Commissaries are on the rise. You may also know them as central kitchens or offsite kitchens, but no matter what you call them, you probably won’t see them when you’re out to grab a bite to eat. Ideally, end consumers will never notice commissaries’ role in the food system. Despite their behind the scenes work, their impact is felt across the foodservice landscape.
With the surge in placeless food businesses that launched during the pandemic, you might expect them to be driving this trend. In most jurisdictions, one-man operations for artisanal pizza or Indian ice cream cannot legally operate out of their homes. And even if they could, commercial kitchens are better for preparing food at scale.
The reality, however, is that major national and regional brands rely on commissaries. Restaurant chains, convenience stores, food retailers, hotels, and airlines all use central kitchens to fully or partially prepare their products. Foodservice IP spoke to multiple large-scale commissary customers and conducted extensive industry research to understand what is driving this trend.
Here are just a few of the things we learned.
Commissaries Deliver Value for Operators of All Kinds
As the Foodservice IP blog has noted before, operators are struggling with labor costs and inflation, regardless of their size or segment. From convenience stores to school cafeterias to quick service restaurants, budgets and staff are under strain.
Commissaries deliver value to all of these customers by delivering labor- and budget-saving services. This ranges from ingredient preparation (e.g., preparing pizza dough and toppings) to products that are finished on site (e.g., ready-to-heat pizza) or fully prepared products (e.g., a grab-and-go pizza slice delivered and waiting under a heat lamp for an end consumer). This allows operators to save on labor costs and allocate employees to more impactful activities.
While Price Reigns, Operators Want Thought Partners
Customers told Foodservice IP that price was the main factor in their decision to partner with a commissary. Given that commissaries promise economies of scale and labor savings, this is not a surprise. If a commissary is going to be competitive, they must deliver services that are cheaper than what customers could achieve in house.
But in addition to competitive pricing, we found that many customers (84%) are looking for some kind of innovation. In particular, restaurants expect commissaries to innovate with them on recipes. Depending on their segment and target customer, commissaries may consider research and development a core service line that differentiates them from the competition.
Expect Competition
During the study, Foodservice IP found that the commissary industry is consolidating, with the largest players controlling 70% of the volume. Food manufacturers who want to secure business in this landscape will need to compete fiercely. Depending on the offering, firms may have an easier point of entry with smaller commissaries that better align with their niche.
The Bottom Line
Commissaries have changed significantly in the past twenty years. The pandemic made ghost kitchens commonplace, but the post-pandemic inflation and labor market made offsite kitchens a necessity. According to Foodservice IP’s research, food manufacturers that are interested in partnering with commissaries should:
- Help commissaries deliver value to their customers by increasing their ability to provide labor saving services at a competitive price;
- Unlock their ability to innovate with customers; and
- Expect competition.
For more about our findings and to learn how your firm can better engage central kitchens, contact Foodservice IP.
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