For 50 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 delivers the most comprehensive view of consumer purchase behavior for foodservice categories, across all operators over time, to help you understand how to adjust your marketing to fuel growth.
Limited Time Offer Tracking
Point-of-sale information tells you how many LTOs were sold and their impact on your sales trends. But with LTO tracking, you can dive deeper into understanding whether you attracted new buyers or affected frequency, the kind of repeat purchasing you are developing, and performance of competitors' LTOs
Understand your opportunities and whitespace and gain insight into the competitive landscape with the timely, accurate, and reliable information needed for data-driven decision-making. This solution is powered by SupplyTrack, ReCount®, and CREST
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.
Get in-depth information about restaurant units, convenience stores, and non-commercial locations in the U.S. and Canada to focus your sales efforts. ReCount lets you identify and target the restaurants with the greatest potential to use your products.
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 NPD Group’s Convenience Store Monitor helps companies understand what is selling, who’s buying, and why. It delivers exclusive detail on the unique characteristics of convenience store shoppers, performance of product categories, and the strengths and weaknesses of specific chains. All of these insights can be analyzed by region, dayparts, and key channel metrics. This service addresses the reasons consumers choose specific retailers, their most important reason for selection, and loyalty levels. Use it to prioritize which retailers to target for distribution and boost your selling power by leveraging category and chain shares
Focusing on delivery is one way to stay competitive in today’s slow-growth foodservice market. We know delivery trends were strong in 2017, but what is the outlook for the future? This report provides new insight about foodservice customers and the potential growth opportunity for delivery The Delivery Overview section looks across QSR pizza, QSR beyond pizza, and FSR, revealing unique business dynamics, consumer profiles, digital delivery engagement, and third-party apps. The Delivery Outlook section provides a five-year cohort forecast for restaurant delivery, as well as a two-year outlook for delivery compared across QSR pizza, QSR beyond pizza, and FSR.
Mobile apps, self-serve kiosks, third party aggregators, and more are playing an increasingly important role in connecting with restaurant and convenience store customers to drive visits and loyalty. In this upcoming report, we examine consumer awareness and usage of these digital disruptors and explore motivations and barriers for use.
The NPD Group’s Chicken Wing Dilemma Report explores how swings in bone-in wing price increases could affect consumer purchasing behavior. Will operators continue to promote the highly profitable boneless version? If so, just how acceptable will these strategies be to purchasers of chicken wings, both bone-in and boneless? It also includes a new look at wing buyers’ food purchasing patterns, so you can make effective menu and pricing decisions with confidence.
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’s report reveals new details about the ways consumers are changing their behaviors and expectations regarding convenience in the kitchen. Their renewed interest in fresh foods requires a new look at the time and effort they’re willing to commit to at-home meal prep. 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.
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.
Total U.S. Restaurant Count At 647,288, A Drop From Last Year Due to Decline In Independent Restaurant Units, Reports NPD
The U.S. restaurant count reached 647,288 in fall of 2017, a 2 percent decrease in units from a year ago, based on a recent restaurant census conducted by The NPD Group, a leading global information company. The primary source of the decline in U.S. restaurant units was a three percent drop in independent restaurant units compared to a stable restaurant chain count, reports NPD’s Fall 2017 ReCount®, a census of commercial restaurant locations in the United States compiled in the spring and fall each year.
With restaurant traffic stuck between a 1 percent increase and flat for several years now, U.S. restaurant chains are turning to value deals, new menu items, or optimizing menus to focus on high performing items in order to drive more customer traffic, according to The NPD Group, a leading global information company.
Unintentional Foodies, Gen Zs Expect Food Brands to Follow Their Needs, Rather Than the Other Way Around
Generation Z, those born 1997 to present, now represent 27 percent of the U.S. population, a larger group than Millennials, and although only older Gen Zs are entering adulthood, their impact on the food industry is already being felt, finds a new study by The NPD Group, a leading global information company. Gen Zs, many of whom were raised by Gen Xers, grew up understanding the purpose of food and how it fits into a well-lived life. As a result this generational cohort has set expectations that food and food brands will follow their needs and not the other way around.
It’s that time of year when a lot of people hunker down indoors to watch sports and eat chicken wings. Just as sports enthusiasts choose a team, wing enthusiasts choose their type of chicken wing, either bone-in or boneless*, says The NPD Group, a leading global information company. With 45 percent of the population ordering chicken wings at restaurants and foodservice outlets and servings on the rise, it behooves restaurant operators to know who is on team bone-in and who is on team boneless.
