For more than 40 years, The NPD Group has been tracking the foodservice and restaurant industry daily. We are the leading source for trends, performance indicators, and market sizing—with unique information and insight that spans the entire supply chain, from manufacturers to distributors to operators.
Our flagship information service for the foodservice industry, CREST®, along with SupplyTrack®and our other foodservice market research, can help you with strategic planning and positioning, product/menu development, customer targeting, competitive analysis, and product performance tracking.
We can also bring these robust data assets along with our industry expertise and combine it with your data or third-party data to address your unique business issues.
Since 1975 CREST®, NPD's flagship information
CREST Local Market
See CREST restaurant information broken out across the top media markets in the U.S. This view allows you to benchmark performance and analyze competitive strengths and weaknesses at the local market level. Ask us for a complete listing of the markets available.
Four times a year, CREST OnSite reports on consumer dining experiences in the vending, business and industry, secondary school, college and university, recreation, lodging, hospital, senior care, and military segments. Clients receive an in-depth view of what foods and beverages are purchased, where and when they are consumed, how much they cost, and how satisfied consumers were with their dining experiences.
Checkout Tracking℠ provides information on consumer buying behavior at the market basket level, based on receipts for brick-and-mortar retail purchases. You get precise, item-level purchase detail that is linked to buyers and their demographics. Data comes from large-scale longitudinal panels, making it possible to study the same consumers over time, analyze competitive market baskets, and identify purchase patterns.
NPD Sampler Package
The NPD Sampler Package incorporates highlights from many of NPD’s signature offerings, including CREST® and ReCount®, on a smaller scale and at a lower price point than a full data subscription. It provides an introduction to the power of deep data and expert insights to help manufacturers and distributors get the right products in the right places for the right people.
SupplyTrack® is the only monthly point-of-sale service that tracks every product shipped from a critical mass of leading foodservice distributors to each of their operators. It delivers in-depth insights for categories, brands, items, product attributes, and operator segments. Foodservice manufacturers and distributors use this information to view market trends, measure performance, size the market, and develop sales optimization strategies.
Know more with ReCount®, a census of commercial restaurant locations in the U.S. and Canada. It includes both chain and independent restaurant locations. Restaurants are categorized by service type and food specialty within the QSR and FSR segments, and by geography, from the national level down to specific unit address.
QSR Market Monitor
This continuous (daily), syndicated awareness, trial, and usage tracker for quick-service restaurant (QSR) operators captures information on what motivates consumers to visit restaurants, delivering in-depth insight into brand/advertising awareness, ad content recalled, ad ratings, cross-chain purchasing, recency of visit, and customer satisfaction.
Uncover answers with this market benchmarking service for participating chains in North America and Europe. It delivers monthly or weekly reports on total system sales, branded units, and same-store sales trends, based on actual sales data. The SalesTrack® suite also includes SalesTrack Weekly and SalesTrack Market.
Convenience Store Monitor
The Convenience Store Monitor helps manufacturers and retailers understand what is selling and who’s buying at convenience stores. Its exclusive detail includes the unique characteristics of convenience store shoppers, profiles of product categories, and insights into specific chains’ strengths and weaknesses – all of which can be analyzed by dayparts, regions, key channel and demographic metrics.
The U.S. restaurant industry’s stalled traffic is expected to continue through 2018. Understanding the foodservice-related habits of key generational groups is one way to address the complex issues that have created the current slow-to-no-growth environment. The NPD Group’s new report, What Matters Most To Key Generational Groups, explores key buyer groups’ wants and needs to reveal the factors that most influence their restaurant purchase behavior.
With new labeling laws on the horizon, it’s critical to understand and address consumers’ concerns. Most consumers now say they are aware of genetically modified organisms (GMOs), and many of them tell us they aren’t comfortable buying and consuming foods that include them. Our new report, Navigating GMOs for Success, gives you new information and expert insight into this consumer mindset. It’s how to get the knowledge you need to improve product positioning and deliver effective marketing messages to respond to GMO-related concerns.
