Recipient Organization
USDA/ERS
1800 M STREET NW
WASHINGTON,DC 20036
Performing Department
ECONOMIC RESEARCH SERVICE
Non Technical Summary
The project will look at the foodservices industry which is an increasingly important component of the food economy. The goal of the research is to best understand how economic and demographic trends are shaping this industry as well as how consumers and companies supplying the industry are likely to be impacted.
Animal Health Component
90%
Research Effort Categories
Basic
10%
Applied
90%
Developmental
(N/A)
Goals / Objectives
The project consists of a number of expected final reports and conference presentations. Each output focuses on the foodservices industry and examines consumer behavior, industry structure, industry performance, or the link between these issues. Consumer behavior will be analyzed using both cross-sectional data from national samples and survey data. The cross-sectional data will be used to model consumer expenditure on food-away-from-home as a function of economic and demographic characteristics of consumers. The goal is to understand which forces are driving consumer expenditure on food-away-from-home in the aggregate. The survey data will complete the demand-side of the study. It will link the aforementioned characteristics of consumers to their attitudes, the demands they place on foodservice operators, and how much they spend on food-away-from-home by type of restaurant concept. In turn, this analysis will allow us to link observed trends in demand to observed
trends in supply. In particular, these results will enable us to explain the relative growth rates of various restaurant concepts, changing menus, and new types of services being offered. The implications of these trends in supply for all members of the foodservices supply chain can then be analyzed including implications for foodservice operators, distributors, processors, and agriculture. Issues of particular interest include trends in both horizontal and vertical linkages along the supply chain. Finally, studies will be undertaken of pricing and price dispersion in key sectors of the foodservices industry. As much as possible, these measures of industry performance will be linked to the above trends.
Project Methods
The project will be based on a review of the literature, analyses of primary data, industry reports, and interviews with members of industry. Data collection and analyses are being conducted in collaboration with faculty at Rutgers University. A cooperative agreement exists between ERS and Rutgers University to complete certain components of the project. ERS researchers are taking the lead role both in designing the project and in most aspects of its implementation. The universities are responsible for conducting the surveys as well as assisting ERS with the data analysis and writing of final reports. Data used include the Consumer Expenditure Survey for 1990 to 1999. The analysis of these data enable us to explain the contribution of particular economic and demographic trends to changes in expenditure on food-away-from-home over the past decade. The data will be analyzed using well-known techniques for such data including the Heien-Wessells technique, the Heckman
technique, and Tobit technique. Alternative specifications will be considered because results are not always robust to specification. Survey data will be collected by the University to compliment the above study and link trends in demand to those in supply. Separate surveys will be conducted of consumers and businesses. Both surveys will take place in New Jersey. The business survey will be used to measure trends in business practices and industry structure. Interviews with key members of industry are being conducted to prepare for this survey. The final survey will include both restaurant operators and distributors. The data will be analyzed using well-known techniques for qualitative data such as the logit model, logistic regression, and the multinomial logit model. Finally, studies of industry performance will be facilitated through the collection of price data. Observing publicly posted prices and matching these data to observed characteristics of a restaurant and its
location, the goal of the final part of the study is to understand pricing mechanisms in the foodservices industry. Cooperation with other governmental agencies is strongly anticipated for work at this stage of the project.