Chain Restaurants Gather in Chicago Amidst Growing Concern

Straddled with outdated marketing messaging, brand protectionism strategies restaurant marketing leaders are gathering in Chicago, reminiscing, debating, do we want to look more like yesterday’s restaurants or tomorrow’s Grocerants?  

Restaurant chain leaders are fast becoming aware that the food industry is advancing creating new points of non-traditional food distribution without them.  These new points of distribution are empowering consumer choice, driving customer migration.

 87 Million Reasons Restaurants Are Worried 

In five years between 2010 and 2015 Foodservice Solutions® Grocerant Guru®  reports that the grocery/supermarket sector increased sales of prepared meals by 87 Million. That occurred in a quick five year period.  Chain Drug stores have taken notice and continue testing, fresh prepared food at locations from coast to coast.  

Five years from now as restaurant chain leaders return to Chicago for the restaurant show they will be focused on Non-traditional fresh food competitive growth. Yes, we said that before.  We were right then and are right now.  Customer counts for fresh prepared food are growing in Grocery, Convenience, Dollar, Liquor, and Drug stores not however in the Restaurant sector. 

  Restaurant Customer Migration Exploding 

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 which is on 5% of the marketplace. Laughing aloud about how a multi-billion dollar restaurant industry missed the Consumer Marketing Migration that took place from 1999 to 2013 and continues today. 

Brand Protectionism Is Dead

Five years from now chain restaurant leaders will wonder how Mintel, NPD and Technomic reported on but missed the Consumer Marketing Migration. Five 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 .

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 grows 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.

 

Four Walls Can’t Hold A Brand Today 

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.

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).

It’s About Share of Stomach not Channel Blurring

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. Have you been to brand camp lately? You know where they still teach brand protectionism strategies so you restaurant can look like restaurants did during the golden era of restaurants. That ear has come and gone. 

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. 

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 and in doing so they look more like yesterday than tomorrow. 

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.)

 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 are driving change according to a 2015 Technomic report Food Industry Transformation the Next Decade. 

Uncontested Competition Accepted

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 according to Foodservice Solutions® Grocerant Guru™.

Why should restaurants care if Walgreens is selling fresh prepared Ready-2-Eat, Made-2-Order sandwiches, or Fresh Sushi? 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?

Restaurants 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.

Consumers or Marketers Who is in Control 

Trader Joe’s and Whole Foods have created Rready-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.

Recent research shows that both Trader Joe’s and Whole Foods are each known for high quality (restaurant quality) Rready-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. It’s time for chain restaurants to begin thinking outside the box. 

Walgreens fresh prepared food is restaurant quality, priced less than Panera Bread, or Corner Bakery Café today.  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.

Today, 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.

 

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

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.

Legacy chain restaurants continue to practice brand protectionism, stifle the brand while diminishing consumer relevance. The consumer is dynamic not static. Brands must be dynamic. Don’t wait five more years watching other retail sectors thrive.  Success in the restaurant world is no longer simply about what happens within your four walls. Ready for some Outside Eye’s. 

Steven Johnson is Grocerant Guru™ at Tacoma, WA based Foodservice Solutions®, with extensive experience as a multi-unit operator, consultant and brand/product positioning expert. 

Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche for more on Steven Johnson and Foodservice Solutions® visit: www.FoodserviceSolutions.us or call 1-253-759-7869 or http://www.linkedin.com/in/grocerant or twitter.com/grocerant