It's a "one-percent world," where growth is largely absent across foodservice segments. And now we're even seeing a slowdown in a former bright spot: quick service restaurants. But rather than simply accepting the status quo, smart companies are looking more deeply into what's actually behind the slow-to-no-growth problem. They want to identify their best opportunities to not just survive, but thrive. That's where The NPD Group's Losing Our Appetite for Restaurants report comes in.
Is Delivery the Right Choice for Your Business? Delivery is one of the most convenient options a restaurant operator can offer to address consumers’ need for a convenient meal solution. And now there are new possibilities available to you, if you’re looking to enter the delivery market. Explore consumers' habits, behaviors, and attitudes related to food delivery with NPD's new report.
In the food and beverage industry, foresight about the future of how people will eat and drink and deep insight about what they’re doing right now can make all the difference to your growth trajectory. This year we’ve dug deeper than ever before into our unique data assets and industry expertise. The result? An unparalleled look at actual consumption behavior and how it’s changing, both at home and away from home. You can use the Annual Report on Eating Patterns in America to determine which emerging behavior patterns will help drive your business and identify new market opportunities.
Meal kit delivery services like Blue Apron and Plated have garnered a small, but seemingly dedicated, segment of enthusiasts in the U.S. Are these kits a passing fad, or is this a trend worth watching? Our new report, Thinking Inside the Box: A Fresh Look at Meal Kit Delivery Services, combines findings of our own custom study with ongoing NET® consumer tracking research, insights from our Checkout Tracking solution, and industry expertise. It uncovers answers to your pressing questions about this new player in your market.
Cultural influences and the more adventurous taste buds of U.S. consumers have made flavors like tikka masala, poblano, and doenjang recognized names on grocery store shelves and restaurant menus. The affinity U.S. consumers continue to show for ethnic flavors and dishes is supported by the fact that 75 percent of U.S. adults, especially young adults, are open to trying new foods, reports The NPD Group, a leading global information company.
Customer visits to U.S. restaurants and foodservice outlets remained negative in the quarter ending June resulting in six consecutive quarters of weak traffic performance, reports The NPD Group, a leading global information company. The U.S. foodservice industry has not experienced six quarters in a row of no traffic growth since the recession of 2008-09. The average check at foodservice outlets rose by 2.6 percent — the largest increase in several years — reflecting higher menu prices.
The next step for a successful single- to two- unit restaurant, an independent restaurant, is to grow into a micro-chain of three to 19 units. Although total independent restaurant unit counts have declined by 4 percent from a year ago, micro-chain units are increasing in major U.S. cities, reports The NPD Group, a leading global information company. Micro-chains, which are often locally-based, represent a diverse segment of restaurants that typically reflect emerging trends in food, a positive customer experience, and hit the right buttons for restaurant customers today.
Forever in the shadow of Boomers and Millennials, Gen Xers can now take center stage as an important customer base for restaurants, finds The NPD Group, a leading global information company. Generation X, ages 36 to 52, now represents 23 percent of all restaurant visits, not a significant difference from Boomers and Millennials, who represent 26 and 25 percent of visits respectively, according to a new foodservice study published by NPD Group.
There has been a lot of buzz about the strength of independent restaurants, even to the point of some saying independents were doing better than major chains. A clear understanding of restaurant performance begins with defining the landscape, says The NPD Group, a leading global information company. Visits to independent restaurants were down 3 percent in the first quarter of this year from a year ago and consumer spending was flat; independent restaurant unit count dropped by 4 percent, reports NPD, which continually measures the foodservice industry in multiple ways. Although overall the current state of independent restaurants overall isn’t positive, there are some independent restaurants in the U.S. that are succeeding.
The total U.S. restaurant count decreased slightly (-0.6 percent) from a year ago to 629,488 units, according to a count of U.S. commercial restaurant locations compiled in the spring and fall each year by The NPD Group, a leading global information company. A 2 percent decline in independent restaurant units was the sole contributor to the total restaurant decline, based on NPD’s Fall 2015 ReCount®, which includes restaurants open as of September 30, 2015. Chain restaurant units increased by 1 percent from a year ago from 289,726 to 292,943 units.
