Without Innovation the Restaurant Sector Will Remail Stifled

 

Capitulating customer counts year after year and relying on menu price increase in order to find sales is not a business formula, they would ever teach at any business school. Sadly, it appears to be the state of the restaurant industry once again. Remember that the status quo is not in the minds-eye of the consumer.

Regular readers of this blog know that Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® routinely, regularly, and repeatedly has call on restaurant to evolve their business models, stating, “if your restaurants today look more like 1990, 1998, or 2015 than a restaurant of today or tomorrow your sure to be capitulating year over year customer counts. 

Even the National Restaurant Association forecast in its annual “2023 State of the Restaurant Industry” report released last week, the association expected sales to increase $60 billion over the $937 billion last year, which had exceeded the association forecast of $898 billion.

Noted that the 6.4% increase in forecast sales over 2022 includes “high rates of menu price inflation,” said Hudson Riehle, the association’s senior vice president of research, in an interview. Here is that interview:

“Sales in uninflated dollars have yet to return to 2019 levels, before the pandemic was declared in March 2020. “If you go back and track it from 2019 through this year, the real sales are down by 8.6%,” Riehle said. “So, it basically is the new normal.”

The industry’s “new normal” demands innovations, he said.

Restaurant operators obviously have to look for creative solutions in this environment,” Riehle said, “because the traditional restaurant model, from a cost standpoint, was not designed to endure the depth and breadth of this sustained period of much, much higher food and labor cost.”

Among other findings in the annual study:

• The foodservice industry workforce is projected to grow by 500,000 jobs, for total industry employment of 15.5 million by the end of 2023. The association said employment in the industry was 15 million in pre-pandemic 2019. “In the second-half of 2023, the industry recovers to a level that is higher than it was before the pandemic,” Riehle said.

• About 70% of operators said business conditions have settled into — or are on the path to — a new version of normal.

• About 84% of consumers said going out to a restaurant with family and friends is a better use of their leisure time than cooking and cleaning.

• Inflation continued to dog the industry, with 92% of restaurant operators saying the cost of food is a significant issue.

• In 2023, 47% of restaurant operators expect competition to be more intense than last year.

Revenue streams will continue to expand, Riehle said, citing subscription plans, loyalty programs, meal bundles, outdoor dining and prix fixe offerings.

Alcohol to-go for table-service concepts has been especially popular, though some communities have tightened restrictions as pandemic concerns ebb , Riehle said.

“Particularly among the younger age cohorts,” he said, “the ability to add alcohol to that off-premises order is a big deal.

At least four in 10 operators in each of the three limited-service segments — quick service, fast casual and coffee/snack — said the addition of drive-thru lanes will continue to be more common in 2023, the forecast found.

Technology continues to be at top of mind for operators, the report found. More than four in 10 operators planned new investments in equipment or technology to increase front- and back-of-hour productivity. Most of those investments will be in the order and payment arena rather than automated systems like robots to prepare food, association surveys found.

“The report is quite clear that consumers are extremely comfortable with using technology in their daily restaurant encounters,” Riehle said, adding that younger consumers expect some technological savvy, be it smartphones, kiosks or video menu boards.

The report found:

• Among fine-dining restaurants that offered delivery during the pandemic, 79% added it for the first time; and eight in 10 of those planned to continue it.

• Two-thirds of adults said they’re more likely to order takeout food from a restaurant than they were before the pandemic.

• Off-premises-only locations were expected to grow in popularity with more than four in 10 limited-service operators saying they would more common this year.

• 69% of adults said they like the option of dining outside.

Riehle said many brands are finding new revenue streams in branded merchandise such as clothing and other retail products.

The forecast noted that the restaurant and foodservice industry added 2.8 million jobs over the past 24 months, bringing the industry total to 15 million at the end of 2022. The foodservice industry remains 400,000 jobs below pre-pandemic levels. With hiring in 2023, Riehle expects employment to return to 2019 levels later this year.

Association surveys found 87% of operators said they will likely hire additional employees during the next six to 12 months if qualified applicants are available.

Between 2023 and 2030, the foodservice industry is projected to add an average of about 150,000 jobs a year, with total staffing levels projected to reach 16.5 million by 2030.

