between restaurants and food retailers as they both try to serve the needs of quick casual diners. In 2003, takeout made up more than 70% of sales for the top 20 retail food companies. Within this area of the market, sales are forecasted to be US$395 million in 2003, a 15.6% increase in sales from the previous year.

Seafood appears to be in strong demand as people shy away from beef and poultry. This is due to the increased recognition of the health benefits of seafood, food safety concerns, and the demand for ethnic dishes containing seafood. In addition, sales of main dish salads at fast food restaurants grew by 12% in 2003, indicating a strong growth of low-carb diet practices and healthier eating. As a means to gain competitive advantage, companies are attempting to associate their food products with popular health-oriented brands.

Despite stronger growth trends full-service, sit-down restaurants continue to face their share of challenges including fuel, health care, and commodity prices. Meanwhile, consumer spending remains less confident due to an unstable economy. Furthermore, several legislative issues affecting full service restaurants are currently in debate: (1) increased restrictions on smoking in the workplace for restaurants and bars (2) employment compensation issues (3) minimum wage increases and (4) obesity lawsuits. All of these could have serious impacts on the growth of the restaurant industry.

Quick Casual

Quick casual chains are heating up the South Central market at a rapid pace of 15% per year.
Custom-made sandwich sales rose at a pace of 15% annually compared with hamburgers at 3%. These sandwiches are made with fresh and specialty ingredients which matches the demand for convenient and fresh foods.
Also increasing in popularity are cooking techniques such as flame-roasted and fruit-wood smoked foods, as well as the option of building "personal combination meals."
"Fresh Mex" restaurant chains, a fast growing Mexican and fast-casual niche, were estimated to make up an US$8 billion market in 2003.

Texas holds the majority of quick casual locations including Jasons Delis, La Madeleines, Café Expresses, Panera Breads and Boston Markets. Companies such as Chipotle, Baja Fresh Mexican Grill, and Qdoba Mexican Grill have also flourished in Texas. Besides these chains, independent quick casuals in the South Central Region add to the overall competitiveness within the sector.

Full Service

Beef remains in high demand, especially premium beef including Kobe beef, 100% certified Angus or Hereford, veal, organic meats, and preservative-free sausages.
Fish and seafood still remain the top choice for baby boomers, with shrimp being Americas most eaten seafood.
New Asian cuisine including Vietnamese, Malaysian and Indonesian are also growing trends, as the minority population changes in the South Central Region.
Fine-dining establishments are adding birds such as duck, capons, Guinea hen, pheasants, quail, and ostrich into their menus for todays more sophisticated diner.
Home Meal Replacements is a major trend that full service restaurants may enter into.

With the cost gap between dining at home and dining out gradually decreasing and people enjoying increased disposable incomes, people are taking up more opportunities to diversify their food palette with the convenience of personalized service. Full service restaurants are also exploring new culinary recipes to satisfy the consumer demand for fresh and authentic food choices.

Hotels

Albuquerque and Sante Fe, the two biggest markets in New Mexico, saw an increase in visitors with a healthy state-wide increase of 4.3%.
Texas is the third largest domestic tourism state in the US and is the leader in the South Central Region, followed by New Mexico and Louisiana.

The travel and leisure industry has seen slow growth since the economic recession in 2001. Currently, 16.4% of the US$41.2 billion travel expenditure is allocated to eating and drinking. Domestic travel has flattened since 2002, however tourism is expected to pick up as economic recovery occurs in Texas. The trends at resorts, hotels and conference centers echo the overall food trends of restaurants as consumers are looking for smaller portions, quick, healthy, and fresh foods.

Non-Commercial Sector

In 2002, the national non-commercial food sales stood at US$100 billion dollars. It is expected to increase by 13% to US$113 billion in 2010. The non-commercial food service sector has shown slow growth as it continues to adjust to changing food demands and stricter food regulations among other factors. Changing customer eating habits have profoundly affected several sectors, as employees are demanding that workplaces provide quick, healthy and fresh food choices.

Note: All food products in schools must be domestically produced. The US Department of Agriculture forbids foreign countries to export food products to US schools (kindergarten to grade 12).

Colleges and Universities

There are more than 600 colleges and universities in the South Central Region, most of which have contract operated foodservice.
There are almost two million students attending colleges and universities in the South Central Region.
In the Texas University System alone there are more than 61,000 personnel and 15,000 faculty working on a university or college campus.
The countrys post-secondary school foodservice segment is estimated to grow from US$9 billion in 2002 to US$13 billion by 2010, a 44% increase.