The health benefits of eating seafood are well-documented but many consumers lack the confidence to select the right seafood and prepare it in-home, which is why many consumers turn to restaurants. Shellfish, which tends to be more costly and therefore to some consumers riskier to prepare at home, appear to be the seafood of choice when dining out, reports The NPD Group, a leading global information company.
U.S. Restaurant Traffic Remains Steady and Consumer Spending Increases in Q1 While Operators Dollars Ordered From Broadline Distributors Grow
The restaurant industry is an economic bellwether and the read for the first quarter of 2017 is steady as she goes, reports The NPD Group, a leading global information company, which continually tracks the foodservice industry. Consumer spending grew by 1.3 percent and visits to restaurants and foodservice outlets held steady. On the supply chain side, operators at eating and drinking establishments and retail foodservice outlets increased their dollar spend with the major U.S. broadline distributors by 1.7 percent and cases ordered by 0.5 percent.
Innovation and Expansion Surround Plant-Based Dairy and Meat Alternatives but Market Still Remains Niche
In recent years there has been a lot of expansion and innovation surrounding plant-based dairy and meat alternatives in the U.S., even with dairy and animal-protein manufacturers finding ways to enter the space, but the market’s potential is still being determined. According to The NPD Group, a leading global information company, the market for plant-based alternatives is still evolving as consumers begin to leverage these items because of food allergies or they’re seeking what they believe to be more healthful options.
A major QSR chain’s analytics team sought an advantage against a competitor. This NPD client had a number of important questions, the answers to which would determine its next step. But time was short. At issue was the dessert menu. The competitor offered a much wider variety of frozen dessert options than did our client. More flavors, toppings, and sizes were available. The team wanted to know if it should duplicate the competitor’s wider assortment.
Millennials are the center of many conversations about building momentum in today’s slow-to-no-growth U.S. foodservice industry. Understanding their wants and needs is important. But it’s just as important to stay focused on other key generational groups, in addition to those coveted Millennials.
Unfortunately, the actual power of LTOs can remain hidden in the bulk of a company’s own point-of-sale (POS) information. Recently an 800+ unit fast casual restaurant chain asked us, “Do you have a way to measure the real-world performance of our fried green tomatoes limited time offer?” Because the chain didn’t have any idea what kind of customers the promotion attracted, there wasn’t a clear way to evaluate the offer and target those buyers with other similar promotions throughout the year.
Generational and situational shifts affect eating patterns for people of all ages. Right now we’re seeing it among U.S. marketers’ coveted Millennials — they’re having kids, and it’s changing the how, what, and why behind their consumption choices.
As the seasons change, U.S. consumers’ snack and meal choices also shift. Summer temps are on the way for much of the country, so interest will turn to outdoor grilling and icy delights that help people beat the heat.
Over the last decade, U.S. consumers have become less concerned about checking nutrition labels for calories, fat, and sodium. But sugar was holding steady . . . that is, until a recent uptick in 2016. Now it’s their number-one priority when checking labels.
What’s shakin’ with bacon? And what are your best opportunities related to this category or others? Fact-based shipment data from 700,000+ operators reveals America's love for bacon.
Restaurant traffic growth has come to a standstill. Rather than simply accepting this new status quo, smart companies are looking more deeply into what’s behind the problem, to identify their best opportunities to not just survive, but thrive.
Consumers are composing meals on their own terms, and this includes traditional snack foods. Learn the three keys to capitalizing on this consumer trend from Senior Industry Analyst David Portalatin.
Understanding consumer behavior around scratch cooking versus foodservice usage is key to finding growth opportunities. Find out more about what is trending in food – it’s all in this video featuring David Portalatin, Senior Industry Analyst.
Insights and Opinions from our Analysts and Experts
I'm a Houston resident and like most Houstonians I've been battling flood waters all week. One of the things I’ve been amazed by during Harvey is just how good the food industry is. Retail shelves that were decimated in the days of hasty pre-storm preparation were filled to abundance the next day, and grocery stores were among the first to open. A testament to the efficiency of our supply chain, the persistence of industry employees, and the overwhelming abundance of this wealthy nation.
Then there’s this local Pizza Hut Franchisee literally wading through flood waters to bring hot pizza to people. Awesome!
