Jack Li of Datassential said “Fat is back,” citing Bulletproof coffee spiked with grass-fed butter as evidence of crossover into even beverages. Kathrynn Fenner of Technomic said “fresh and natural” took 45 percent of the pie among successful independents over other ingredient priorities like natural, local and even made-from-scratch. David Portalatin of NPD (shown above) said there are a number of chains who leverage digital technology well, and pointed out that top chains like Jersey Mike’s, Panda Express, Chick-fil-A, Domino’s, Texas Roadhouse, Panera, Moe’s, and Starbucks are leading the digital revolution.
In this article, chef and writer Amelia Levin shares takeaway from the 2017 IFDA SMart Conference and presentations by The NPD Group, Datassential, and Technomic.
READER TIP: Make sure to read the “Health and Functional Foods” segment!
Consumer Spending and the Restaurant Landscape
There’s a reason we constantly hear about this trend and that. While endless talk about UberEats delivery and “natural and local” gets old, staying on top of food trends, new innovations, and changing consumer preferences are the keys to navigating what’s becoming a “1 percent world,” according to David Portalatin, group vice president and food industry analyst at The NPD Group.
Portalatin defined 1 percent as the general slowdown in consumer spending – which represents $1.84 trillion and increased only 0.1 percent in the 12 months ending March 2017. Restaurant traffic has also been flat, with a 1 percent or less change in the last year. Food inflation is having an impact and NPD estimates that a shift in spending to the experiential, like travel, spas, and even “hammocking” may also be a culprit.
Now for the good news — there are restaurants still succeeding and there are strategies that supply chain partners can leverage to achieve growth. Independents in particular are poised for growth, said Kathryn Fenner, principal at Technomic “They are benefiting from a number of demand generators, including the rise of third-party delivery, consumer preferences for more local experiences, and the diversity among independents that creates innovation and more choice for consumers."
And while almost 4 percent of 1-2 store independents closed last year, traffic only declined 2.7 percent, which indicates that the survivors had traffic growth, said Portalatin. They also increased their case volume by 0.5 percent compared to a 1.7 percent increase for larger chains.
Authenticity and Global Flavors
One current trend is introducing bolder flavors and global cuisines for a more authentic experience that Millennials and younger consumers crave. Portalatin’s case in point: there are many places to get great barbecue in the state of Texas, but the lines are still out the door at Franklin BBQ in Austin, where James Beard Award-Winning Chef Aaron Franklin churns out smoked brisket and other slow-cooked meats.
Changing consumer demographics, functional foods, food through science, and even robots are redefining modern “American” cuisine said Jack Li, managing director at Datassential. In referencing redefining, Li joked that people used to ask him if he was related to the Kung Fu master Bruce Lee. “These days, I don’t get that anymore,” he said, noting how people of so many different ethnicities and backgrounds continue to come together, and share their native cuisines.
But rather than watered down cuisine, today’s America showcases distinct ingredients, flavors, cooking techniques, and dishes with a new focus on authenticity and global realness. It’s not unusual to crave a Korean BBQ burger laced with gochujang (chile paste) or lightened up, modernized Indian food.
“Just a couple exposures to ethnic food can lead you to love it,” Li said.
The bridge between the ordinary and the bold also takes shape as food producers take familiar products, like sea salt, and add their own twist to them in the form of smoked salt, Adobo-spiced salt, and more. Leveraging products like these helps distributors set themselves apart from the norm.
Jack Li of Datassential said “Fat is back,” citing Bulletproof coffee spiked with grass-fed butter as evidence of crossover into even beverages. Kathrynn Fenner said “fresh and natural” took 45 percent of the pie among successful independents over other ingredient priorities like natural, local and even made-from-scratch.
Health and Functional Foods
Another ongoing trend centers on health and more plant-based eating in the form of vegetables, legumes, seeds, and grains. Science has had a surprising intersection here, too, as researchers continue to toy with the concept of meat “made in a lab” (animal tissue in petri dishes). Other meat alternatives go beyond the likes of tofu and tempeh, cultivating plant-based heme combined with wheat, coconut oil and potatoes to recreate a sizzling burger (Impossible Burger), and using plant-based ingredients to mimic the taste and texture of chicken (Beyond Meat).
“Fresh and natural” took 45 percent of the pie among successful independents over other ingredient priorities like natural, local and even made-from-scratch, according to Fenner.
When it comes to healthy, “clean” eating, we’re moving away from calorie counting and weight management to more of a focus on mental and physical energy and strength. “Fat is back,” says Li, citing Bulletproof coffee spiked with grass-fed butter as evidence of crossover into even beverages. Functional foods like superfoods in the form of chia seeds, spirulina, goji berries and more continue to show up on menus across the country. Probiotics are making waves, with fermented foods like homemade sauerkraut and beverages like kombucha finding a place in restaurants and even mainstream grocery stores.