Post-secondary foodservice providers are increasingly becoming sensitive to college student demands as they realize the need to curb the obesity epidemic. Other trends are a demand for authentic ethnic foods, vegan/vegetarian foods, healthy options, and organic/sustainable foods. Campus convenience stores which are becoming "hybrid" operations that offer partially prepared meals, flexible lifestyle menus, a choice of food service outlets on each campus, and more flexible meal plans.

Hospitals

In 2003, foodservice sales were estimated at US$12 billion.
Only one in five hospital foodservice providers are outsourced to private foodservice providers, such as Sodexho USA and Aramark. The remaining are independent, hospital-run operations.
More than two-thirds of 68% of meals are being served to individuals other than patients, including employees and visitors.

The aging baby boomer population has increased demand for quality healthcare services, including foodservice. The buffet-style food service is now taking on more of a bistro, quick and casual feel. "Just in time" menus offer a wide range of innovative selections in an effort to increase patient satisfaction.

NICHE MARKETS

The cultural diversity mirrors the demand for menu globalization which is occurring in many South Central restaurants. Currently worth US$3.7 billion in the US, the ethnic food market is expected to climb to US$4.9 billion by 2008. In 2002, the composition of the ethnic food market by cuisine and sales broke down into three major categories:

Hispanic foods: US$2.5 billion (67%)
Asian foods: US$837 million (22%)
Emerging Ethnic Foods: US$400 million (11%) - including Caribbean, Indian, Middle Eastern and Greek foods

The increased diversity of demographics in the South Central Region is being echoed in more global menus, as dishes from different ethnicities make their way into mainstream consumption patterns of sophisticated American consumers. Consumer preferences are changing the face of the restaurant industry. New restaurants and menus are incorporating:

Organic-certified
Vietnamese
Thai
Noodle shops
Live sushi bars
Haute Indian
French bistros and Provencal
Tapas restaurant/bars
Bakery sandwich
Fresh Mex

Canadian exporters have demonstrated the ability to deliver many products that are in demand in the South Central Region. The following is a list of products that are common to all ethnic cuisine trends in the South Central Region and can be exported by Canadian companies.

Shrimp
Lobster
Crab
Salmon
Mackerel
Ackee
Saltfish
Cod
Scallops
Calamari
Calf brains, kidneys
Beef
Lamb
Pork
Chicken
Goat
Spicy sausage
Meat pies
Ethnic beef stew
Ethnic chicken stew
Tofu
Vegetarian dishes
Dark chocolate
Garlic
Ginger
Coriander
Cinnamon
Curries
Cilantro
Cumin
Chillies
Oregano
Bay leaves
Laurel leaves
Black bean soup
Chickpeas
Cranberry
Zucchinis
Tomatoes
Potatoes
Mushrooms
Peppers
Olives
Almonds
Sparkling waters

Hispanic/Latino

This market includes South American, Spanish and Portuguese foods. In 2003, approximately 25% of the South Central population were Hispanic persons. Nuevo Latino cuisine is Latin dishes made with an American twist. Some recent product trends include ceviche, curtido, pupusas, paella, fabada, tapas, slow-roasting dishes, dulce de lèche, tres lèches, plaintains, cherimoya fruit, pico de gallo, and Mateus wines. Popular flavours also include lemon Cajun, chipotle, mesquite, and chimichuri.

Caribbean & Central America

This market includes foods from Cuba, Dominican Republic, Puerto Rico, Jamaica, Guatemala, Costa Rica, El Salvador, and more countries. Cocina criolla is Puerto Rican cuisine which has become very popular in the US. Recent product trends include jericalla, picos bread, sautéed or slow-cooked dishes, croquetas, empanadas, pastelitos, bocaditos, maduros, congri, piraguas, gizzadas, root vegetables, avocado, pumpkin, onions, yautias, bacalaitos, cornmeal, fish soup, caldo gallego soup, and preserves. Key flavours include sofrito sauce, jerk, mojo, guava, mango, coconut, and papaya.

Pan-Asian

This market includes Chinese, Japanese, Thai, Korean, Vietnamese, Cambodian, Filipino, and Malaysian foods. In 2003, Asian Americans and Pacific Islanders represent over US$340 billion of total purchasing power. This group now makes up 4.4% of the US population. The biggest Asian population segment is Chinese Americans. This group has grown nearly 50% between 1990 and 2000. Texas has the third largest population of Asian and Pacific Islanders in the US, after California and New York. Almost all persons in this group live in a metropolitan area.

