DMA's own Matt Kot joined the panel “How Technology and Information Changes Everything” at Presidents Conference last Tuesday to share the impact DMA’s technology changes will have on customers’ and distributors’ futures. A panel of experts discussed what is already starting to happen and what is right around the corner and included leaders from Arrowstream, Cut+Dry and Kinetic12. Kot is a DMA veteran who now leads the DMA Advantage team overseeing analytics and technology solutions.
Pat Mulhern was honored last week with an Industry Sparkplug award for his long-standing support of IFMA, representing the supply chain community. The IFMA Sparkplug award honors individuals who have made significant impacts on the association’s programs through their board and/or committee involvement. He and his team have been instrumental in contributing insights and thought leadership to IFMA’s membership from speaking at conferences to providing distribution insights to IFMA’s Go-to-Market Planning Program subscribers. Please leave a message congratulating Pat here to show your support.
Themes for Foodservice from DMA Live in Texas
challenges, diverging dining hours, and burgeoning menus were among the
foodservice themes explored by panelists at info sessions presented by Distribution
Market Advantage (DMA) as the organization hosted its Live in Texas event
in Arlington between Oct. 23 and Oct. 25.
stakeholders from the foodservice industry including distributors, operators,
and suppliers convened at Live! by Loews for three days of meetings, networking
opportunities, and learning sessions. The Food Institute was invited to attend
and came away with three major takeaways for the foodservice industry.
Birds and Late-Night Diners
traditional dinner hour is changing, according to R.J. Hottovy, head of
analytical research for Placer.ai. He noted more and more, Americans
were becoming early bird diners or enjoying fast-food fare at later hours.
by Hottovy indicated visitation growth for various fine dining restaurants
between the hours of 3:00 p.m. and 7:00 p.m. while visitation dropped for the
previously popular 8:00 p.m. to 10:00 p.m. time range.
On the other
hand, many diners were turning to quick-service restaurants for food in the
later hours of the day. Placer.ai data found growth in the late-night period
(defined as the 10:00 p.m. to 4:00 a.m. timeframe) growing for a variety of
restaurant operators, including Burger King, Wendy's, McDonald's,
Taco Bell, and Jack in the Box.
showed growth in the breakfast (4:00 a.m. to 10:00 a.m.) and afternoon snack
(2:00 p.m. to 5:00 p.m.) time periods among the five examples, as well, with
only the dinner period (5:00 p.m. to 10:00 p.m.) showing any declines.
Remains an Issue in Foodservice
president of sales Americas at Datassential, noted that although the
unemployment rate was normalizing to pre-pandemic figures, the foodservice
industry was still contending with labor issues related to wages, skill level,
To that end,
she said 65% of operators had reported they were hiring less-qualified staff
for operations in the current environment when compared to historic norms.
she shared data on understaffing levels by job position and function within
restaurants. Of note, 24% of restaurants said they were significantly
understaffed with prep, line, and short-order cooks; 43% said they were also
slightly understaffed at these positions.
At the front
of the house, there was significant understaffing for both the
busser/barback/food runner positions (12%) and servers/bartenders (12%).
Twenty-seven percent of restaurants said they were slightly understaffed for
Item Counts, LTOs Still on the Rise
principal and head of partnerships with Technomic, explained that menu
item counts were once again on the rise in the foodservice industry.
data showing a 5.2% increase in menu item counts between first quarter 2018 and
first quarter 2023; he also highlighted a 2.7% increase between first quarter
2022 and first quarter 2023 for menu item counts.
limited-time offers (LTOs) were on the rise. Technomic tracked 20,722 LTOs
across limited-service restaurants, full-service restaurants, and convenience
stores in 2022, which was up 2.2% from the year before. More strikingly, these
figures were up 45.4% when compared to 2018.
that menu innovation would likely draw in more consumers, but that newer items
on the menu could create distribution challenges, especially as menu complexity
Trends for 2024: Artisan, Crustless and Value Pies
appetite for pizza has reached eye-opening proportions.
survey by Caulipower Pizza indicated 98% of Americans eat pizza.
Meanwhile, a recent poll produced by talker.news revealed 74% of
Americans would be satisfied eating pizza for any meal of the day.
pizza. It's that simple," said Jim Metevier, the CEO of Mountain
"Pizza is completely customizable to individual flavor preferences.
... It's quick, delicious, and portable," Metevier told The Food Institute.
Trendincite recently noted that the frozen pizza
category increased by 10.7% from the past year, reaching sales of $6.83
billion. And numerous pizza innovations have been unveiled in recent months,
apparent in grocers' freezers and at chain restaurants.
The new year
promises more unique products as R&D teams consider every pizza concept
we'll see innovations around crusts – stuffed, flavored, etcetera – that will
grow in popularity, and we'll see artisan takes on pizza becoming an even
larger part of the frozen pizza segment," Metevier said.