I’m very privileged to get to travel this great nation each week and share data and insights about food and beverage consumption trends. While it’s my job to share what I’ve learned from studying NPD’s diverse data sets on food and beverage consumption, consumer restaurant behavior, and wholesale distribution, I feel like I learn as much as I share from hearing what’s on the minds of food and foodservice industry executives. Lately many of these executives are asking a common question: What is happening with independent restaurants?
This question is stemming from multiple competing viewpoints in the marketplace and the resulting confusion as key stakeholders try to make sense of the diverse and fragmented restaurant landscape.
The foodservice landscape is more complex than ever as it adjusts to changing consumer needs, technological advances that have redefined quick service, and competitive threats from other channels, like retail foodservice and meal kit delivery services.
Fortunately, we at NPD have multiple data assets to shed light on the situation – from consumer traffic trends, to a bi-annual census of restaurant locations, to broadline shipments to over 700,000 commercial and non-commercial operators. Leveraging all of these assets, here is my assessment of what is really happening with independent restaurants.
The popular narrative right now is that independent restaurants are winning while big chains are losing. This assessment of the market is often derived from a limited viewpoint. My view, which is informed by NPD’s diverse and comprehensive set of data, yields a different result.
For clarity we’ll first define terms. In over 30 years of tracking the restaurant industry, NPD defines independent restaurants as those having one to two locations. This definition is underpinned by our ReCount® restaurant census of over 600,000 individual restaurant locations nationwide. The term independent restaurant can be more broadly defined, but I’ll use our definition of 1-2 units in order to provide a more granular evaluation of the foodservice landscape.
We have reported publicly that consumer visits to independent restaurants have declined sharply while consumer visits to the large chains increased. In the first quarter of 2017, customer visits to independent restaurants declined 3 percent compared to a 1 percent gain for the big chains. So how can other sources extol the successes of the independent restaurant sector?
Let’s dig deeper. While independent restaurants saw a decline in consumer traffic of 3 percent in Q1, actual unit counts for spring 2017 versus year ago show 4 percent of these restaurants went out of business. A 4 percent closure rate and only a 3 percent traffic decline would imply that independent restaurants managed to eke out some positive growth. By analyzing case volume shipped to these restaurants by broadline distributors, we see they did purchase slightly more product in Q1, increasing the volume by .5 percent versus year ago. So clearly there is some life in the independent sector, but we would be hard pressed to say they have outperformed big chains.
But what about independent restaurants beyond the 1-2 unit definition? Those small operations with marketplace success and the business acumen to expand to three or as many as 19 units, which we call micro-chains, are faring quite well in today’s environment. Micro-chains have increased their case volume purchased from broadline distributors in Q1 by almost 3 percent versus year ago. Many of these micro-chains are in major metro areas and reflect the leading edge of emerging food trends and consumer experience.
Although interesting, this relatively small segment does not reflect what is happening in the industry overall. After all major chains represent more than 64 percent of all restaurant visits, and there are many examples of major chains with double-digit traffic growth even in today’s challenging environment.
So, are independents beating the chains? Not necessarily. I can cite examples of success in multiple sectors of foodservice. Typically those with growth are differentiated by superior quality, excellent execution, great value, and a keen relevance to current consumer trends. These fundamentals have always been keys to success in foodservice and always will be. This is true regardless of whether a chain has one or 2,000 units. The bottom line, however, is that although some independents are doing well, on balance, they are not trouncing major chains. Major chains are here to stay.
If you’ve heard me speak in public then you’re well aware of how I describe change in food and beverage habits – slow like the movement of the tectonic plates, but this means you need to take many little steps over the years to ensure your long-term success.
We know Hispanics are a quickly growing group in the United States and they bring their culturally-based eating habits as they grow. Even those born into “American culture” are still emphasizing the importance of traditional Latin American cooking when they prepare family meals.
NPD’s continuing research on Hispanic consumption patterns has shown they prefer manufacturers to help them by saving time in the kitchen but not making the meals for them. In other words, pre-prepared tamales, tortillas, or other traditional foods are, in many ways, considered an infringement of their traditions and they would rather have the flexibility to control the end product and therefore the flavorings.
