In 2025, spice is no longer a fringe flavor—it’s a frontline strategy.

Introduction: A Category Reimagined

The food industry is filled with grit, optimism, passion, resilience, and overwhelming pride held by the people and companies that work hard to fill our plates, evoke nostalgic emotions and memories, and create new exciting experiences every day. As one of the largest industries in the U.S., with sustainable demand and substantial infrastructure, it’s no wonder the industry has been a hot spot for mergers and acquisitions and private equity (PE) investment. In Q4 2024 alone, the F&B sector achieved a remarkable 351 transactions totaling $24.8 billion, making it the most active quarter on record (The Food Institute). This trend is further underscored by a Baker Tilly report showing 149 deals in Q3 2024— the highest quarterly figure since 2017 —and Charter Capital Partners reporting a 26.8% year-over-year increase in transaction volume. Yet, even with that, more change is still to come. A recent report by Eaton Square noted that recent shifts towards economic nationalism, including deregulation and lowered corporate taxes, have stimulated domestic mergers and acquisitions in the U.S., creating an increasingly favorable environment for private equity investments in the food and beverage sector. However, complexities arising from trade tensions and geopolitical factors necessitate careful strategic consideration for cross-border activities." “Foodservice offers unique, attractive growth opportunities. Consumers have been spending more of their food dollars away from home than at home over the past [20] years with the exception of a few brief periods. Foodservice is also where much of the innovation in the food industry happens. Consumers constantly look to bring their restaurant experiences into their homes. We see food and beverage manufacturers that supply foodservice as an attractive segment to drive both scale and differentiation.” ~Erik Kahler, Partner, Entrepreneurial Partners Private Equity (e2p), Chicago, IL With record-breaking activity in recent quarters, private equity interest is surging, demonstrating robust investor confidence in food manufacturing and foodservice segments—offering substantial opportunities for private equity firms, investment bankers, advisors, manufacturers, distributors, retailers, and operators alike. “Food and beverage is a highly attractive sector due to its significant role in the economy, yet it has historically seen underinvestment from private equity. Agrifood represents around 5% of the U.S. GDP but attracts only about 2% of private equity capital flows, signaling substantial untapped potential for strategic investors who specialize in and understand food.” ~Craig Hanna , Founding Partner, Power Sustainable Lios (PSL), Toronto, Canada So, what’s driving this mass acceleration in activity? And what trends do we see taking shape as companies look for business development strategies to reach above market growth, and generate value creation? At Kinetic12, we've worked with dozens of private equity firms and hundreds of food manufacturers to define their foodservice strategy, identify white space, and help in the dynamic process of M&A, assisting in maximizing strategic plans and contributing to EBITDA growth. Here, we explore the current trends impacting Food and Beverage Manufacturers and Private Equity Fund Companies, arming industry stakeholders with strategic intelligence to enhance business planning, competitive positioning, and growth strategies. Drawing on expert insights from PE industry leaders like Power Sustainable Lios, Graham Partners Private Equity, and Entrepreneurial Equity Partners (e2p), the following analysis illuminates key dynamics and offers actionable recommendations for navigating and capitalizing on this vibrant market environment.

The food industry stands at a crossroads as we near the end of Q1 2025. The landscape is shifting fast, and uncertainty has become a common feeling for industry leaders. Consumers, battered by inflation, are making tough choices, reshaping dining habits, and forcing the industry to rethink its strategies. Simultaneously, operators, manufacturers, and distributors are struggling to drive growth as sales slow due to declining foot traffic. This has led many to actively prioritize new streams of revenue to offset those challenges, underscoring the growing urgency to diversify revenue sources. Adding to these pressures, industry leaders are facing other disruptions, including tariffs and regulatory shifts, making it more challenging to hit the sweet spot between innovation, growth, and profitability. In this time of uncertainty and change, collaboration isn’t just a safeguard—it’s the launchpad for innovation, growth, and industry leadership. The strongest companies won’t wait for stability; they’ll create it through strategic partnerships. The data is clear: companies that fail to build strong partnerships will fall behind. By building deep, meaningful partnerships with suppliers and customers, foodservice businesses won’t just weather the storm—they’ll lead the charge into a stronger, more resilient future. Industry leaders consistently highlight strategic collaboration as a crucial driver of revenue growth, reinforcing the importance of strong partnerships. With years of experience leading collaborative initiatives across foodservice—ranging from working with distributors to develop truly collaborative category planning processes to leading an industry-wide initiative focused on optimizing the foodservice supply chain to launching a program on Collaborative Innovation that is now entering its seventh year—the partners of Kinetic12 have seen firsthand what drives successful partnerships. Based on these experiences, here are four essential collaboration learnings for 2025:

