Food Industry Innovation Lacking Customers Drive Change

When we said two years ago that five years from now chain restaurant leaders will be attending the National Restaurant Show in Chicago networking, learning and laughing aloud about the money they wasted sending employees to Fast Casual Summits. Laughing aloud about how a multi-billion dollar restaurant industry missed the Consumer Marketing Migration that took place from 1999 to 2014 we think we are still on target.

Restaurants Coddling Brand Protectionism

When we said two years ago that five years from now chain restaurant leaders will wonder how Mintel, NPD and Technomic reported on but missed the Consumer Marketing Migration. Three years from now chain restaurant leaders will laugh at the fact that the undercurrents of the evolving face of retail food competition has been all around yet while they practiced brand protectionism, drug stores, C-stores and grocery stores simply catered to the evolving consumer preferences garnering share of stomach and did so within in the Ready-2-Eat and Heat-N-Eat fresh prepared food grocerant niche again we were right on target.

When we said two years ago that five years from now chain restaurant leaders will wonder why when in 2013 Technomic reported that revenue from prepared foods at supermarkets had increased more than six percent annually during the past five years. Why they continued to host, speak and pontificate on Fast Casual when the consumer had migrated. More important T echnomic reported that the prepared food number grow to 13 percent for mass merchandisers and superstores during the same period. All the while the margins on prepared food were expanding creating a fast growing new revenue center for fresh prepared food in this non-traditional fresh prepared food retail sector.  Can you believe we were right once again.

Looking Outside Current Boundaries

Two years ago when we said five years from now all food retailers will evaluate how they do business not how they did business. Five years from now chain restaurant leaders will be laughing how they missed the universal commonalties the drug store, grocery and c-store food marketers did not. Five years from now they will understand that successful competition comes from outside well established operating boundaries. Ok, we were right again and many are still not looking beyond existing boundaries but we are.

When we said five years from now no one will wonder about the findings in a Harris Poll of 2,496 adults surveyed online between February 13 and 18, 2013 by Harris Interactive found that Americans continue to be reducing how often that they eat out at restaurants : Fast food restaurant chain (26% less, 14% more),Local casual dining restaurant (20% less, 14% more),Casual dining restaurant chain (24% less, 11% more),Local fine dining restaurant (21% less, 7% more),Fine dining restaurant chain (23% less, 4% more). We were right again!

Channel Blurring

Then we went on to say that five years from now all food marketers will understand that channel blurring exist only in the minds-eye of legacy food marketers not in the minds-eye of consumers.

Ok we also said five years from now Food retailers will understand the 65 Inch HDTV Syndrome Foodservice Solutions® Grocerant Guru™ Steven Johnson found:

The line between restaurants and food retailers is growing ever thinner. The fight for America's food dollars continues to intensify as consumers find fresh prepared ready-2-eat food options at a wide and growing array of outlets across almost every channel: convenience stores, chain drug stores, restaurants, grocery stores, club stores, vending and even more non-food retailers like dollar stores. While manufacturers, retailers and restaurants worry about choice overload, consumers have embraced their new choices and show no signs of returning to the old ways. This fight is taking place in what is called the Grocerant Niche. This is not getting old, we were right once again.

The restaurant industry is not an industry known for trying to be first as in fastest to market with an ideation, food or technology advance. In the United States the larger the chain in almost all cases the more slowly they are to adopt something than a smaller chain or independent restaurants will. Chain restaurants goal is simple feed one meal at a time in the restaurant while protecting and edifying the brand.

Historically chain restaurant leaders have denied the credibility of start-up competitors as non-relevant. The pizza sector is a great example; evolving from family dinning independents to national chain of "Red Roof" Italian, then to delivery only outlets and now take-N-bake is garnering market share in the pizza sector. (Note: Home Made Pizza Company and Papa Murphy's are further examples of take and bake pizza operators.)

