The convergence of technology, changing dietary preferences, and heightened awareness of environmental impact are redefining how food services and facility management (FM) operate. From the rise of plant-based diets and local sourcing to the integration of smart technologies that optimize resource use and building efficiency management, the parameters within which industry must operate are getting far more numerous and exacting.
Consequently, the complexity of commercial food services and facility management is increasing, leading many more customers to outsource these needs to specialized providers so they can more effectively meet the evolving expectations of their workforce and customers. In a survey of 200 leading buyers of food services and facility management in the United States and Europe, conducted by Oliver Wyman in 2024, 91% expected an increase in their food services and facility management outsourcing budgets over the next five years.
Meanwhile, the food services and facility management industry has become highly fragmented: local and independent providers account for nearly one-third of global outsourced services, while giants like Compass, Sodexo, Aramark, CBRE, Jones Lang LaSalle (JLL), Cushman & Wakefield, and ABM leverage economies of scale to build market shares. Since 2016, top food services and facility management players performed over 60 acquisitions to strengthen their market position and continue to look for opportunities to grow.
Looking for help with carbon footprints
One of the latest pressures on food services and facility management providers comes from major customers, including corporations, universities, hospitals, and sports and entertainment venues, to be more aggressive about cutting greenhouse gas emissions. The demand comes in the wake of recent regulations, particularly in Europe, requiring companies to disclose emissions and provide plans for how to cut them.
Reinforcing how important cutting emissions is for customers, two-thirds told the Oliver Wyman survey they would be willing to pay as much as a 10% premium on sustainable offerings from food services and facility management companies that lowered emissions; one-third said they would go as high as 20%. Thus, the need to reduce emissions is transforming sustainability into a critical strategy for the sector, offering a competitive edge for proactive vendors and even potentially a revenue enhancer. By adopting sustainable practices and leveraging them in marketing, providers can not only meet client expectations but also gain an advantage in an increasingly competitive market that is starting to prioritize environmental responsibility.
A broader definition of sustainability
Sustainability goes beyond just cutting emissions and reflects the new economic environment both customers and providers must navigate, including inflationary costs pressures and the critical role of a reliable supply chain. As a result, the food services industry is placing greater emphasis on cost efficiency, with supply chain operations playing a crucial role in sustaining healthy profit margins.
One tactic is through the minimization of the number of stock-keeping units (SKUs). But many providers run into a conflict here with other emerging sustainability trends that prioritize local sourcing, traceability, and sustainable agricultural practices that make it challenging to keep costs low and SKUs limited.
Outsourcing in food services and facility management is also on the rise, with the survey showing the two main drivers being rising costs and the need for more consistent service quality. Current global outsourcing rates are approximately 35% and projected to reach 40% by 2027 — with the United States and Europe leading other regions with rates of 47% and 38% in 2023, respectively.
Post-COVID corporate life 2.0
The COVID-19 pandemic fundamentally transformed work dynamics, establishing hybrid and work-from-home models as standard practices. This shift necessitates companies to adapt their office environments to support fluctuating occupancy and enhance employee experiences. As organizations reduce office space and invest in flexible workstations and collaborative zones, the focus is on creating engaging and welcoming workplaces that foster creativity and well-being.
Talent retention issues are emerging as a significant challenge, necessitating innovative approaches to attract and maintain skilled professionals in a competitive landscape. Additionally, the demand for sustainable office spaces is prompting the adoption of green building practices.
The transformative impact of technology
Technology plays a vital role in enhancing providers performance. Staying at the forefront of technological advancements, particularly in data and artificial intelligence (AI), is critical for delivering tailored, sustainable, and efficient solutions. Companies can either develop proprietary technologies or pursue strategic acquisitions of disruptors and competitors with technological advantages, ensuring they maintain market leadership and drive growth.
Advanced technologies and AI are significantly transforming the food services and facility management industry, with 81% of US food service operators adopting new technologies in the past two years. This shift highlights the growing importance of technology in positioning providers to meet evolving market demands and sustainability goals.
The 2024 Oliver Wyman survey identified key use cases for new tech, including analyzing occupancy trends to optimize operations, improving supply chain decisions, and enhancing the accuracy of safety and quality checks. Overall, customers have confidence in their providers’ abilities to deliver next-generation services, with 76% expressing trust in food services and over 90% in facility management companies.
Carving a path forward
Based on the research, food services and facility management providers have a significant opportunity to evolve from mere solution and service providers to genuine trusted business partners for their customers. They can achieve this role by focusing on a few key factors:
Tailored offerings for cost efficiency
Providing tailored offerings that deliver customized solutions in unison with cost control allow service providers to better meet the specific needs of their clients while keeping much needed cost efficiency.
Strong branding for customer archetypes
Developing strong brands to match requirements of selected customer archetypes, particularly in food services.
Supporting sustainability goals
Helping customers reach their sustainability targets related to food sourcing, building management, and energy efficiency.
Attracting and retaining talent
Assisting customers attract and retain employees by meeting the new expectations of employees, especially in a post-Covid world, on food choices, sustainability concerns, and work environments.
Leveraging tech and AI
Relying on latest technologies and AI to deliver cutting-edge services to customers.
To meet these new customer expectations and needs, the industry is likely to pursue more consolidation, as it enables key players to expand their presence across the value chain, propose more end-to-end solutions, and continue to pursue the latest technology.