Surveys found only one in 10 restaurant operators said recruiting and retaining employees will be easier in 2023 than it was in 2022, with about 58% of operators saying that use of technology and automation to alleviate labor shortages will become more common in their segment in 2023. Riehle noted that operators said technology is generally complementary to human labor and primarily intended to enhance, rather than replace, workers.

Operators are in an “uncertain environment,” with the federal debt ceiling increase and other issues on the horizon for 2023, Riehle said, but the pandemic had the largest impact.

“I don't think anybody ever in any of their models anywhere could have predicted such a substantial impact,” he said. “For the restaurant industry, among all the industries in America, it was the industry that was most severely impacted in terms of employment and sales declines.”

Riehl added that “2023 is in many ways still a transitional year, but it is a year in which that ‘new normal’ has gained a greater presence of mind — both in the mind of the consumers as well as the operator.”

Operators plan to respond to trends, which include a majority of operators across all segments expecting to keep their menus in 2023 similar in size to last year and to enhance eco-friendly business practices, which appeal especially to Millennial customers.

“The major tenet that holds the whole thing together — and this was true even during the pandemic — is that consumers love to use restaurants in their daily lifestyle, and sometimes that's on-premises sometimes it's off-premises,” Riehle concluded. “They prioritize that spending. … We asked them about how essential is the industry in their daily lifestyle: They're very large numbers, particularly among younger consumers.”

Customers see restaurants as part of their standard of living and prioritize spending toward the foodservice industry, Riehl said. “That's not true of a lot of other industries in America,” he added.”

In case you did not know, the full 2023 report can be accessed from the restaurant association’s website. The association, founded in 1919, includes nearly 1 million restaurant and food

Don’t under estimate the consumer.  Consumers are dynamic, not static. Do not accept the status quo.

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter

With New Product Innovation on the Decline Gen Z Adopts Legacy Brands

 

NeilsenIQ recently noted that innovations in grocery store space is declining, with the total number of innovations across Germany, France, Spain, Italy and the UK amounting to 38,000 last year.  Which was down from nearly 54,000 in 2019.  NeilsenIQ noted that trend is continuing well into 2022.

Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® stated “with the continued decline in new product innovation Gen Z consumer have will like most other generations migrate to brands that their parents introduced them too.”

So, market research firm Morning Consult compiled a ranking of the brands that are most successfully winning over Generation Z (defined as consumers ages 18-25) in a new report entitled "Gen Z's Favorite Brands 2022."

Notice that multiple convenience store beverage, candy and snack suppliers stand out on the top 20 ranking of Gen Z's favorite brands, which were rated as having either a "somewhat" or "very" favorable opinion of each brand. Now let’s see if any of you or your parents’ brands are on the Gen Z list.

Among Gen Z's favorite brands are:

·         M&M's ranked No. 5 with 79.81 percent favorability

·         Doritos ranked No. 8 with 79.32 percent favorability

·         KitKat ranked No. 9 with 78.96 percent favorability

·         Oreo ranked No. 10 with 78.57 percent favorability

·         Gatorade ranked No. 11 with 78.54 percent favorability

·         Cheetos ranked No. 13 with 77.45 percent favorability

·         Sprite ranked No. 15 with 77.39 percent favorability

·         Pringles ranked No. 16 with 76.71 percent favorability

·         Skittles ranked No. 19 with 76.27 percent favorability

The manufacturers of these brands include Kellogg's, Mars Wrigley, Mondelēz International, Nestlé, PepsiCo and The Coca-Cola Co.

Other findings of the report include:

·         When compared with the general public, gummy candy maker Trolli came in at No. 8 among Gen Z's favorite brands. According to Trolli, the brand grew 21 percent year over year.

·         The most popular brands among Gen Z men are Gatorade (No. 2) and M&M's (No. 10).

·         The most popular brands among Gen Z women are M&M's (No. 5), Doritos (No. 6), Oreo (No. 8) and KitKat (No. 9).

Gen Z's Favorite Brands ranking uses data from Morning Consult Brand Intelligence, which fields tens of thousands of surveys across the globe every day on more than 4,000 brands and products. 