Latest Innovations Offer Flavor & Value
MOD Pizza recently added a "folded" Pocket Pie
to its menu. In a similar spirit, Conagra has introduced three new Banquet MEGA
Cynthia Ottavio, director of menu innovation at Donatos, said "In 2024
we believe the ‘sweet heat' trend will gain even more popularity. Food trends
have become even more widespread thanks to short-form videos on social media,
and hot honey is no exception.
or the blend of spicy and sweet, is ideal for pizza because it gives an extra
kick to each bite but isn't overwhelming," Ottavio said.
also developing new pies with distinct crusts. California Pizza Kitchen
has added Croissant Inspired Thin Crust Pizzas with flaky layers, according to
pizza can be a labor-intensive product, the food industry is increasingly
turning to robotics to provide solutions. Donatos, for example, is testing
automated machines that distribute sauce and toppings on pizzas in addition to
a slicing machine that cuts pies.
Additionally, DiGiorno is testing Pizza Kiosks at locations like Walmart
in Colorado. The kiosks are essentially large vending machines with an oven
and premade, 10-inch pizzas that take roughly three minutes to prepare, Trendincite
In a period
of inflation, businesses must be mindful of consumers' economic concerns, too.
2024 will see consumers continue to face economic uncertainty and look to
stretch financial resources as far as they can," Metevier said. "As a result,
we'll see a focus on bundling and building value." Food
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Future of Restaurants: Data and Insights for 2024 and Beyond
consumers desire in 2024 when they eat out? Value and convenience, mostly, and
though those are universal qualities most any time, an uncertain economic
outlook and increased food prices have seen consumers slowly shifting their
habits after re-emerging in 2022 into the general market and enduring inflation
Hottovy, Head of
Analytical Research at Placer.ai, recently sat down with The Food
Institute to discuss what's coming in 2024 in the restaurant sector.
saw a strong start in both retail and overall dining spend from consumers
compared to the year before, but as the year has continued, those trends are
reversing—consumers are eating out less, staying in more, and preparing for the
winter amid an uncertain economy.
starting to see some normalization," Hottovy said, "as some of the spending in
restaurants driven by the holidays is now leveling off a bit."
September, year-over-year spending in both categories is around -5%. Spread
among different restaurant categories – QSR, Fast Casual, Specialty Coffee,
Casual Dining, and Fine Dining – monthly visits has swung almost 20% except in
the specialty coffee category, though this may have more to do its annual
appeal and the return to the office for many consumers.
want to stretch budgets," Hottovy said. "Visitation trends holding steady show
a big change in consumer behavior; fast casual is thriving, possibly due to the
value and ease of mobile ordering combined with takeout. It was already
happening pre-pandemic but has now accelerated and is here to stay."
Keys to Understanding Contemporary Visitation Trends
shifts?" Hottovy asked. Here are some of the answers:
Return-to-office remains below pre-pandemic levels but year-over-year gains
have helped, especially in specialty coffee and fast casual.
– Chains employing
suburban real estate strategies have been winners, and many companies are
looking with hungry eyes toward urban residential areas. Rural and suburban
population densities have been increasing since 2018 as urban centers are
has done a good job with this and it's just fascinating," he added.
"Historically, groups have stayed away from these markets due to lower volume
but previously unexplored markets are paying dividends."
Value – Consumers remain price-sensitive and are exploring more channels
to find values. Across the broader food category (restaurants, grocery, dollar
stores), people are shopping in different channels more than ever before.
They're trialing different locations and brands, and as inflation pressures
the common consumer, many are shifting toward dollar stores, ALDI,
and value chains to stretch their budgets. Private label and branded products
are playing an increased role in that as well.
post-pandemic visitation gains went to larger players given their scale.
Eatertainment (Dave & Buster's, Top Golf, Main Event
Entertainment, etc.) are doing well. Eatertainment gains naturally occurred
post-pandemic and now they're even higher with 25-30% increased foot traffic.
unique experiences are making up ground," he said. "Experiential concepts are
really doing well. Olive Garden and Outback-type restaurants are doing well,
particularly in the past 12-18 months."
Have We Learned?
these factors point to a value-driven consumer willing to shift brands and
modes of eating in order to have an experience, feel good, and make their
dollars work. Compared to Q3 2022, Fast Casual and Quick Service restaurants
have seen phenomenal numbers:
Casual category is led by:
Wingstop – +24.9%
Cane's – +20.7%
Express – +9.7%
Service category is led by:
Hawk – +9.7%
Roadhouse – +3.7%
Lobster – +3.7%
Breakfast, and Bakery, Hottovy pointed out Dutch Bros. Coffee with a
whopping +24.2% increase YoY, followed by Starbucks at a distant +6.4%
and Peet's Coffee & Tea at 1.8%.
speaking, more suburban openings for fast casuals is evident," Hottovy said.
"Fast casual is re-emerging and asserting itself despite blurred lines with
also eating earlier. Six p.m. may be the new 8 p.m. as a swift change toward
late afternoon / early evening dayparts is evident across categories.
Reservation times are moving up coupled with less visits in the late hours and
more from 3-7.
[Placer.ai] think it has a lot to do with return-to-office and more flexibility
with dining out," Hottovy said.
dining is experiencing a resurgence as well. Consumers eating at the 10:00 p.m.
or or later daypart over the last several quarters is increasing, particularly
at Taco Bell and Jack in the Box."
summed up the previous three years as such:
2021 – The
year of shelter
2022 – The
year consumers make adjustments and re-emerge
2023 – The
year of inflation
2024 – The
year of innovation
is key next year," Hottovy concluded.