Everything Ancient is New Again: Case Shipments of Ancient Grains to Foodservice Outlets Increased by Double-Digits
Grains, like quinoa, amaranth, farro, and spelt, which were eaten on a daily basis by ancient civilizations, are growing in popularity again with today’s consumers because of their perceived health benefits compared to processed wheat grains, reports The NPD Group, a leading global information company. Case shipments of ancient grain categories by broadline distributors to U.S. foodservice outlets increased by double-digits over the past year, according to NPD’s SupplyTrack®, a monthly service that tracks every product shipped from major foodservice broadline distributors to over 700,000 commercial and non-commercial foodservice operators.
A Look Into 2018 And Beyond: Foodservice Consumers Will Look for A New Level of Convenience and Foodservice Operators Will Do What It Takes to Oblige
U.S. foodservice industry growth may be slow, but there are certain changes taking place that will help to move the industry in a positive direction, says The NPD Group, a leading global information company. NPD forecasts flat to sluggish traffic growth for 2018, but the trajectory could change, according to NPD Restaurant Industry Analyst, Bonnie Riggs. Focusing on what consumers want will help foodservice marketers better align their strategies to maximize their relevance in 2018 and beyond, says Riggs.
New Realities of Shifting Consumer Needs and Marketplace Disruption Are Shaping Eating Patterns in America and Creating a One Percent World
Shifting consumer attitudes, behaviors, and demographics; an evolving marketplace with ongoing channel and digital disruptions; and increasing competition for consumer mindshare and dollars are changing the playing field for food companies and foodservice operators, reports The NPD Group, a leading global information company. The key shifts are how consumers shop, define convenience, use restaurants and foodservice outlets, and personalize health and wellness, according to NPD’s recently released Eating Patterns in America report.
Quick Service Burger and Gourmet Coffee Chains Drive Uptick in U.S. Foodservice Traffic in Third Quarter
After six consecutive quarters of flat or negative traffic, strong growth at quick service (QSR) burger and gourmet coffee chains drove total U.S. foodservice industry traffic into positive territory — up 1 percent — in the quarter ending September, reports The NPD Group, a leading global information company. Collectively, the top QSR burger and gourmet coffee chains account for a sizeable percentage of total QSR traffic and have a major impact on industry traffic overall. QSR visits, excluding these chains, were flat but still an improvement from the previous quarter when traffic was negative, according to NPD’s CREST®, which daily tracks consumers’ use of foodservice and restaurants.
Java, cuppa Joe, go juice, hojo, or whatever one wants to call coffee, a ready-made cup of it is not far from reach for the majority of U.S. consumers. In addition to coffee served at restaurants and other foodservice outlets, there are 33,129 gourmet coffee shops in the U.S., a 2 percent increase in units from last year, based on a recent restaurant census conducted by The NPD Group, a leading global information company.
From mobile ordering to delivery apps and order kiosks, the U.S. foodservice market is experiencing a digital evolution. New convenience-enabling technologies are a bright spot in an otherwise slow period for the industry — they’re growing consistently and adding excitement. How many restaurant visits are paid for with mobile apps? What stops consumers from using digital services for their restaurant and c-store visits? Find out in this infographic.
Chicken wing pricing has been like a roller coaster ride. Prices skyrocketed, compelling restaurant operators to promote boneless wings. Then they plummeted to lows not seen since 2004, giving operators the ability to renew their focus on bone-in wings. Will operators continue to promote the highly profitable boneless version?
After years of leading the fruit-juice category in the lodging segment, a particular manufacturer slipped to second place in the market. In fact, a competitor was outpacing our client’s sales by 10 points each month.
From Pantry to Table
Manufacturers must convince retailers that their version of the hot, new thing should be on store shelves. See how our client proved tablet/laptop buyers spend twice as much on electronics overall compared to other buyers.
A 30 percent market share didn't stop a foodservice manufacturer from looking for growth opportunities. Comparing their product mix to their competitors, along with a segment analysis led to a surprising growth opportunity.
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.
Insights and Opinions from our Analysts and Experts
Technology, generational change, and emerging consumer food values will result in new realities for both retail food and foodservice in 2018 and beyond.
- Retail food and foodservice will remain in a low growth environment - Our aging population is shifting more consumers into lower consumption life stages at both restaurant and retail. At the same time, emerging generations illustrate eating patterns that are a departure from established trends of the past. These macro demographic shifts create headwinds for total food and beverage consumption that are difficult to overcome for both food retailers and foodservice operators. In a stagnant market, there will be retailers, brands, and restaurants that find growth through a differentiated value proposition, on-trend attributes, and/or superior quality, but that growth will be mirrored as declines for other players.