The foodservice industry is evolving faster than ever. Foodservice operators are grappling with accelerated digital transformation, changing consumer behaviors due to economic challenges and demographic shifts, and ongoing supply chain challenges left over from the pandemic. All of these forces are creating unprecedented change in the industry (see last month’s Kinetic12 Network newsletter article “ 2024 Reflections: Predictions vs. Reality in the Foodservice Industry ” for a more in-depth look at the effect of these forces across the industry). These shifting market dynamics, customer expectations, and competitive pressures mean that sales leaders must adapt –or risk falling behind. To drive profitable growth in 2025, organizations must go beyond traditional sales approaches and focus on efficiency, effectiveness, and agility. The most successful sales leaders are implementing three powerful techniques to ensure their teams are set for success: sales benchmarking, strategic account planning, and team empowerment.

"The future belongs to those who believe in the beauty of their dreams," Eleanor Roosevelt once said. In 2025, the foodservice industry stands poised to make those dreams a reality, not through small steps but by daring to reimagine what’s possible. This is our moment to think bigger, act bolder, and reshape how we connect with consumers in ways that inspire loyalty and ignite imaginations. The rules have changed. Consumers demand flexibility, authenticity, and seamless engagement across every channel. The question isn’t if we adapt –it’s how we lead. This year, success will belong to those who transform challenges into opportunities: redefining hospitality not as a place, but as an experience, meeting consumers wherever they are, and turning every interaction –digital or physical –into a moment that matters.  Real change requires more than innovation –it demands collaboration. Operators and suppliers must unite to build solutions that address today’s realities while shaping tomorrow’s possibilities. Together, we have the chance to craft an industry that doesn’t just serve but inspires, creating a future in which foodservice transcends expectations and redefines its impact on the world. The following 10 predictions from Kinetic12 outline the key areas where transformation will happen, offering a roadmap for how operators and suppliers can seize the opportunities ahead.

As we reflect on 2024, it’s evident that the foodservice industry’s transformation has continued to redefine the way operators and suppliers navigate challenges and capitalize on opportunities. This year demanded bold strategies, visionary thinking, and an unrelenting focus on collaboration. By adapting to the insatiable consumer, prioritizing profitability, leveraging technology, and addressing supply chain volatility, the industry has proven that resilience and creativity are key to staying ahead.

So, your budget for 2025 has been set, and your final sales targets were just handed down to you. You lobbied for a +2% target increase in sales, but your management wants a +7% top-line revenue growth and 9% gross margin dollars growth! Your thoughts wander through a range of emotions: fear, disbelief, and panic set in. Don't they understand that our industry is flat? Personally, I used to call these targets "GGQs," short for "God-given quotas!”

In a world of chaos, the opportunity for change and to think differently is born. And right now, there is no greater need than to come to the table with an open mind and fresh ideas.  In many ways, when we look at the restaurant-chain landscape, we've already made substantial changes over the past four years, which have accelerated the transformation of business as we know it. Yet, we still remain at a crossroads where traffic is not where it needs to be, inflation has outpaced the consumer's willingness to spend, and the economics of the restaurant industry remain at a critical point, teetering on what we deem as sustainable. Yet, operators are still opening new units and expanding within and outside their four walls to conceive of creative solutions that combat headwinds.