Rising Wages, Rising Benefits, Smarter Tech, and Leaner Packaging—The New Economics of Takeout Growth

 

As the Grocerant Guru® has consistently emphasized, labor cost pressure is no longer a line item—it is a structural shift. On January 1, 2026, that shift accelerates as minimum wages rise in 19 states, with Arizona, Colorado, Hawaii, Maine, Missouri, and Nebraska crossing the $15-per-hour threshold for the first time. More notably, the U.S. will reach a symbolic and economic tipping point: more states will now operate at or above $15 per hour than at the unchanged federal minimum of $7.25, which has remained frozen since 2009.

Washington state will increase to $17.13 per hour, Connecticut to $16.94, and California to $16.90, while the District of Columbia already leads at $17.95. Layer on California’s $20-per-hour fast-food minimum wage, and the message is unmistakable—labor inflation is permanent, cumulative, and expanding beyond wages alone.

 

The Takeout Growth Paradox: Demand Is Up, Margins Are Under Siege

Food marketing data shows that takeout, delivery, and grab-and-go meals now represent more than 60% of all foodservice occasions, compared to roughly 35% a decade ago. Consumers value speed, predictability, digital access, and portion control—attributes that favor takeout-first formats. However, this growth masks a dangerous paradox: every incremental off-premise transaction carries higher operational complexity and cost.

Three pressures converge at once:

1. Labor Wages: Compounding, Not Isolated

According to Ballotpedia, the average wage increase among states raising minimums in January 2026 is approximately $0.70 per hour. That figure may appear modest, but when multiplied across thousands of annual labor hours, extended operating schedules, and multi-unit footprints, it materially reshapes P&Ls. Importantly, wage hikes do not reset—they compound year after year, permanently lifting the cost base.

2. Employee Insurance: The Silent Accelerator

What many operators underestimate is that wages trigger benefits inflation. As hourly pay rises, so do employer contributions to:

·       Health insurance premiums

·       Workers’ compensation

·       Payroll taxes

·       Paid sick leave and mandated benefits

Industry data indicates that employee healthcare costs alone have risen 6–8% annually, outpacing both food inflation and menu price growth. For operators offering benefits to retain staff in a tight labor market, total labor burden often exceeds 125–135% of base wages. In practical terms, a $17 hourly wage can easily translate into a fully loaded cost north of $22 per hour.

3. Packaging Costs: Takeout’s Structural Tax

Takeout growth has driven packaging costs up 30–40% since 2019, driven by material shortages, sustainability mandates, freight costs, and consumer expectations for leak-proof, insulated, brand-forward containers. Packaging has quietly become the fourth-largest operating expense, behind food, labor, and occupancy. Unlike dine-in service, takeout offers no escape from this cost—it scales directly with volume.

 

Technology Is No Longer Optional—It Is the New Margin

In this environment, technology is not about innovation theater—it is about survival. Operators that have adopted digital ordering, self-checkout, kitchen display systems, and AI-driven demand forecasting consistently report 10–20% improvements in labor productivity. That efficiency is not about eliminating jobs; it is about eliminating friction.

As wages and insurance costs rise together, operators must reduce:

·       Order-taking labor

·       Transaction time

·       Rework and food waste

Food marketing data shows that over 70% of consumers now prefer ordering via apps or kiosks, particularly for takeout occasions. Each digital transaction replaces minutes of labor while improving order accuracy and data capture—data that can be reinvested into menu engineering and labor scheduling precision.

 

Packaging: From Cost Center to Strategic Asset

Packaging is no longer just a container—it is operations, marketing, and sustainability rolled into one. Forward-thinking grocerant operators are redesigning packaging systems to reduce complexity and cost by:

·       Standardizing formats across 70–80% of the menu

·       Using lighter-weight, stackable designs to reduce freight expense

·       Selecting materials that support sustainability claims without premium pricing

Packaging has also become media. A branded, well-designed container replaces costly in-store signage and reinforces value perception in a takeout-dominated world. Operators that rationalize packaging before raising menu prices often unlock margin faster and with less consumer resistance.

 

Competing Economic Narratives—and Operational Reality

Economists and advocacy groups continue to debate the impact of minimum wage increases. Conservative researchers argue that wage hikes reduce employment opportunities for entry-level workers, while organizations like Business for a Fair Minimum Wage emphasize increased consumer spending and reduced turnover.

The Grocerant Guru’s view is pragmatic: both narratives can be true simultaneously, but neither changes the operator’s reality. Whether wages stimulate demand or suppress hiring, operators must still serve more takeout meals with higher labor and benefit costs than ever before.

