Are Breakfast Sales Endangering the Viability of Corporate Food Services?

December 3, 2012

FOR IMMEDIATE RELEASE

Breakfast sales at employee food services have significantly diminished over the past five to seven years, endangering the viability of corporate food services, research by Clarion Group, a food service consulting firm, has found.

“While breakfast sales are lower than at lunch,” Tom Mac Dermott, Clarion’s president, said, “the decline has a negative effect on the food service’s profitability.  The profit margin on coffee, bagels and scrambled eggs is far higher than the margin on labor-intensive, high-cost lunchtime fare of hot meals, burgers, pizza and bottled cold drinks.”    

“The decline in corporate café lunch services has been widely reported in the industry,” he said.  “The reduction in breakfast activity hasn’t been noticed, possibly because it has been more recent and is not as widely distributed among companies.”

The primary measure of an on-site food service’s activity is “participation rate,” the percentage of the site’s population that purchases meals in the company café.  This is considered a key performance indicator because it’s unaffected by increases or reductions in employment.

“Corporate food service lunch participation has declined from over 50% of the available population a decade ago, to about 40% today,” Mac Dermott noted.  “The primary causes are the introduction of work-from-home options and employees’ increasing tendency to bring meals from home.”

In 2005 and ‘06, company food services experienced an average breakfast participation of 25% to 27% of the available population, according a nationwide survey conducted by the Society for Foodservice Management.  By 2010, the most recent SFM survey, breakfast participation was reported to be between 20% and 22%.

“The decline may have accelerated since 2010,” Mac Dermott said.  “Our research with Clarion Group clients has found breakfast participation rates at company food services of as little as 4% to 15% of available population.”

“The reduction appears to be more concentrated at companies in rural and suburban areas,” he noted.  “Corporate food services in city centers where we have reviewed data have higher participation rates, up to 40% in one instance.”

The difference may be caused by the way employees come to work, Mac Dermott said.  “Employees at companies outside city centers typically drive to work.  They have easy opportunities to stop at a fast food drive-through or at a convenience store to buy a coffee and bagel or pastry when they stop for gas.”

“City employees more commonly come to work by train, subway or bus and may find it more convenient to visit the company food service before starting work,” he said.

Some companies where breakfast participation is low have responded by changing the way their food service provides breakfast, according to Mac Dermott.  They have closed the food service café in the morning and instead offer hot breakfast sandwiches, coffee, fresh fruit and pastries at a kiosk inside the main employee entrance.

“Sales are lower, but labor cost is reduced substantially, offsetting the reduced sales,” he noted.

The research is published in the Fall issue of Clarion Group’s newsletter, Dining Insights.