Large, national food companies have economic advantages that make it almost impossible for small companies to compete with them. Institutional Food Service. The institutional food service market is somewhat easier to penetrate than grocery stores. This market mainly consists of restaurants, schools, factories, and hospitals and is serviced by large food distribution companies. Normally, food products used by this market are packaged in larger containers than would be purchased for household use.
Packaging is generally less costly on a per unit basis than in other markets.
Brand identification is not a major concern with most products. Specialty or gourmet food stores may have less market entry barriers for the small food processor than any other food market outlet. Although packaging is important in the specialty market, it is the quality of the food product that creates repeat purchases. The food processor or broker will make direct contact with the shops management regarding the food product. The specialty market generally is not high volume but relies more on the perception of a high quality product at higher prices.