Brand Intelligence data was collected May 1 to Aug. 21 among 16,053 adults per brand, including an average of 2,031 Gen Z adults.

The full Gen Z's Favorite Brands report for 2022 is available here.

For international corporate presentations, regional chain presentations, educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert, and public speaking will leave success clues for all. For more information visit GrocerantGuru.com, FoodserviceSolutions.US or call 1-253-759-7869

Branded Food Matters to Digital Native Generations

 

How much would you pay to get a new customer for life?  That is the question foodservice retailers should be asking themselves according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. Johnson believes that the cost of a lifetime customer and cost of customer acquisition need to be top of mind for every leader selling food or beverages in every retail channel today.

Regular readers of this blog know that Gen Z and Millennials both have an unmet need-set, that being food discovery. Garnering trial from a digital native is one thing.  The real question is how to you plan to keep them a customer for life after they try your brand?  Younger consumers are developing strong preferences for brands that meet their needs.

Recently Mobiquity, a digital consultancy shared some insights with CSNews, about how retailers might encourage more occasions and ultimately earn their long-term business. The majority of consumers surveyed by Mobiquity, noted an increase in mobile, and online ordering, as well as the utilization of curbside services in the past year.

Mobiquity, found that this is especially true among digital native generations, with younger customers nearly three times as likely to use mobile apps than those ages 56 and above. Because of this growing mobile usage, younger consumers are creating digital habits and developing strong preferences for brands that meet their needs.

The findings went on to say that along the same lines, 63 percent of consumers ages 25 to 40 will frequent a restaurant or convenience store that has digital offerings more often than ones that do not. Forty-four percent of consumers in this age group have also changed where they order food from because their usual place had subpar digital offerings. Additionally, more than 70 percent of consumers ages 18 to 55 stating that they are likely to increase how often they order from a store if their mobile app is easy to use.

Other highlights of the report include:

·         Digital ordering promotes customer loyalty: When it comes to continuing to order from a particular restaurant or convenience store, 82 percent of respondents agree that having an easy-to-use website is important and 76 percent agree that an easy-to-use mobile app is crucial.

·         Customers will switch allegiance for better rewards: Fifty-two percent of respondents ages 25 to 40 changed where they order food from because another store had a better loyalty or rewards program.

·         Current apps are not quite meeting expectations: Of the consumers surveyed, 71 percent were satisfied with delivery mobile apps, such as DoorDash, GrubHub and Uber Eats. Seventy percent were satisfied with restaurants' apps, 61 percent were satisfied with coffee shops' apps, but only 53 percent were satisfied with convenience stores' mobile offerings.

·         Contactless fueling could lead to increased c-store visits: Among the 25 to 55 age demographic, the majority of consumers would visit a particular convenience store more if it offered them the ability to fuel their car using a mobile phone (more than 50 percent) as well as if they could earn fuel discounts via a mobile rewards program (more than 70 percent).

·         Income has an impact on order frequency: Those in the lowest income bracket ($50,000 or less) are most likely to use an app to order food and be frequent users, making about 56 visits a year. That's compared to consumers who earn more than $100,000 per year who make about 36 visits in the same timeframe.

Britt Mills, senior director, customer experience at Mobiquity, stated, "Restaurant and convenience store customers have rapidly adopted digital tools over the last year in order to safely interact with their preferred brands," … "It comes as no surprise that younger generations of customers are more comfortable using mobile apps to order food. Our Restaurant and Convenience Store Digital Impact Report revealed that these consumers have built digital habits that will remain even as restrictions ease. It's vital for restaurants and convenience stores to meet and exceed expectations when it comes to mobile apps to cement long-term consumer loyalty as competition grows."

The Restaurant and Convenience Store Digital Impact Report explores how consumers are engaging with technology in restaurants and convenience stores as well as how this engagement affects loyalty, order frequency, and in-store or in-restaurant traffic. Nearly 1,300 consumers across the U.S. ages 18 and older were surveyed.

For the full Restaurant and Convenience Store Digital Impact Report click this blue link.

