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Jan 18, 2017

Globally Mobile


Foodservice

As fascinating as the foodservice business is to me, I appreciate that not much ever happens in it compared to, say, consumer electronics or gaming. In those markets there are blockbuster new products or entirely new categories of things, like the Internet of Things and drones and wearables and VR...it goes on and on. In the foodservice business there is more related to meat, spicier things, pumpkin spice, and the "next" pumpkin spice and movie tie-ins (I admit it:  I yawned as I wrote this sentence).

Yes, there has been the swift shift in the direction of purer foods. Yes, a fairly large and much-talked-about chain can have problems. Yes, companies can claim to deliver with drones. Chains can insert radical new ingredients (cheese!) into pizza crusts. Stuff happens...but there is rarely something emerging that causes everyone to get excited. OK, the mainstreaming of sriracha is pretty cool but is more of a tweak than a sea change.

The emergence of "Home Meal Replacements" in the '90's got everyone in a tizzy. There were conferences, white papers and special studies as various symbol manipulators saw an opportunity to manipulate some symbols for the foodservice market.

But mobile ordering!!  Now there is a reason to get in a tizzy. Or, if you're an under-capitalized independent, it’s a reason to rejoice. ..or not. Everyone is getting into it. Even the local feed spot that is the closest foodservice outlet to the Global Foodservice Blog Mountain Redoubt allows me to place a pickup order using the same interface they use at the restaurant. I'd use the app but going there gives me an excuse to get out of the house and talk to people. They're so nice.

I've written before about how my personal Millennial focus group makes extensive and creative use of mobile ordering. From group customization of pizzas to Pad Thai in a jiffy in a strange city they have seamlessly integrated it into their lives. None have ordered anything via chat bot yet...unless you count pizzas from Alexa. They are really up on things.

I don't spend a lot of time in or thinking about the U.S. market since my focus is global foodservice. So the first time the mobile ordering thing came to my attention was in China. In China, mobile has gone from nothing to everywhere in a couple of years. There are dozens of startups fighting it out for share using dedicated apps or inside the WeChat parallel universe. They are even selling food from chains at below the price the chains charge. Talk about cutthroat!     

When we look at NPD's CREST consumer foodservice tracking data in China we can see how this is playing out in the market. If we divide the method of ordering into three groups - mobile, internet and Old Boring Way (including sitting at a table and asking a server) - and we index them to a starting period of 2014, we can see that the Old Boring Way is the same size that it was ten quarters ago and the other two methods have grown consistently, quarter-after- quarter.  Mobile ordering in China is now more than four times the size it was at the start of 2014.

NPD Group Chart | Mobile ordering in China

Source: The NPD Group, CREST®, year ending September 2016

While the same pattern is not exactly repeated around the world, the flatness of the "Old Boring Way” is. In Europe the new cool ways are growing but often in fits and spurts. In Brazil the Internet is as flat as the OBW (Old Boring Way). In Australia the Internet is growing and mobile is flat.

I went down to Research Science Row to get some perspective on this. I found someone sweeping up at the end of the day who said that it's fair to say that "pretty much all" the growth in the global foodservice market is coming from mobile or Internet platforms. She also said it was OK to say that mobile ordering in China is "way tons" bigger than it was in 2014.

The thing about mobile ordering is that, as fast as it is growing, it still is very small. Below is another chart showing the percent of restaurant visits that come from each of the three ordering methods.  Note that the Old Boring Way totally dominates all markets, which means that all the growth in these markets is coming from the incredibly cool and dynamic tiny slivers at the top.

In a market where the vastly dominant ordering form is stagnant, that is a reason to get excited.

NPD Group Chart | Mobile ordering in China


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