• by Karlene Lukovitz  @KLmarketdaily, March 9, 2007

Shorter and shorter lunch breaks and a growing array of grab-and-go foods being offered in supermarkets, grocery stores and supercenters are major factors behind sluggish growth in the overall food service industry, according to a new study from Packaged Facts, a division of MarketResearch.com.

PF estimates that the food service business (including all types of commercial and institutional restaurants) will reach $182 billion this year--and more than a third of food service sales take place at lunch.

But since 2000, total lunchtime food service sales growth has been under $1 billion, leading PF to project that total food service sales will edge up by just another $5 billion by 2012. Furthermore, most of the growth has been coming from the institutional sector--schools, in particular--and that trend is expected to continue despite healthier and more creatively packaged options from fast-food and other restaurants.

Time appears to be the main spoiler. The average lunch "hour" is now 25 minutes, and lunch breaks of eight minutes or less are not uncommon. While 75% of Americans still eat lunch, many eat at their desks as often as three times a week, according to HR Daily Advisor. (This jives with National Restaurant Association data showing that full-time workers buy food service lunches 1.8 times per week, on average.)

Quick-serve sandwich and burger chains are in no danger of going under (Americans eat more than 50 billion sandwiches per year, including 14 billion burgers). But a growing number of dedicated desk jockeys are eating packaged foods purchased in supermarkets and other grocery outlets.

PF cites Progressive Grocer consumer spending data showing that three "lunch-relevant" SKUs made significant gains in 2005: self-service deli refrigerated products (up 7.2%), fresh produce (up 12.9%), and bottled water (up 17.8%). Fresh produce gains were driven by pre-cut salad mixes (up 36%)--and as PF notes, the individual-serving salad mixes and kits introduced by Dole and Ready Pac last year promise to produce even more growth. And after two years of decline, sales of "combination lunches" in supermarkets jumped 4.2%, to nearly $650 million.

All of which would seem to shed additional light on Kraft Foods' recent introduction of Oscar Meyer Deli Creations, as well as indications from CEO Irene Rosenfeld that Kraft is planning innovative entries in the branded, prepared salads sector.