Beyond making foods simpler to prepare or helping Hispanics by reducing the time it takes to prepare ingredients, there are other ways to take those little steps along the path to long-term success. In this day and age of corporate transparency and responsibility, consumers are interested in knowing what happened to a product before it hit the store shelf. In other words, what are your production practices? Are you using natural ingredients? What causes does your company support? These all go a long way in satisfying consumers’ cultural needs and aligning with their values.
When it comes to Hispanics marketers need to think beyond their products and engage these consumers on a cultural level. Let them know you support the same causes that are important to them so that they not only enjoy the taste of your products but also feel pride in supporting a company that supports them back. And remember, consumption patterns will change – you just need to be patient so stick with your plan for the long haul.
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.
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.
I love reading things about the tastes of Millenials. For instance, I recently read that restaurants supposedly can really go a long way with them by offering vegetarian fare. I've been using CREST® global consumer foodservice tracking data to look into the foodservice tastes of generations just to see how different they are. I was inspired by hearing someone at a conference talk about how the new Generation Alpha (of which the oldest are 6) are and will be completely different (they're not). At that same conference someone said that the "global Millennials" were completely different from everyone else.
So as long as I had the data organized, I thought I'd see what it said about Millennials.
But before I looked at real data, I consulted my Millennial focus group about the vegetarian thing. One of the ten is a pescetarian who longs to be vegan but likes pudding too much (kidding, that was when she was much younger). Another is "sort of" vegetarian who doesn't bat an eye at chicken Parmesan or sausage pizza. Another will bat an eye at those things but will eat them to be polite if that's what's being served. The rest eat meat unapologetically. So, that's (generously) three out of ten. I think the folks on research science row would allow me to say that it's about a third. For the record, my imaginary better self is also vegetarian but since he's imaginary we can't count him in the stats.
This gives credence to the claim in the opening paragraph. My Millennial focus group has a higher incidence of vegetarian leanings than you'll find in most groups of people. NPD's National Eating Trends®, which continually tracks all aspects of consumption, reports that the incidence of flexible vegetarians or “flexitarians” are 8 percent of the population with actual vegetarians at 1 percent and vegans at half that. So there is an unusual prevalence; but (and again research science row backs me up here) that's not close to a majority.
Off the top of my head the biggest, broadest offering of a "veggie" thing is Sofritas at Chipotle. So I did a quick survey of my personal Millennials and found that one didn't know what it was (so much for a halo), one described himself as "intrigued" but had never tried it, one actually uses it as a kind of relish on top of the meat, one tried it and went back to the chicken. The most committed vegetarians pretty much always get it. I like the guy who uses it to express his vegetarian sympathies. We'll call that 25 percent incidence.
Again you can see why veggie offerings have value to a restaurant. But none of that is actually data. That's really just me talking to some people.
And we're now coming around to the point. OK...so I took a look at our CREST® ongoing foodservice research data from the U.S., Great Britain (which the Continental Europeans all say is just like the U.S....HA!), Italy, China and Japan. I broke out the global Millennials and looked to see what foods and drinks they consume the most.
|Regular CSDs||Water Still||Meat Dish||Regular Cola||Chinese Stir Fired|
|French Fries||Espresso||Japanese Tea||Chips/Fries||Plain Rice|
|Pizza||Croissant Farcito||Noodle, Pasta||Beef Burger||Burger|
|Breakfast Sandwiches||Pasta Semola||Coffee||Diet/Low Calorie Cola||Soup|
|Tea-Iced||Cola Regular||Veg Dish||Bacon||Chinese Stew|
|Lg Cheeseburger||Pizza||Lunch Box||Pizza||Cola - Regular|
|Bottled Water/Seltzer||Panini||Sushi||Plain Still Bottled Water||Soy Milk|
Source: The NPD Group/CREST®, year ending September 2016
While you could pick the lists apart and point out opportunities for vegetarian options (pineapple jalapeño pizza, for instance), they all look pretty much like everyone else in their respective countries. The Italian list looks very Italian to me (that's a stuffed croissant in the list). And the Japanese list looks very Japanese. They don't seem very "global millennial." The Chinese list, with burger and cola, is the most striking in its difference from the population. The soy milk in the list is not the soy milk we find in the Americas and Europe. It might more accurately be called "liquid tofu" and is the dominant breakfast beverage. And anyone can see that the British and the Americans are completely different. OK not really. They're disturbingly similar. The thing that looks very millennial to me (though not vegetarian) in the U.S. is the breakfast sandwiches; the seeds of all-day breakfast. The bacon in the British list may be a deconstructed bacon bap sandwich.