Product trends in Asian food include artisan sake, Asian BBQ, spring rolls, edamame, Kobe, panko, prawns, squid, octopus, clams, raw foods, cabbage rolls, gourmet noodles and toppings, furikake rice seasonings, dumplings, dim sum, and hot and sour soup. Popular flavours and ingredients include soy, peanut sauce, hoisin, wasabi, miso and cardamom.

Indian

This market includes Indian, Pakistani, and Sri Lankan foods. Asian Americans of Indian origin are the fastest growing major demographic group. This group grew 105% between 1990 and 2000. In 2000, there were 1.7 million Asian Indian persons in the US. At current growth rates, Indians will be the largest ethnic Asian population by 2010.

Indian food includes both vegetarian and non-vegetarian cuisine and dishes from specific regions of the country. Product trends include Mughlai and Tandoori dishes, aduki beans, black-eyed peas, rice beans, coconut milk, eggplant, mangoes, okra, palm sugar, saffron, tamarind, masala spice blends, basmati rice, flat breads, rice cakes, mango chutney, achar relishes, and raita yogurt salad.

Mediterranean

This market includes foods from Greece, Israel, Spain, France and the Middle East. Product trends include panna cotta, gnocchi, frozen custard, tabouli, escargot, flatbread pizza, gyros, falafel, feta and ricotta cheeses, stufffed grape leaves, keftas, moussaka, baklava and artichokes. Current flavours trends and ingredients include pesto, balsamic vinegar, and honey dijon.

Other Trends

Several other trends are occurring in the South Central Region which may be opportunities for Canadian exporters. The trends in artisan and specialty cheeses include Paneer, Chevre, Crottin de Chavignol, Chevrefeuille, Roquefort, Manchego, Perail, Ricotta and Feta. Exotic teas with emphasis on Asian varieties including green tea, chai, herbal, yerba mate, rooibos, oolong, bubble, organic, iced and decaffeinated. Other beverages trends include specialty coffees, ice wine, sparkling wine, flavoured water, sparkling water and sport beverages.

CONSUMER BEHAVIOUR

It is estimated that by 2010, the number of foodservice transactions in the US will surpass the amount made in 2004 by 3 billion. The nation's 900,000 restaurants are predicted to reach US$475 billion in sales in 2005. One of the main factors is the diminishing gap between the price of dining out and cooking at home. There is only a 25% cost difference for an average meal between restaurant purchases and buying the ingredients to prepare it at home.

Consumers are also more experimental. Ethnic cuisines are not just sought out by persons from these ethnic groups, but by many other Americans as well. Choice of products and foodservice outlets are also directed by health and wellness concerns; personalization and service expectations; and away-from-home and at-home needs.

The South Central Region is a strong market for foodservice, accounting for almost 12% of national foodservice sales. Opportunities are available across most foodservice operations including quick service, full service, quick casual, universities and colleges, cafés and juice bars, and health-care institutions.

Health and Wellness

Health and sustainability continue to dominate the consumption trends, causing restaurant owners to shift their starchy menus to leaner, protein-based dishes. The demand for vegetables, chicken, meats, fish, antipasto meats, cheese and olive oil continue to increase rapidly as people attempt to improve and maintain healthy, low-carbohydrate diets. In 2004, the US$78 billion "naturally low-carbohydrate" food category rose US$4 billion. Chefs are crafting more "light" meals and meatless entrees made with the increasing array of exotic ingredients now available in the US marketplace.

Opportunities

Introduce healthier alternatives for childrens menus
Demonstrate food safety on product packaging and in outlets
Offer help for consumers to make informed choices: portion size, nutritional value, caloric intake, balanced diets, and smart cooking techniques
Offer fresh, natural, organic and wellness products in retail outlets and restaurants.

Personalization and Service

Personalization and quality foodservice are also deciding factors in consumer choices. The demand for individual solutions will increase brand loyalty. Restaurants that offer a separate weekday and weekend selection will meet the needs of consumers who need practical solutions on weekdays and who prefer premium quality dining on weekends.