Looking for success clues of your own? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities, technology, or a new menu product segment.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

Retail Foodservice: The Future is Clear

Today retail foodservice continues to evolve it is not dominated by Restaurants, Convenience Stores, Grocery Stores, Drug Stores, or Dollar stores according to Tacoma, WA based Foodservice Solutions® Grocerant Guru® Steven Johnson; who stated “retail foodservice is now about the consumer empowerment, complexity free food, it’s about Grocerant Ready-2-Eat, and Heat-N-Eat fresh prepared food. The battle is one for share of stomach the retail channel is less important than ever.”

A Grocerant is a term used to describe any retailer that sells fresh prepared Ready-2-Eat and Heat-N-Eat fresh prepared food.  Today, it can be any retailer from Ikea to a traditional brick-N-mortar outlet the ilk of Kroger, ecommerce outlet like Amazon, or non-traditional retailer the ilk of Everytable or Green Zebra Grocery. The word Grocerant and term Grocerant Niche were coined by Steven Johnson of Foodservice Solutions® shortly after the first Eatzi’s opened in Dallas, Texas in 1996. 

The word / term GROCERANT first appeared published in an Op-Ed article titled “CALL THEM GROCERANTS in Foodservice Director, August15, 1996. Then again in an Op-Ed article titled “Home-meal-replacement niche is the future of foodservice” in Nation’s Restaurant News, August 19^, 1996. Both authored by our own Grocerant Guru® Steven Johnson

 Success does leave clues and Foodservice Solutions® has left many.  In fact you all know the old adage “imitation is the highest form of flattery” we the industry leading team at Foodservice Solutions® is FLATTERED.  Let’s look at what other just now singing the praises of the grocerant niche are saying:

1.       "Neither restaurants nor grocery stores are the future of food shopping. Instead, what could dominate is a hybrid of the two – grocerants." - Forbes

2.       Grocerants have already become the second most appealing of all foodservice segments in North America. According to a recent survey by Datassential, value and customer service are viewed as the key strengths of this emerging segment that make it so appealing. In fact, 18% of consumers in the U.S. are buying grocery prepared food more frequently this year.

3.       The grocerant trend is taking off in Europe as well, with several key retailers investing in the concept. Across the modern trade landscape in Europe, we see numerous retailers looking to lure millennials into their stores with grocerant offerings. Auchan Poland has rolled out Bistro snacking corners, and Ahold Delhaize has introduced instore foodservice bakeries. Their Deli Kitchen foodservice points are located within the actual selling area and offer both takeaway meals and a seating area for instore consumption.

4.       In addition to salads, dessert bakery items and breakfast bakery items are the top grocerant prepared foods that consumers want to purchase. More than anything, consumers are buying prepared food from groceries to replace a meal. But these same consumers view fresh bakery items as a key part of the meal. Carrying the right assortment of fresh bakery items – muffins and croissants for breakfast; cake slices, squares, and brownies for dessert – creates opportunities to capitalize on this growth.

5.       In-store advertising is critical to the success of grocerants, as most consumers learn about grocerant offerings once they're inside the store. Signage above serving stations and at the entrance to the store are the most preferred and popular ways of communicating grocerant offerings. In addition to offering the right products at the right prices, it's also important to optimize store placement and promotion. Don't assume consumers will find your grocerant offering – tell them you have fresh prepared meals and desserts that provide the quality and convenience they seek.

6.       Grocerants offering amenities most commonly found at LSR's should realize the strongest growth. According to a recent survey by Datassential, the grocerant amenities most appealing to consumers include: 1) beverage fountain in seating area, 2) large condiment / plastic silverware / napkin station, and 3) remote seating area. In-store execution will continue to be a major driver in trip conversion. Offering amenities that make it more appealing for shoppers to consume a meal in the grocery store should greatly enhance the likelihood of grocerant success.

Success does leave clues www.FoodserviceSolutions.us  is the global leader in grocerant niche business development.  We can help you identify, quantify and qualify additional food retail segment opportunities.  Has your company had a Grocerant ScoreCard completed, Grocerant Program Assessment, or new Grocerant niche product Ideation?  Want one?  Call 253-759-7869 Email: Steve@FoodserviceSolutions.us