My Millennial focus group would likely come close to the U.S list if you replace cheeseburgers with burritos.
Now, we could "index" (it's a verb, not a noun) these and see which tiny things are more likely than average to be consumed by global Millennials. Alcohol would be prominent in a couple of countries. Just for fun, I'll tell you that bruschetta has the highest index for Millennials in the U.S.
Years ago there was a speaker on the U.S. foodservice conference circuit who spoke about his experiences at Burger King and the objections from their customers when Burger King removed salad bars that nobody ever used. He'd say that "people talk thin and eat fat." Customers liked to come in and see the salad bar before they ordered their Whoppers. So headlining a menu with a dish made of roasted cauliflower topped with spicy tomato sauce, almonds, and avocados is not an illogical thing. My imaginary better self is always ordering things like that while I'm pondering whether to get a full or half slab of ribs. Maybe just don't prep so much of it.
There has been a sort of double arms race in delivery of late.
The first arms race is built around information technology. This race has mostly been run by plucky startups. The introduction of apps that aggregate many different restaurants, chains, and independents has created a situation in which non-pizza places and independents in general are now able to compete with chains on a more equal footing. This has proved to be such a successful model that many of these startups, all over the world, have become none-too-plucky and have set themselves firmly on the road to Behemoth (which I believe is a town in Montana).
The second arms race is built around hardware. Chains, the residents of Behemoth, have taken the initiative here by (OK, in just a couple of instances) developing an air force of drones and different unmanned vehicles to deliver their goods. Truth be told, almost nothing has been delivered this way but there has been a lot written about each and every item delivered.
All the while, a behemoth with its own IT and its own drones has been entering the fray: Amazon.
Amazon appears to have moved beyond all the cool zip codes inside actual cities and into...well... Irvine, California. I suppose it's like a city and it's kinda cool but it is in no way as cool as the city of San Francisco...or whatever the name of the cool part of Brooklyn is...or Wrigleyville (Chicago)...or the Pearl District...or the neighborhood of the Global Foodservice Blog Mountain Redoubt (where, to be fair, Prime takes an extra day and we pick up our mail at the post office). The point is that it's one thing to market some stuff to those people who do all that cool stuff on their phones. It's another thing entirely to sell stuff to their older siblings or their parents. It's a move to the mainstream.
There is concern among restaurant chains that the kind of dis-intermediation taking place in the delivery "space" is less than desirable. The apps control the way the outlet is presented. A good bit of branding is removed. This is less of a problem for independents. If they can offer Pad Thai to a complete stranger at the price they put on their menu, it's a complete upside for them.
As we've talked about apps and foodservice delivery at other times in this space, the big benefit from the IT applications standpoint in the U.S. has been the independents. The apps provided them with reach and payment processing that they could not afford or manage in the past. Much of the growth in delivery in the past few years in the U.S. has come from non-pizza, non-chain outlets.
As much talking as there is about apps, NPD's report Delivery-A Growth Opportunity on the Horizon clearly illustrates that the telephone is still the primary means of ordering delivered food....except for millennials. And, apps are still less than a fifth of all foodservice orders across the board. What's missing from all research is the incidence of internet/app ordering offerings at restaurants. From our data, I'd guess that the majority of restaurants still rely on the phone. To me that means that there is still a huge upside and that's where Amazon comes in.
Now, Amazon is a behemoth for sure. But merchants seem to keep coming to Amazon to front for them and handle all those pesky details like billing and logistics. This could be similar to inventing an entire new ecosystem under which all restaurant offerings are more or less equal. Although there are lots of restaurant chains working tirelessly all around the world to regain their advantages in the new world of apps. Based on NPD's delivery report, we can see that we're only at the start of this.