Opportunities

Offer consumers a way to customize food purchases according to their personal tastes
Allow consumers to customize menus to meet their nutritional requirements
Let customers know exactly where to find their favourite products
Satisfy the consumer demand for restaurant quality in at-home products
Satisfy the "indulgence factor" of consumers in restaurants and at home

Away-From-Home Dining

Almost half of total US food expenditures in 2003 were spent on food away from home. The main reasons consumers eat away from home are to relax and be sociable, to save the time of cooking, and to celebrate special occasions. Quality family time is another strong motivating factor to dine out.

Spending on weekdays in the away-from-home sector is growing rapidly. With long commutes being the norm for most, many have little time for preparing meals on weekdays. Consumers are also looking for on-the-go meal replacements to eat at the office or in the car. Retailers should try to meet the needs of consumers who have unpredictable meal times.

Opportunities

Present unique and premium dining on weekends
Offer away-from-home breakfast products and menus
Offer restaurant quality products to the non-commercial sector
Create healthier school lunch box solutions

At-Home Meal Solutions

Restaurant quality is the new trend in at-home meals. Chef or restaurant-branded products imply credibility. Consumers are looking for ingredients and home meal replacements to replicate the experience of dining out. Families are the most time conscious consumers and need ways to alleviate time pressured stress.

Opportunities

Offer quick-and-easy meals at home
Prepare easy to carry "car food"
Offer premium meal ingredients for at-home consumption
Offer restaurant quality food to take home at specialty retailers/markets

Competitive Environment

Canada has long been the number one exporter of meats, processed fruits and vegetables, grain mill products, bakery goods, sugar and confectionary, and fats and oils to the US. This has given Canadian food a distinct advantage over international competitors, however, Canadian exporters will face intense competition from small to medium-sized local and national food manufacturers that typically operate on a regional level. There is also the presence of large multinational manufacturers such as Danone and Nestle, which entered the South Central market through acquiring smaller producers.

International Competition

The top countries importing agri-food and seafood into the US are Canada, Mexico, Chile, France, Italy and China. The main imports originating from these countries are as follows.

Mexico: edible vegetables, alcoholic beverages, edible fruits and nuts, beer and tomato products
Chile: edible fruits and nuts, fresh grapes, shellfish, peaches, and alcoholic beverages
France: wine, brandy, vodka, sparkling wine, and dairy products including cheese
Italy: wine, olive oil, prepared cereal and flour, dairy products, and cheese
China: prepared vegetables and fruit, seed oils, edible fruits and nuts, citrus fruit, and tea

Canadian Position

Canadian companies will find several opportunities in the foodservice sector considering that roughly four cents out of every dollar spent by South Central consumers on imported food flows back to Canada. The changing demographics of age and ethnicity, depending on the specific area in South Central, make it wise for exporters to conduct thorough consumer analysis.

It is estimated that Canadas agri-food and seafood exports to the US will be up 2.9% in 2005 over 2004.
In 2004, Canada exported nearly $790.4 million of agriculture and agri-food products to the South Central US, a slight decrease over 2003.
Texas is the largest South Central customer for Canadian agri-food exports with nearly a 60% share, followed by Arkansas (13%), Kansas (12.5%), Louisiana (8.5%), Oklahoma (5%) and New Mexico (2%)
Other leading exports included beverages, spirits and vinegar, which together accounted for almost 13% of total exports to South Central, prepared cereal and baking ingredients (12%), prepared vegetables, fruit and nuts (10%) and animal and vegetable fats and oils (7.5%)

Canada has a strong potential to capture a part of the organic, natural and nutraceuticals food market that is rapidly growing in the US. The North American market for organic products is reporting the highest growth worldwide. The retail food and foodservice industries that are based in Texas include the worlds largest retailer of organic and natural foods, Whole Foods Market. This company distributes many Canadian products including cheese, bacon and canola oil. They have also opened a retail market in Toronto, their first store outside the US.

Canadian organic producers seeking to enter the South Central market must receive the USDA National Organic Program accreditation.

Food Distribution

The South Central Region is headquarters for some of the largest food distributors in North America. The majority of exporters (75-80%) choose to ship their product directly to the retailers warehouse. The advantage of this channel is expediency over shipping to distributors/wholesalers without the excessive transportation and labour costs of shipping directly to the store.

SYSCO, with sales of US$28 billion, is the largest food distributor in the United States. Other substantial broadline distributors serving the South Central Region include US Food Service, Performance Food Group, and Ben E. Keith Foods.