 

Four Insights from the Grocerant Guru®

1.       Fully loaded labor costs—not wages—will drive strategy
By 2027, winning operators will plan around total labor burden (wages plus insurance and benefits), not headline hourly rates.

2.       Technology will replace hours, not hospitality
Automation will absorb transactions and forecasting, allowing remaining staff to focus on food quality, speed, and guest satisfaction.

3.       Packaging simplification will outperform menu price hikes
Operators that standardize packaging systems will recover margin faster than those relying solely on consumer-facing price increases.

4.       The grocerant model is the ultimate labor hedge
Grocery service delis and convenience stores—already optimized for low labor per transaction—will continue to gain share as traditional restaurants struggle to re-engineer cost structures.

As wage floors rise, insurance costs climb, and takeout demand accelerates, the Grocerant Guru’s conclusion remains firm: The future belongs to operators who design systems for cost reality—not nostalgia.

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The Importance of Speed of Service in Modern Food Retail: A 30-Year Perspective Across Restaurants, Convenience Stores, and Grocery Service Delis

 

Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® believes that across the food industry, speed of service has shifted from a competitive differentiator to a fundamental expectation. Over the past three decades, consumer demand for faster experiences—driven by lifestyle changes, technology adoption, and economic pressure has reshaped how restaurants, convenience stores (c-stores), and grocery store delis operate. Today, speed is not merely operational performance; it is a strategic lever influencing traffic, sales, customer satisfaction, and competitive positioning.

 

1. Restaurants: From Sit-Down to Seamless Service

Historical Context (1990s–2000s)

In the early 1990s, traditional full-service restaurants dominated dining occasions where consumers expected multi-course experiences and longer table times. Quick-service restaurants (QSRs) existed but operated within an ecosystem segmented by drive-ins and sit-down counters with service measured in tens of minutes.

Late in the decade, technological changes began reshaping expectations. Single-point ordering systems, basic drive-through lanes, and cash registers were the norm, with speed of service largely dependent on staff skill and kitchen efficiency.

Technological Acceleration (2000s–2010s)

The adoption of point-of-sale (POS) systems, kitchen display systems, and workflow optimization in QSRs improved baseline operations. Drive-through service became a focal point as cars brought mobility access to speed, and limited-service restaurants began benchmarking service times under ten minutes during peak hours.

During this era, the broad adoption of mobile phones enabled rudimentary digital orders, beginning the shift to off-premise consumption.

The Last Decade (2015–Present)

Data from industry reporting shows that average drive-through service times across major U.S. QSR brands were around five to six minutes in 2023, with innovations such as multi-lane formats and automated ordering significantly reducing service times at select locations to under four minutes.

From 2019 to 2023, statistics also show an increase in the share of visits lasting ten minutes or less at major brands like Taco Bell and Wendy’s, reflecting operational refinements and labor productivity improvements.

A pivotal shift occurred in the 2020s as technology—mobile ordering, AI voice systems, dedicated mobile pickup lanes, and automation—enhanced not only speed but order accuracy and customer satisfaction. Investments in digital order platforms and real-time kitchen performance monitoring have become standard operating tools.

Consumer Expectations

By 2025, industry research indicates that nearly all restaurant consumers place “quick service” among their top priorities, with fast take-out and drive-thru accounting for roughly three-quarters of all restaurant traffic.

 

2. Convenience Stores: From Grab-and-Go to Foodservice Competitor

Evolution of the Format

Originating in the early 20th century, convenience stores initially filled gaps in off-hour retail service. Through the latter half of the 20th century, they offered basic items and fuel with a focus on customer access rather than complex foodservice.

Transformation Through Speed (2000s–Present)

Since the early 2000s, c-stores have made strategic investments to expand prepared food offerings and shorten transaction times—turning the channel into a viable competitor to restaurants and grocery prepared food by prioritizing speed, ease, and accessibility.

A 2023 industry survey found that customers inside convenience foodservice spend an average of roughly three minutes and thirty-three seconds from leaving their vehicles to returning, underscoring the inherent velocity of c-store transactions.

Increasingly, convenience stores provide high-frequency visits with prepared meals, beverages, and snacks that meet or exceed consumer expectations for speed and affordability. Foot-traffic data from 2019 to 2023 shows c-store traffic outpacing that of grocery, superstores, and quick-service restaurants, suggesting speed and convenience are key drivers.