Sick of kale, yet? Look for edible seaweed and algae as “the next green thing.” In fact, seaweed has already seen 54 percent menu growth in the last year, Li said.
“Culinary Adapters,” otherwise known by Technomic as independent operators more interested in local sourcing and catering to Gen Zers, are leading the charge in clean, healthy food production, said Fenner. She compared this group to other operator archetypes, like “Fence Sitters” and “Mainstream Magnets” who are focused more on traditional service, convenience, and consistency. “Cutting Edgers,” or those with known, fine-dining trained chefs and “Controlled Explorers” focused on Milllennials are also seeing some successes in the urban markets they tend to overtake.
Distributors can develop turn-key solutions like partially prepped products for c-stores and others focused on convenience to help them compete, Portalatin said.
According to Fenner, other than delivery (which we’ll get to), home meal kits could be one solution for operators to introduce a convenience offering.
Right now, only 14 percent of operators offer at-home meal kits, but nearly half (45 percent) of Controlled Explorer independent types are getting into this game, leveraging ingredients like pre-chopped veggies, fresh pasta, and other components they can easily put together to deliver half-cooked.
Delivery and Foodservice at Home
NPD reports that delivery now represents 1.7 billion foodservice visits annually, with one-fourth of all U.S. consumers claiming to have ordered a meal via delivery in the past three months. Young adults are the heaviest users of foodservice delivery, representing 56 percent of delivery orders.
A whopping 70 percent of independents who have begun using third-party delivery said it has had a positive impact on their sales – leading to increased total sales, better brand awareness, and even increased store traffic over time, likely as consumers become loyal through delivery first, according to Fenner.
Rather than battling for restaurant traffic, operators seem to be “battling more for the home,” said Li, who even pointed out the influx of delivery-only restaurants, led by celebrated chef David Chang and Danny Meyer’s daughter who are essentially “Uberizing” the restaurant industry.
This “foodservice at home” has shaken up the industry, most notably in the form of third-party delivery services like Postmates, Door Dash, Grubhub, and UberEats making it easier for consumers to skip the restaurant stop. We’re even seeing the advent of both aerial and land-based drones as “drivers” of this food, with Domino’s leading the charge in some pilot program testing.
“Operators should already have a strategy in place for how to get their products into the home,” Li said. Thinking about hold times and packaging solutions should – and, frankly needs – to be a part of the equation these days, and this is an area where DSRs can offer their support.
SMart Conference attendees were briefed by leading research and data firms during the opening general sessions, and then attended interactive breakout sessions.
Flexible Eating Occasions, Leveraging Digital, and Automation
Supporting flexible eating occasions like mini-meals, snacks and breakfast all day through price, portability, and portion control will help more consumers of all ages, Portalatin said.
In fact, morning meal and afternoon snacking dayparts posted growth this year over traditional lunch and dinner, according to NPD. It’s no surprise, then, that breakfast sandwiches still have merit among consumers, while 26 percent of Millennials and Gen Zers are consuming snack foods as their main meals.
Portalatin also said there are a number of chains who leverage digital technology well, who pointed out that top chains like Jersey Mike’s, Panda Express, Chick-fil-A, Domino’s, Texas Roadhouse, Panera, Moe’s, and Starbucks leading the digital revolution.
Digital orders in the form of online and mobile app orders have grown tremendously over the past five years, from 637 million occasions in 2011 to nearly 2 billion this past year, Portalatin pointed out.
In a new step for the restaurant industry, some businesses are experimenting with new forms of automation as a way to cut other costs.
Robots in the form of sushi chefs, pizza and salad makers, and even cruise ship bartenders have started to – and likely will continue – to proliferate the foodservice industry, Li pointed out. While these may relieve escalating labor costs on the one hand, they could threaten jobs on the other. Li compared it to the banking industry – few of us even remember what it was like to work directly with a teller versus an ATM.
Execution and Experience
One area of focus distributors should be opportunities to help operators improve good old execution – the basis of hospitality and the differentiator among both chains and independents these days.
“Chains who are doing well are just better at everything,” said Portalatin. Sure, taste is important, but so is the overall experience, atmosphere, and of course, customer service.
Fenner closed the morning trends-focused sessions by pointing out that plenty of opportunity exists for both operators and their supply chain partners, even if they tend to be more cautiously optimistic.
“Help address competitive pressures from fast casual chains, retail, and direct-to-consumer outlets,” she said. Also, bring solutions to address labor concerns, which are the biggest concerns among all operators.