US Fast Food & Fast Casual (QSR) Disposable Packaging & Serviceware

Report Overview

• Growth of fast casual market supports demand growth

• Some single-use plastic items such as straws and cutlery face new bans

This Freedonia industry study analyzes the $16.3 billion US disposable packaging and serviceware in quick service restaurants (QSR) industry. It presents historical demand data (2012, 2017, and 2022) and forecasts (2027 and 2032) by product (boxes and folding cartons, clamshells and two-piece containers, food cups, tubs, pails, buckets, and scoops, packaging bags, wrap, and liner, trays and other food packaging, beverage packaging, carryout bags, and serviceware), material (plastics, paper and paperboard, molded fiber, and aluminum and other materials), and market (fast food restaurants and fast casual restaurants). The study also evaluates company market share and competitive analysis on key industry competitors including Pactiv Evergreen, Dart Container, Georgia-Pacific, Graphic Packaging, and WestRock.

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The US market for single-use foodservice packaging and serviceware continues to face unprecedented disruption, with the lingering impact of the COVID-19 pandemic, sustainability initiatives, and longer running market trends all combining to escalate changes in market size, product formats, and materials. Quick service restaurants (QSR), which include fast food and fast casual establishments, are the largest market for single-use products and have an outsized impact on overall foodservice industry trends.

Demand for foodservice single-use products in quick service restaurants is forecast to grow 3.2% annually to $19.1 billion in 2027. However, this growth rate hides several opposing underlying trends:

•      Growth in individual product prices will moderate – or even decline – from inflation-driven highs in 2021 and 2022, but this will be offset by a shift in the product mix toward higher value materials and packaging formats.
•      Demand will be supported by the increasing popularity of fast casual dining, coupled with the fact that these establishments generally offer single-use products that are higher value than fast food restaurants.
•      Growth in units will be restrained by the maturity of the fast food segment, as well as by sustainability-driven efforts to reduce or eliminate excess packaging and serviceware use.

New Materials Compete for Market Share, but with Limited Success

Quick service restaurants and their suppliers continue to search for the ideal packaging material, one that provides both sustainability and performance at a low price. While conventional plastics continue to maintain strong market share due to their low cost and performance benefits (and a growing focus on recycled content), new materials such as molded sugarcane and PHA bioplastics are emerging as potential alternatives. However, the fast food market has largely embraced paper as its primary alternative for plastics and is hesitant to incorporate new materials. Meanwhile, fast casual restaurants are better positioned to adopt these new materials if they can offer adequate performance, sustainability, and competitive pricing.

Fast Growth in Fast Casual Restaurants Affects Overall Disposables Usage

Fast casual restaurants have historically accounted for a small share of the overall QSR market, which has long been dominated by fast food. However, recent shifts in consumer preferences have led to strong growth in fast casual revenues. These establishments seek to differentiate themselves from traditional fast food by providing unique menu items and atmosphere, as well as fast service. As part of this differentiation, fast casual restaurants utilize types of disposables and materials not as common in fast food. For example:

• greater incorporation of higher value materials, such as molded fiber
• more versatile packaging options, such as two-piece containers that better cater to the increasing popularity of food in bowls
• use of high-performing packaging that feels and looks more appealing than traditional fast food packaging

Additionally, fast casual restaurants increasingly provide takeout and delivery, further boosting growth in disposables.

Demand by Market Sector (Fast Food vs. Fast Casual)

Overall QSR Market Outlook

Quick service restaurants – which for purposes of this report include fast food and fast casual establishments – are part of the broader limited service sector of the foodservice industry. Limited service restaurants generally do not have table service and focus on a more limited menu than full-service restaurants. QSR establishments are dominated by national and regional chains.

Demand for single-use packaging and serviceware in the quick service restaurant market is expected to grow 3.2% annually to $19.1 billion in 2027. Quick service restaurants dominate sales of single-use products in the foodservice market overall, due primarily to the large fast food industry and its heavy use of disposables:

• The fast food sector will continue to post among the slowest growth rates for disposables demand in the entire foodservice industry due to market maturity and its well-established carryout business model.
• Fast casual restaurants will see growth in disposables demand that is much faster than the QSR industry average, especially in market value, due to underlying strong growth in the number of fast casual restaurants, as well as the tendency for these businesses to use specialty, higher value packaging and serviceware.

Pricing Trends

The foodservice disposables industry is competitive, and product pricing is a significant factor in customer purchasing decisions. Factors influencing prices for single-use foodservice products include:

• raw material and labor costs
• shipping and transportation costs
• supply and demand balances
• customization, design, and printing costs
• changes in the material mix for various products
• increasing participation in and corresponding competition from products made of newer and more innovative materials
• import competition

Raw material price fluctuations tend to have the greatest effect on pricing although product mix can also be important:

• The price of plastic goods such as foam and rigid plastic cups, dinnerware, and containers is largely determined by the price of polystyrene, polypropylene, and PET resins, which, in turn, are affected by crude oil and natural gas prices.
• Paper bag, paper cup, pizza box, and paperboard clamshell prices are linked to the price of bleached and unbleached kraft paper and paperboard, while napkin prices are tied to tissue paper prices.

Despite the significance of raw material costs as a base influence on disposables prices, pricing for single-use foodservice products does not always track raw material costs, as manufacturers tend to absorb raw material price increases as much as possible to maintain competitiveness. In addition, foodservice establishments can switch from one type of disposable to another if cost becomes an issue and this limits the ability of disposables producers to pass on increasing materials costs as well.

The quick service restaurant market is dominated by very large chains (e.g., McDonalds, Subway, KFC, Chipotle), which can affect disposables prices through their strong purchasing power. These companies purchase tremendous quantities of specific products, which applies downward pressure on prices.

While raw materials costs for key materials used in the production of foodservice disposable packaging and serviceware will moderate or decline from the high levels of 2021 and 2022, average prices for foodservice products will continue to grow, supported by a shift in product mix toward higher value formats and materials:

• In plastic products, a shift toward bioplastics (which tend to be more expensive than traditional plastics) as well as a general shift away from lower cost foamed plastics and small low cost straws and cutlery will result in growth in average per unit prices.
• Price increases for aluminum disposables will be the result of a shift in product mix due to sharp rebound in catering activity, which relies heavily on large foil steam pans.

While newer materials seeing fast growth such as molded sugarcane, PHA, and bamboo are generally higher priced than competing established products, individual prices for these items will be flat to declining due to rapidly expanding production capacity both in the US and abroad.