You’ve probably heard me say already that food and beverage consumption patterns are slow to change, but lately I find myself eating those words (pun intended). My colleagues and I at NPD have been watching several trends that might disrupt what we consider to be the fundamentals for the food industry. We will closely monitor these shifts in the coming year and beyond.
Sweating the small stuff
It's the little things grabbing consumers’ attention these days; they can be small but influential ways to garner loyalty among consumers. Increasingly consumers are looking to support brands and companies that do more than manufacture a product —they want to support causes and actions aligned with their values. People feel they’re doing right when they support companies that are connected to locally sourced ingredients, donations to charities, sustainable environmental practices, and animal welfare practices. The constant flow of Internet-based information will continue growing, so expect younger consumers especially to research brands and pinpoint those with the qualities they value.
Healthful eating gets personal
It’s not about what works on average but what works for the individual. Just as consumers want personal touches in the foods they eat, health is getting personal as well. Wearable devices that track footsteps and apps that track calories allow consumers to develop their own personal plans to meet their needs, rather than relying on health plans based on averages. Even though dieting is on the decline, “my own diet” is still rising as the most common way consumers take control of their intake. They’re looking for personal plans that meet their own specific interests, and more importantly, their lifestyles.
The future is now
Technology is quickly making its way into how we acquire our foods and beverages. It represents a small portion of food acquisition but has the potential to grow if consumers are convinced the extra cost of technology saves time in other areas of their lives. Technology is also helping consumers avoid the grocery store entirely by enabling them to purchase their groceries online and have them delivered to their homes. Based on growth patterns for this behavior we expect to see more people in the coming years use retailers’ websites or third-party sites like InstaCart to acquire foods and beverages.
Meal kits, still in their infancy, are another time-saver and solve the age-old problem of figuring out what to have for dinner. The kits also prevent fresh foods from spoiling by providing the exact amount of ingredients called for by a particular recipe.
Home is where the
It’s becoming more common to make meals at home while also using dishes sourced from restaurants. Those purchased components are more likely to be appetizers or side dishes, indicating consumers use these dishes as quick ways to round out or complete their meals. It’s yet another sign people want freshly prepared items in the home without having to spend a great deal of time in the kitchen. This is a true generational shift; younger consumers already consume fresh foods at rates higher than older adults did when they were the same age. As these younger consumers age, our forecast shows their demand for freshness in a hurry will only increase.
I’ve got my eye on these trends and so should you. If you’re a food and beverage marketer i then now is the time to react to these shifts because more and more it seems the pace of change is accelerating. It’s about connecting with consumers on a personal level to let them know you understand them as an individual. One size fits all doesn’t seem to fit anymore.
I was just at a conference in Dubai. It was intended to be a global conference and, if you looked at the attendees, it pretty much was; especially from an American point of view. The content was largely presented from an American perspective. This was fine with me because I haven't been to an American conference in years and it was interesting to hear what the Americans are concerned about.
The Americans, like the Chinese, Canadians, Australians and various Europeans, are concerned about delivery apps and third party aggregation services.
Before I go further, I need to remind everyone that delivery is less than 10% of the traffic in any of the 13 markets we track with our CREST® foodservice market research. But, while these services are taking a part of something that is less than 10% of the market, they have grown from nothing with alarming speed. And, they have created services, like aggregation, that were unimagined just a few years ago. It feels like they could change everything.
The delivery aggregation services were likened to the hotel web sites that we business travelers love so much. Apparently, the hotels don't love them in the same way. They, like the restaurants, lose contact with their customers. They lose the ability to make themselves stand out and they, to some degree, lose pricing control. Now, we just started asking about these services in a couple of countries; but, we are well aware of the alarm with which some companies view them.
We have, on the other hand, been asking about Internet ordering and generic mobile app usage for a year or more all around the world. If I look at what CREST tells us about these services, it's easy to see why the Chinese and North Americans are so excited about this. In China, just shy of half of all delivery orders are through the Internet or an app. In Canada and the US, the number is a little smaller than that. This is up from zero just a couple of years ago.
