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Specialty food innovation, sales are flourishing in foodservice channels

Summer Fancy Food Show highlights growing restaurant opportunities for specialty foods that feed consumers' current cravings.

5 min read

Consumer InsightsFoodRestaurant and Foodservice

More than 2,400 specialty food companies exhibited their wares at the Summer Fancy Food Show.

(Image: Janet Forgrieve)

Consumers, from college kids to upscale fine diners, are driving specialty food innovation and sales growth in foodservice channels as the industry continues to recover from the pandemic years.

Specialty food sales across retail, foodservice and ecommerce grew 6.5% to $206.8 billion in 2023, largely the result of inflation – while retail sales were up by dollar amount, they were down slightly by unit volume in some retail channels. Retailers still generate the lion’s share of specialty food sales, and retail sales by both dollar amount and unit volume are on track to pick up as inflation eases.

But while retail leads, foodservice has been the fastest-growing channel in the category for the past two years, and it’s poised to keep leading through 2025, according to researcher David Lockwood, who presented the annual State of the Specialty Food Industry report at the Summer Fancy Food Show.

Specialty food sales in foodservice grew 11.3% last year and accounted for 18.1% of the specialty food market, according to the report, and it’s expected to comprise between 18% and 19% of the growing market this year and next, the report says.

“Foodservice is still recovering from the pandemic, so there’s room to grow,” Lockwood said in his presentation, adding that it’s “slowly getting easier to sell specialty foods in foodservice.”

Putting the fancy in fancy foodservice

The Specialty Food Association, which puts on the show in New York City every June, defines the category as “products of the highest grade, style, and/or quality in their respective categories. Their specialty nature derives from a combination of some or all of the following attributes: uniqueness, global origin, particular processing (and often an intentional lack thereof), design, limited supply, unusual application/use, compelling packaging, or channel of distribution/sale.”

In the foodservice arena, specialty food players are growing amid changing trends that reflect the effects and aftermath of the COVID-19 pandemic, said The Kruse Company’s Nancy Kruse in her State of the Plate report. 

Eco-friendly packaging, plant-based proteins and healthy bowls ranked in the top five in the National Restaurant Association’s What’s Hot survey in 2020. Last year, experiences and local community came in at number one, followed by chicken sandwiches, charcuterie boards and comfort fare.  Kruse dubbed the 2020 list “BC” for “Before COVID,” while the 2023 forecast was “PC” or “Post COVID.”

This year, consumers’ cravings for “comfort, community and curiosity” flavors the forecast, which reflects a hunger for new twists on familiar foods, international cuisines and shareable dishes that bring people together. 

“The good news is, consumers really want what you’re selling,” Kruse said. 

The three C’s of specialty food demand

Comfort, the first of the three C’s, is reflected most obviously in the rise of cheese on restaurant menus, including in new dishes at Arby’s, and Noodles & Company’s decision to add 50% more Wisconsin cheese to its mac and cheese sauce. 

Patty melts have surged in popularity and over-the-top versions of the sandwich include Mooyah’s Patty Melt, which features two varieties of melted cheese, and the new Cheeseburger Melt at Pizza Hut. 

Biscuits are another comfort food category that’s on the rise and are especially popular at eateries Kruse defines as “Daytime Cafes” that serve breakfast, brunch and lunch. Lazy Dog combines the biscuit and cheese trends in its Bacon-Cheddar Biscuits and Another Broken Egg Cafe offers “Deep South Biscuits.” 

Restaurants can feed cravings for contemporary comfort with a focus on sensory appeal, Kruse said, with a focus on textures like crispy and crunchy or warm and gooey. 

The pent-up demand for experiences and getting together with others after the isolation of the pandemic has led to a craving for community – It’s “the Golden Age of board games,” Kruse said. Shareable foods like charcuterie boards, chicken wings and Southern-style sheet pan meals are feeding that primal urge to break bread together.

Established chains are embracing the desire for shareable foods, like Cicis Pizza which moved its limited-time Piezilla – a 28-inch pizza that sells for $49.99 – from the limited-time offering list to the permanent menu. And fondue concept The Melting Pot isn’t just for date night anymore – the chain has been offering promotions like “Wednesday Friends Day” to encourage shared weeknight meals. 

The yearning for community creates opportunities for eateries to win fans with innovative shareable dishes, finger foods and a personal touch, Kruse said.

Kruse’s third “C,” curiosity, highlights the ongoing demand for new global flavors that has fueled a new generation of fusion styles that bring together different cuisines in more thoughtful ways.

Fancy fusion

This trend is highlighted at limited-service chains including Velvet Taco, which melds Asian and Latin flavors in the Potsticker Tacos and Fried Paneer Tacos, and Del Taco which serves up custom ramen dishes like the Shredded Beef Birria Ramen.

For specialty food companies serving foodservice, fusion and mash-ups are proving perennially popular, with a caveat – specialty food makers and eateries must be prepared to demonstrate their authenticity. 

Fine dining has long been a fertile ground for specialty foodservice innovation and that trend continues. Another key growth area these days are college and university dining programs, which provide a wealth of potential because they serve diverse audiences with eclectic tastes and eating styles at a time in life when many are exploring new things, said Leana Salamah, the Specialty Food Association’s senior vice president for marketing & communications. 

“[Campus dining’s} embrace of specialty food has been huge,” Salamah said.

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