Foodservice Retail Discontinuity Continues Driven by Gen Z and Millennial Adoption

 

Notice was first given in 1991 when Foodservice Solutions®, Grocerant Guru® Steven Johnson, warned foodservice industry professionals about the shifting consumer mindset at COEX. Then, in 1996, Johnson coined the term "grocerants" in an Op-Ed article published in both FoodService Director and Nation’s Restaurant News. Fast forward to today, and the foodservice industry is in the midst of a retail discontinuity driven by the evolving preferences of Gen Z and Millennial consumers.

Looking Ahead: The Fight for Consumer Relevance

Globally, restaurants are battling to maintain consumer relevance as grocery giants like Tesco, Sainsbury's, and Walmart are losing market share. Meanwhile, discount chains such as Aldi, Lidl, and WinCo Foods are capitalizing on this shift by offering fresh prepared food at prices up to 7% lower than traditional grocery stores. These retailers are expanding their grocerant niche, attracting younger consumers who value both convenience and affordability.

While restaurant prices continue to climb, as reported by Nation’s Restaurant News, the paradox of rising costs is driving consumers away from dining out and back to grocery stores and convenience stores. A recent Euromonitor report highlights that the growth in home delivery and takeaway food has outpaced that of restaurants every year since the financial crisis. From 2009 to 2014, the UK market for takeaway and delivery grew by 2.7% to £6.5 billion, while the value of food bought in restaurants fell by 5% to £17.1 billion.

Non-Traditional Locations Gain Ground

Today's consumers, particularly Gen Z and Millennials, have discovered that they can find restaurant-quality food in non-traditional locations such as chain drug stores, grocery store delis, convenience stores, online meal kits, and even furniture stores like IKEA. This shift has been extensively documented by the Foodservice Solutions® team, which continues to report on the migration of consumers toward new avenues of fresh food distribution.

As legacy grocery stores expand their branded frozen food courts, one question remains: Will this be enough to slow the migration to non-traditional fresh food outlets? In the United States, restaurant customer counts have been either flat or declining for three consecutive months, signaling a shift in consumer behavior. In the UK, Britain's two largest publicly listed restaurant companies by market share, Mitchells & Butlers and The Restaurant Group, have seen sharp declines in market valuation as investors lose confidence in traditional high street brands.

The Rise of Digital and Delivery Platforms

Digital platforms like GrubHub, Amazon Prime Now, and apps such as Just Eat have revolutionized the way consumers order food, offering convenience that aligns with the lifestyles of younger generations. However, the Foodservice Solutions® team argues that simply offering apps, takeout, or delivery is not enough to sustain long-term growth for chain restaurant brands.

Consumers, particularly Gen Z and Millennials, are increasingly seeking Ready-2-Eat and Heat-N-Eat fresh prepared food from non-traditional locations, including furniture stores like IKEA, which is now generating $2.8 billion annually from its food offerings. This trend underscores the importance of addressing the 'stay home' consumer, who values both convenience and quality in their dining experiences.

The foodservice industry must adapt to these changing consumer preferences or risk losing relevance in a market that is rapidly evolving. The future belongs to those who can innovate and meet the demands of a new generation of consumers who are redefining the way we eat.

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  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