But these tools are not just delivery. They're used for pickup. And at the conference they said that the day will soon be upon us when we use an app on our personal device to order while sitting at a table in a restaurant. Perhaps that day is already here. My Millennial focus group thinks use of on-premises apps is pointless. OK, so maybe they think it'd be worth it for discounts or coupons. One, whose food is always late, thinks that perhaps it would be good for tracking her order. Another thinks that, combined with Go Pro cameras and a VR headset, it could be a path to an entirely new level of transparency. My wife, a solid Boomer who is always up on things, has used an app-like device at Applebee's to speed up the service...but not a phone app. Maybe the on-premises app is something for Generation Alpha. Watch this space.
Source: The NPD Group/CREST®
I should go to more conferences.
I was just at a global foodservice conference in Dubai (with a distinctly American agenda) and came across the term "Generation Alpha," which covers anyone born after 2010. Sure this is likely a term bandied about in conference rooms all over North America…but it isn't in Asian or South American conference rooms. Even less here in the neighborhood of the Global Foodservice Blog Mountain Redoubt in California.
Boy are these kids going to be different. Boy they are different. You need to completely change your game to satisfy these kids like nothing before.
At the moment the oldest of Generation Alpha is 6-years-old.
So I thought (and I'm quoting myself here),"what are they eating so much of that's so different?"
Just to get myself started, I went to the U.S. CREST® foodservice market research database to see what it had to tell me. I found that the five most popular items for Generation Alpha were:
- French Fries
- Chicken Nuggets
- Regular Carbonated Soft Drinks
"No Way!" (I'm quoting you here). "They're eating fresh fruit and quinoa salads."
But these guys are supposed to be different from any previous generation? What if I went back to 2010, before any of them were born, to see what the favorite items of the youngest Generation Z kids were eating...
- French Fries
- Regular Carbonated Soft Drinks
- Chicken Nuggets
But we market researcher guys have a trick to tease differences out of the data to highlight things that might not be very important (quinoa) but are very different. We "index" the numbers for each generation relative to the average. This tells us the "propensity" to do a certain thing compared to (in this case) older people.
And when we do that we find that quinoa is the most important.
Just kidding. We find:
- Juice that's not orange juice
- Corn Dogs (!!!!)
- Yogurt-not frozen yogurt (that's better)
- Chicken Nuggets
And, to complete the circle, if we go back to 2010, we find the Under 6 set indexing "high" on:
- Juice that's not orange juice
- Grilled Cheese
- Corn Dogs
I love grilled cheese sandwiches so much I blogged about them last year.
So, I guess the thing about this generation isn't so much what they eat but how you're going to reach them. These kids are going to be as much younger than Millennials as Millennials are to Boomers. Sheesh! What are they going to be up to?
This little business, Two Penny Blue (the name refers to a stamp), is maybe my favorite business in the world. It's tucked into an arch in the old post office building in Sydney, Australia. Just to be clear, it's outside. All the customers are standing on the sidewalk. When the shop is closed there is virtually no sign that it exists. It embodies so many of the global trends.
- It serves coffee and handheld items...not meals. When the Australians ( like most people in the world) say "coffee" they mean espresso drinks. Australians, like most people in the world, have a special way to say "American Coffee" that evokes the idea of spitting something unpleasant out of your mouth.
- Every drink is customized...somehow even more than what you hear at a Starbucks. That's possibly because the default order is with sugar (which they put in for you). There is a person at the register to take your order and pay. That person also puts the sugars in the drinks along with the chocolate for the mochas and queues up the cups. Two people handle the espresso shots and steam the milk. Mostly they add the milk to the drinks and then put them on the counter. There is some system where the fourth person also adds milk. That person also puts the tops on and calls the drinks. During rush hour there are five or six people in line and ten or so waiting for drinks.
- It's very personal. The second time I walked up the cashier knew my drink.
- If you look carefully, you can see a tablet on the counter in front of the fourth person. That is where the mobile orders come in. See the cups next to her in the picture? She's playing the role of the cashier for online orders.
- And somehow it reeks of "authentic." I'm never sure what that's supposed to mean but this is a nearly perfect coffee serving machine of a business. It's like a permanent pop-up business.
Two Penny Blue coffee shop in Sydney, Australia. My favorite little business in the world.