Modern Competitive Dynamics

Operators now optimize store layout, digital and contactless payments, mobile ordering, and hot-case prepared offerings to reduce bottlenecks and capture time-sensitive consumers. Early reports also show significant adoption of loyalty programs and mobile wallets to accelerate checkout and drive repeat visits.

 

3. Grocery Service Delis: Retail Foodservice’s Rapid Rise

Baseline History

Grocery delis historically offered cut-to-order meats or sandwiches as niche departments within larger stores. Service speed was secondary to product quality, and traditional deli counters operated on human throughput with moderate wait times.

Shifts in Consumer Behavior (2010s–2020s)

Over the past decade, grocery chains expanded prepared food offerings—pizza, sushi, sandwiches, and heat-and-eat meals—positioning delis as alternatives to restaurant meals when consumers prioritize both speed and value.

From 2017 to 2025, the share of consumers choosing grocery deli prepared foods over restaurant meals more than doubled, from 12 percent to 28 percent. Grocery deli sales also continued to grow, exceeding $50 billion in retail foodservice sales in recent reporting years.

This trend is driven by speed of access, cost savings, and convenience of one-stop shopping. Customers increasingly view the grocery deli as a quick meal solution with minimal wait, often pairing it with grocery purchases on the same trip—an efficiency not possible with standalone restaurants.

Contemporary Expectations

Modern grocers are prioritizing deli throughput improvements—pre-order via app, dedicated pickup stations, drive-through options, and streamlined checkout flows—recognizing that prep speed directly influences visit frequency and basket size.

 

4. Synthesis: What Speed Really Means Across Sectors

Sector	Core Speed Imperative	2025 Consumer Expectation	Data Trends
Restaurants	Rapid fulfillment of orders, especially off-premise	<6 minutes in QSR contexts; high accuracy	Digital ordering and tech automation reducing wait times; 95% prioritize speed. (Food & Wine)
Convenience Stores	Very fast transactions, ready-to-eat food, easy payment	~3:30 transaction cycle	Prepared food power increasing share; traffic growth outpaces other formats. (EMARKETER)
Grocery Delis	Quick deli pickup, grab-and-go meals	Comparable to fast casual but lower price	Deli as viable restaurant alternative; share doubled since 2017. (Supermarket News)

 

5. Three Insights from the Grocerant Guru

1.       Speed of Service Is a Strategic Revenue Lever, Not a Cost Center
Leading operators have recognized that improving speed of service directly correlates with increased throughput, higher ticket counts, and more frequent visits. In restaurants and retail foodservice alike, reducing transaction times without compromising quality elevates total revenue and customer loyalty. Investments in data analytics, predictive labor scheduling, and real-time performance monitoring often deliver outsized returns.

2.       Blurring Channel Boundaries Will Continue as Consumers Prioritize Time
Consumers no longer compartmentalize where they get meals based on format labels. Grocery delis, convenience foodservice, and restaurant off-premise channels compete for the same meal occasions. Operators that build seamless cross-channel experiences (mobile order ahead, drive-up pickup, optimized in-store flow) will lock in market share as time-pressed lifestyles accelerate.

3.       Technology Is Necessary But Not Sufficient—Operational Culture Matters
While digital ordering, AI voice systems, and automated kitchens accelerate speed, the marginal gains come from aligning staff incentives, refining workflow design, and constantly measuring service KPIs. Empowering employees with high-performance standards and real-time feedback loops ensures that technology amplifies human execution rather than simply replacing core skills.

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® 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 one of the following links: Facebook,  LinkedIn, or Twitter

Millennials Don’t Hate Foodservice—They Hate Friction: Pricing, Authenticity, and Digital Discovery Are the New Table Stakes

 

The foodservice industry is dynamic, not static—and Millennials have proven to be the clearest signal of where the market is headed, not an anomaly to be managed. For legacy brands struggling to “win back” Millennials, the issue is rarely food quality alone. It is friction: unclear pricing, limited digital access, and food that feels engineered rather than authentic.

As Foodservice Solutions® Grocerant Guru® Steven Johnson has long stated, “Digital availability, pricing transparency, and in-store fresh prepared food that is ethnically authentic are the combination that attracts both Gen Z and Millennial consumers.” The data now overwhelmingly supports that position.

Millennials Are Not Hard to Reach—They Are Easy to Lose

Millennials (born roughly 1981–1996) now represent the largest cohort of U.S. foodservice spenders, accounting for an estimated 30–35% of total restaurant and prepared food dollars. Contrary to outdated assumptions, they eat frequently, cook selectively, and shop across channels—restaurants, grocery, club, and convenience—often within the same week.

What they reject is inefficiency.