To arrange distribution in the South Central Region, the manufacturer has three options at their disposal: manufacturer direct to the food outlet, manufacturer to merchant wholesaler to food outlet, or manufacturer to distributor to retailer to food outlet. Other self-distributing, broadline, and specialty distributors operating in the South Central Region include the following.

Supervalu
Fleming
Kroger
Albertsons
Wal Mart
Safeway
Brenham Wholesale Grocery
Costco
McLane Foodservice
C.D. Hartnett
River City Produce
Banta Foods
Unified Western Grocers

EXPORT LOGISTICS

Agriculture and Agri-Food Canadas partners in Team Canada Inc have compiled information for those interested in exporting to the United States. The information is presented in a comprehensive guide to interested Canadian exporters at exportsource.gc.ca

Case studies on exporting to the South Central region are also available. These are on the website, under the heading, "Case Studies of Successful Export into the US Southeast and Southwest" ats.agr.gc.ca/us/e3460.htm

Free and Secure Trade (FAST) is a completely paperless cargo release mechanism put into place to reduce Customs information requirements and has dedicated lanes at major crossings for participants. The program is designed to streamline the commercial processes for clearance by offering expedited clearance to carriers and importers enrolled in Customs Trade Partnership Against Terrorism (C-TPAT) or Canadas Partners in Protection (PIP).

Website
www.cbsa-asfc.gc.ca/import/fast/menu-e.html#information

FAST into Canada
fast-expres@ccra-adrc.gc.ca

FAST into the United States
industry.partnership@customs.treasdhs.gov

OTHER REFERENCE MATERIAL

EXPORT LOGISTICS

Agriculture and Agri-Food Canada has compiled information for those interested in exporting to the United States. The information is presented in a comprehensive guide to interested Canadian exporters at ats-sea.agr.gc.ca/us/3851_e.htm.

PROMOTIONAL EVENTS

Trade shows represent one of the most important ways of entering the lucrative and competitive US food and beverage market. Export-ready companies can learn about market and product trends, check out their competitors, and meet prospective customers at trade shows. At key shows, the Canadian government organizes official Canadian food pavilions, which exporters are invited to join. The Government also organizes several expositions and other trade promotion events to help introduce Canadian food and beverage exporters to the U.S. market. For more information, contact the Agri-food Trade Service office nearest to you.

Website: ats.agr.gc.ca/region/home-e.htm

2005 National Conference
The Healthcare Food Service Conference
June 12-15
Sheraton New Orleans
New Orleans, LA
Website: www.ashfsa.org

2005 Louisiana Foodservice Expo
August 6-8, 2005
Ernest N. Morial Convention Center
Halls I-J
New Orleans, LA
Website: www.lra.org

2005 Southwest Foodservice Expo
June 26-28
Dallas Convention Centre
Dallas, TX
Website: www.restuarantville.com/cc/
swexpo/index.cfm

2005 New Orleans Wine and Food Experience
May 25-29
New Orleans, LA
Website: www.nowfe.com

2006 National Gourmet Food Show
January 20-23
Dallas, Texas
Dallas Market Center--First Floor of the World Trade Center Bldg.
Contact number: 1-800-DAL-MKTS
Email: dmc@dallasmarketcenter.com
Website: www.dallasmarketcenter.com

2006 Oklahoma Restaurant Convention & Expo
Cox Business Services & Convention Center
April 11-12, 2006
Oklahoma City, OK
Phone: 800-375-8181
Email: loric@okrestaurants.com
Website: www.okrestaurants.com

CANADIAN GOVERNMENT AGENCIES

Agriculture and Agri-Food Canada (AAFC)
International Markets Bureau
930 Carling Ave.
Ottawa, ON K1A OC5
Contact: Brent Wilson, Senior International Market Development Officer
Tel.: (613) 694-2394
Fax: (613) 759-7506
Email: wilsonb@agr.gc.ca
Website: www.agr.gc.ca

Canadian Consulate General
Laura Aune
St. Paul Place, Suite 1700
750 North St. Paul Street
Dallas, TX 75201
Tel.: 214-922-9812 (x3357)
Fax : 214-922-9815
Email: laura.aune@dfait-maeci.gc.ca

Canadian Food Inspection Agency (CFIA)
59 Camelot Dr.
Ottawa, ON K1A 0Y9
Tel.: (613) 225-2342
Fax: (613) 228-6125
Email: cfiamaster@inspection.gc.ca
Website: www.cfia-acia.agr.ca

