America’s appetite is changing. Traditionally, food has either been bought at the grocery store and consumed at home, or served up by restaurants and institutional operators and eaten on the premises. Today, however, restaurants are increasingly providing food that is eaten at home or on the go, and the grocery store is selling more ready-prepared food that is eaten at home, on the premises, or on the move. The key issue is not so much where the food is consumed, but where and how it is prepared.

Clearly, Americans want to get out of the kitchen. By the year 2005, many Americans will have never cooked a meal from basic ingredients. Virtually all of the $100 billion in incremental annual food sales expected in the next decade will come from foodservice, including ready-prepared meals consumed at home. To take advantage of this dramatic shift in eating habits, restaurant operators, packaged food manufacturers, and the entire US food distribution system will have to make significant changes. Those who play their cards right—by delivering high-quality prepared foods at reasonable prices—have much to gain. The others may find it difficult to grow or even to survive.

Robust foodservice growth

Largely due to...