Recent industry benchmarks show:

·       Over 70% of Millennials compare prices digitally before choosing where to eat or buy prepared food.

·       More than 60% expect real-time menu availability, nutrition, and ingredient transparency online.

·       Nearly half say they will abandon a brand if pricing feels confusing or promotional rules feel “designed to trick.”

Millennials do not expect perfection; they expect clarity.

Costco: A Case Study in Millennial Gravity

Costco’s continued success with Millennials underscores a critical truth: authenticity and value scale. The company has expanded its organic assortment, increased fresh prepared food innovation, and experimented with digital promotions—including coupon platforms and app-based engagement—to meet younger consumers where they are.

During earnings calls, Costco disclosed that the average age gap between its U.S. members and the general population has narrowed to under two years, down from more than four years previously. That shift did not happen by accident. It happened because Costco leaned into:

·       Transparent pricing

·       Private-label trust

·       Fresh, globally inspired prepared foods

·       Digital discovery without gimmicks

Millennials do not see Costco as “old retail.” They see it as honest retail.

Grocery Is Still Stuck in the 1960s—Millennials Notice

As Acosta Senior VP Colin Stewart noted, “The typical grocery store, especially center store, is the same as it’s been since the 1960s.” Millennials, by contrast, seek experiences layered with utility. They want discovery, but they also want speed.

Key behavioral facts:

·       More than 75% of Millennials grocery shop with someone else, compared to roughly 60% of the total population.

·       Shopping is social: spouses/partners (38%), children (41%), and friends or roommates (nearly 30%).

·       Among Hispanic Millennials, grocery shopping as a social experience is even more pronounced, with nearly 90% shopping with others.

Food discovery, for Millennials, is communal—both physically and digitally.

Digital Is Not a Feature—It Is an Expectation

Acosta’s Why Behind the Buy research made it clear years ago, and the data has only strengthened:

·       64% of Millennials shop grocery online at least monthly, versus roughly 40% of all shoppers.

·       Six in ten Millennials have tried a meal kit, compared to about one in ten Boomers.

·       Nearly 40% of items in Millennial baskets are organic, materially higher than older cohorts.

Meal kits succeeded not because they were trendy, but because they solved multiple Millennial needs simultaneously:

·       Skill-building (45% want to learn new cooking techniques)

·       Health-forward ingredients

·       Portion control

·       Price predictability

·       Digital-first engagement

Pizza, Value, and the Grocerant Effect—Then and Now

The pizza sector’s success—dating back to the mid-2010s and continuing today—remains one of the clearest illustrations of grocerant principles in action. Pizza won because it delivered:

·       Handheld convenience

·       Transparent value pricing

·       Fast fulfillment

·       Cross-channel availability (delivery, pickup, retail, C-store)

Chains like Domino’s and Papa John’s paired aggressive value menus with frictionless digital ordering, setting a standard that grocery, convenience, and foodservice competitors quickly emulated. Meanwhile, C-stores, club stores, and supermarkets expanded Ready-2-Eat and Heat-N-Eat pizza, capturing incremental meal occasions once reserved for restaurants.

The lesson was never about pizza—it was about reducing decision friction while increasing perceived control.

 

Three Grocerant Guru® Insights: Why Food Discovery Now Determines Legacy Brand Survival

1. Discovery Has Shifted From Menus to Moments
Millennials discover food through social feeds, apps, in-store visuals, and peer validation—not static menus. Legacy brands must design discovery across touchpoints, not just at the point of sale.

2. Authenticity Scales Faster Than Innovation Theater
Ethnic authenticity, clear sourcing, and simple preparation outperform “limited-time innovation.” Millennials reward brands that show cultural respect and culinary honesty—not over-engineered novelty.

3. Digital Is the New Front Door—Prepared Food Is the Welcome Mat
Brands that treat digital as marketing miss the opportunity. Digital discovery must connect directly to fresh prepared food availability, pricing clarity, and immediate consumption options—the heart of the grocerant niche.

 

The conclusion is straightforward: Millennials are not abandoning foodservice. They are reallocating spend toward brands that respect their time, intelligence, and desire for participation. Pricing transparency, authentic prepared food, and seamless digital discovery are no longer competitive advantages—they are baseline requirements.

The grocerant niche continues to prove that when brands reduce friction and increase trust, Millennials do the rest.

For more on how the Foodservice Solutions® 5P’s of Food Marketing can accelerate discovery, differentiation, and participation, visit www.FoodserviceSolutions.us or contact Steve@FoodserviceSolutions.us.