International Trade Canada (ITCan)
125 Sussex Dr.
Ottawa, ON K1A 0G2
Website: www.itcan-cican.gc.ca

International Business Opportunities Centre (IBOC)
Tel.: (613) 944-6000
Fax: (613) 996-2635
Email: iboc@dfait-maeci.gc.ca
Website: www.iboc.gc.ca

United States Business Development Division (NUB)
Contact: Dan Mrkich, Trade Commissioner
Tel.: (613) 995-0759
Fax: (613) 944-9119
Email: dan.mrkich@dfait-maeci.gc.ca

Export Development Canada (EDC)
151 O'Connor St.
Ottawa, ON K1A 1K3
Tel.: (800) 850-9626 or (613) 598-2500
Fax: (613) 237-2690
Email: export@edc4.edc.ca
Website: www.edc.ca

CANADIAN FOOD INDUSTRY ASSOCIATIONS

Quebec Agri-Food Export Club
200 MacDonald Street, Suite 102
St. Jean-sur-Richelieu, PQ J3B 8J6
Telephone: ( 514) 349-1521
Facsimile: (514) 349-6923
Website: www.profil-cdi.qc.ca

Food Beverage Canada
17311 - 1023rd Avenue, suite 201
Edmonton, AB T5S 1E5
Telephone: (780) 486-9679 or 1-800-493-9767
Facsimile: (780) 486-0985
Website: www.foodbeveragecanada. com

Alliance of Manufacturers and Exporters of Canada
75 International Boulevard, Suite 400
Toronto, ON M9W 6L9
Telephone: (416) 798-8000
Facsimile: (416) 798-8050
Website: www.palantir.ca/the-alliance/ default.html

Canadian Food Exporters Association
885 Don Mills Road, Suite 301
Don Mills, ON M3C 1V9
Telephone: (416) 445-3747 or 1-888-227-8848
Facsimile: (416) 510-8044

US Government Agencies

US Department of Agriculture (USDA)
14th Street and Independence Avenue SW
Washington, DC 20250
Tel.: (202) 720-2791
Website: www.usda.gov
Note: All USDA offices are accessible from the main telephone number.

Food Safety and Inspection Service (FSIS)
Tel.: (202) 720-7025
Fax: (202) 205-0158
Website: www.fsis.usda.gov

US Food and Drug Administration (FDA)
Dallas District Office
4040 North Central Expressway, Suite 300
Dallas, TX 75204-3145
Contact: Maria Velasco, Public Affairs Specialist
Tel.: (214) 253-5205
Fax: (214) 253-5318
Email: mvelasco@ora.fda.gov
Website: www.fda.gov

Embassy of the United States of America
490 Sussex Dr.
Ottawa, ON K1N 1G8
Tel.: (613) 238-5335
Fax: (613) 688-3082
Website: www.usembassycanada.gov

Commercial Service
Tel.: (613) 688-5217
Fax: (613) 238-5999
Email: ottawa.office.box@mail.doc.gov
Website: www.buyusa.gov/canada/en

US FOOD INDUSTRY ASSOCIATIONS

Food Marketing Institute
655 15th Street NW
Washington, DC 20005
Tel.: (202) 452-8444
Fax: (202) 429-4519
Email: fmi@fmi.org
Website: www.fmi.org

ASMC International
58 Meadowbrook Lane, #100
Unionville, ON L3R 2N9
Tel.: (905) 477-4644
Fax: (905) 477-9580

National Restaurant Association
1200 17th Street NW
Washington, DC 20036
Tel.: (202) 331-5900
Fax: (202) 331-2429
Website: www.restaurant.org

USEFUL INTERNET SITES

Canada's International Trade Centres
(Export counselling and publications for Canadian exporters)
www.strategis.ic.gc.ca/epic/internet/initc-cci.nsf/en/Home
ExportSource
exportsource.ca
Food and Agricultural Organization of the UN
www.fao.org
Food and Service News
(For coverage on the Southwestern foodservice industry)
www.restaurantville.com
US International Trade Administration
www.ita.doc.gov
Foreign Affairs Canada (FAC)
www.fac-aec.gc.ca
InfoExport
www.infoexport.gc.ca
Stat-USA
www.stat-usa.gov
Texas Business and Industry Data Centre
www.bidc.state.tx.us
US Department of Commerce
www.commerce.gov
Food Marketing Institute
List of Industry Resources
www.fmi.org/facts_figs/resourcelist.htm

Date Modified: 2005-07-05

Important Notices