- Brick and mortar retail disruption will accelerate - Almost 8 percent of NPD’s measured universe of $1.8 trillion in consumer purchasing is now online. In some industries, online penetration is as high as 30 percent. In both retail food and foodservice, e-commerce penetration is far lower than the average across industries but the gap is shrinking fast. We are now at a tipping point where a critical mass has adopted ecommerce in groceries, restaurant meals, and subscription meal kits. Brick and mortar grocery and on-premise foodservice is here to stay, but the landscape is being reshaped dramatically. Manufacturers, retailers, and restaurant operators who best leverage digital commerce will win in a challenging environment. Retailers and restaurant operators who reinvent the brick and mortar experience will remain standing.
- Convenience is being re-defined - From the 80’s through the 2000’s we witnessed the convenience revolution as baby boomers focused on career and family formation. They found value in convenience foods that offered time saving meal solutions and outsourcing meal prep to restaurants. Today convenience is as highly valued as ever but it’s taking on a new form. Consumers, who now desire natural foods, are shifting from convenient food to convenient preparation and procurement. This contributes to the growth in grocery ecommerce and restaurant delivery. In addition, American kitchens will be home to a variety of appliances and gadgets to facilitate cooking at home
- We are going “in” to eat more - Regardless of where the food is sourced or who prepares it, our meals are increasingly being consumed at home. Thanks to a changing workforce, the ease of online shopping, and the boom in streaming entertainment, there are fewer reasons than ever to leave the house. The most popular place to eat out this year will be our own home. 49 percent of dinners purchased from a restaurant are consumed at home, and many in home meals are a blend of dishes we prepare and those we purchase ready-to-eat from a foodservice establishment. Manufacturers, retailers, and operators today can win by making it easier to get foods and beverages to the home.
- Wellness….and Health - There is no doubt that a healthy lifestyle movement has changed American eating patterns. The shift to perimeter of the store, the rise in consumption of foods with organic, non GMO and natural labels, and a rise in the desire to avoid sugar are all evidence of healthy attitudes that have been emerging for several years. But now, the goal may be shifting to a focus on wellness. Consumers today are opening up to food as a means of feeling good that can include good health and an indulgent reward. In either case, authenticity will be valued. One the one hand, authenticity in the form of real, natural, minimally altered food. And on the other, an unapologetic honesty about the feel good aspect of a food like its taste, nostalgia, or the experience it is connected to – even if that food may not be the most healthful option.
A happy and successful 2018 to all!
I have been in the foodservice industry, actually working in the industry and later watching the industry, for a real long time. For a bunch of those years I have worked in other countries, watching their foodservice markets, and can say without fear of contradiction that there are differences across all those countries, but the huge reason why consumers around the world use foodservice is universal. It’s convenient (or, they’re lazy…six of one…). By using foodservice, consumers don’t need to cook or prepare a meal or even a snack for themselves.
Although the need for convenience hasn’t changed since the advent of foodservice, the meaning of it has. Technology has enabled an unprecedented level of convenience for foodservice consumers. With a few scrolls, taps, and clicks, they can get what they want, when and where they want it, with great speed. Digitating the market — mobile ordering, delivery, apps, order kiosks, the internet — is growing rapidly in foodservice markets across all CREST® countries. It has been the one thing that has grown consistently in this decade of good and bad news around the world. The foodservice markets in Great Britain and the U.S. were flat (or nearly) last quarter while traffic driven by mobile ordering was up 32 percent in Great Britain and 50 percent in the U.S. Although still a small behavior, mobile ordering is growing quickly and has a huge runway.
Digitization will continue to grow for the simple reason that consumers have come to expect it; and although it’s currently a really small behavior, we can be confident that usage won’t go below zero. What was considered handy yesterday will be considered cumbersome tomorrow from the consumer’s point of view.
The meaning of ease of ordering and speed will be redefined as technology improves and is applied. It’s no longer a choice for foodservice operators to offer digital ordering. Doing it well is table stakes.
I like everything about how global foodservice markets have embraced technology to improve the experience for consumers. Whether it’s mobile apps, cashless restaurants, drone delivery or pizza making robot trucks, the aggressive testing and deployment of new technologies says to me that, regardless of the challenges the foodservice sector faces, it is a vibrant marketplace that puts customer satisfaction front and center. If the chief benefit of foodservice is convenience, then enhancing it through technology can only improve its value proposition to customers and the economy!
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®