Evolving Trends Point to an Increase in Non-Traditional Meal Occasions

Yes when we said that five years from now at the intersection of the consumer, fresh prepared food and technology they will have found that consumer eating behavior is evolving and is now beyond the control of traditional food marketers. Evolving culture and lifestyle, demographics along with the new uncertain economy are all putting pressure on the American food consumer: Demands of work, economic shrinkage, demands of raising a family, commuting, social interaction, kid's after-school activities, all contribute to a food marketplace where convenience vies with price over legacy brands. That one in 10 shoppers choose higher-end cuts of meat in order to recreate a restaurant dining experience (FMI, 2013). Looks as if we were right once again, ok I’m not getting tired of this.  Could your team use some outside eyes? 253-759-7869

Advances in Packaging Largely Ignored

We went on to point out that five years from now restaurant chain leaders will understand that packaging advances help create new points of non-traditional food distribution have empowered consumer choice, and American embraced these choices even as legacy marketers cringe. Who's after restaurant food dollars? Simply put everyone.

Why should you care if Walgreens is selling fresh prepared Ready-2-Eat and Made-2-Order sandwiches? Why should you care if Whole Foods, Trader Joe's, Safeway and Wegmans are selling ready-2-eat and or heat-N-eat fresh pizza? Why should you care if Coinstar is selling Seattle Best Coffee at 1,000 locations for $1.00?

We said that you should care because they are selling it, and you are not! The fastest growing sector of retail food service for the past four years has been the Convenience store sector. The C-store sectors growth in large part has been driven by fresh prepared food. Non-traditional avenues of distribution are growing, gobbling market share while establishing new patterns of consumption, price points and customer loyalty.

The Shopper is in Driving New Retail Food Formats

Trader Joe's and Whole Foods have created ready-2-eat and heat-N-eat fresh prepared food items with qualitative differentiation as an entity with identity that has help propel them into ready-2-eat fresh prepared food leadership. In fact recent research shows that both Trader Joe's and Whole Foods are each known for high quality (restaurant quality) ready-2-eat and heat-N-eat foods with distinctive offerings. More important each is leading with innovative products and package size that create value and have positioned each chain as a food shopping destination for meal components customized and personalized for immediate consumption or mix and matched for a meal time at home. In short they are stealing your customers.

Walgreens fresh prepared food is restaurant quality, priced less than Panera Bread or Corner Bakery Café according to consumers reports. Both Panera Bread and Corner Bakery CAFE thrive in urban locations. Walgreens is now growing price, quality and speed of service advantages over legacy retailers. Legacy restaurant chains must reconsider the speed at which they evolve and adapt or non-traditional outlets will capture profits margins as well.

Traditional views of meals and mealtime can pretty much be discarded. Legacy retailers waiting for the "next big thing" to copy simply might be out of luck this time. Legacy food retailers may not like to be first movers very much but it may prove that waiting too long will not work this time.

Foodservice Solutions® 5 P's are: Product, Packaging, Placement, Portability, and Price

The retail food world is evolving at an ever increasing pace filled with innovation in food, portion size, points of distribution, and quality fresh prepared meal solutions. The price, value, service equilibrium is resetting in retail foodservice. In order to edify the brand and reinforce consumer relevance restaurateurs must leverage Foodservice Solutions® 5P's of food marketing.

Many legacy food retailers continue to practice brand protectionism, stifle the brand while diminishing consumer relevance. The consumer is dynamic not static. Brands must be dynamic, evolving with the consumer. Four more years of watching other retail sectors thrive should be long enough. Success in the restaurant world is no longer simply about what happens within your 4 walls. Need Help?

Steven Johnson is the Grocerant Guru™ at Tacoma, WA based www.FoodserviceSolutions.us

with extensive experience as a multi-unit operator, consulting, brand, and product positioning expert.  Call 253-759-7869 visit http://www.linkedin.com/in/grocerant or twitter.com/grocerant for more information of consulting.