"Consumers want value and convenience. Automation is hitting its stride
after almost a decade of hype and slow implementation."
today's automation not only saves labor but can increase food quality.
Sweetgreen's Infinite Kitchen concept in Illinois has a fully automated
assembly line, and that location has 50% higher visits than legacy locations.
Meanwhile, Chipotle is testing conveyor-type options for salads and bowls.
He also believes the suburban advantage will continue to play out, as well
as holiday and experience-driven meals around Easter, Mother's Day, and certainly
the upcoming holidays. Event-based spending will continue into 2024. Food
Pizza Hut introduced a new $7 value menu. The
$7 Deal Lovers Menu rivals Papa Johns and Domino's as more brands
push value offers, reported Restaurant Business (Oct. 23). Full
Domino's is giving away $1 million of free
pizzas to people who are paying their student loans again. The company is
giving out codes for one free medium two-topping pizza. The promotion follows
the successful "Emergency Pizza" promotion as Domino's tries to rebuild sales
after a difficult two years after the pandemic, reported Restaurant Business
(Oct. 26). Full
Barrel has partnered with superstar Dolly Parton to be the face of "Rewards
That Rock," a campaign honoring the brand's recently launched rewards program.
To celebrate the partnership, Cracker Barrel and Dolly are giving rewards
members the chance to win one of 667 custom-designed Dolly Rockin' chairs. Full
Cane's plans to
borrow $500 million from the junk-bond market to refinance its debt, becoming
the latest eatery looking to address its upcoming maturities. Initial price
talk on the senior unsecured notes calls for a yield in the high 9% to 10%
range, reported Bloomberg (Oct. 30). Full
chain Potbelly has signed a 40-unit franchise deal in Florida and Ohio.
The chain, which current has 430 locations, is pushing both refranchising and
new-unit franchise growth, reported Restaurant Business (Oct. 30). Full
Starbucks will add 17,000 locations by 2030
and hopes to cut $3 billion in costs. The announcement is the latest in the
brand's "reinvention" strategy laid out by former CEO Howard Schultz as the
Seattle-based coffee company beat Wall Street estimates for quarterly earnings
and revenue, driving shares up 9.5%, reported CNBC (Nov. 2). Full
Chili's efforts to turn around sales and foot
traffic are working. Year-over-year traffic was positive in October as the
chain remains focused on core menu items, improved service, less discounts, and
more advertising. Chili's prices are 8.8% higher than they were a year ago as a
barrage of TV advertising and revamped chicken tenders are attracting more
customers, reported Restaurant Business (Nov. 1). Full
KFC unveiled a new holiday bucket design
and matching holiday merch collection. The fried-chicken chain is also serving
up two new menu items this November: a Mac & Cheese Wrap and the Colonel's
Homestyle Brownie. Full
Caesars will launch
new Detroit-style Slices-N-Stix across New York City locations. The combo
includes two slices of Detroit-style deep-dish pizza and four pieces of Italian
Cheese Bread. Full
plant-based restaurant chain Stalk & Spade has unexpectedly closed
all locations. The restaurants, from the owner of the Crisp & Green
salad chain, said the "unpredictable landscape" of the plant-based industry was
a key factor, reported The Minneapolis Star-Tribune (Nov. 2). Full
Food Lab, once
considered a hot, plant-based restaurant concept, has declared bankruptcy. The
12-unit Massachusetts chain sought debt protection after financing froze just
as it kicked off expansion plans, reported Restaurant Business (Nov. 6).
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Edible Insects the Future of Alternative Protein?
insects have all the makings of a smash hit in the alternative protein sector.
Insect protein is nutritious—a good source of essential minerals—and
sustainable, too. It requires significantly less land and water to produce than
conventional livestock and can be raised on organic waste from food processing.
problem? U.S. consumers might not want to eat bugs.
it take for edible insects to become a popular protein in the U.S.? The Food
Institute tapped Alexandra Kazaks, PhD, RDN from the Institute of
Food Technologists' Nutrition Division, to consider this question.
parts of the world, entomophagy—the practice of eating insects—is a
well-established tradition," said Kazaks. "However, in the United States, most
people view insects as pests or carriers of diseases, and the thought of eating
them is met with skepticism, repulsion, and a considerable ‘ick' factor."
true—many U.S. consumers are grossed out by the thought of eating insects.
Mainly because it's a significant departure from the taste, texture, and
appearance of the foods they're used to. This feeling is akin to neophobia—a
fear of the unfamiliar or unknown—and often creates an aversion to new foods.
"To address this unfamiliarity, it would be helpful to introduce insect-based
products in a way that is not intimidating and emphasizes their nutritional
benefits, their potential as versatile, inconspicuous ingredients in food
products," explained Kazacks.
the intimidation factor, safety is another chief concern for many American
consumers, especially because people often associate insects with the spread of
disease. However, just like any other protein, insects are completely safe to
eat when raised in a sanitary environment, and according to Kazaks, can be even
safer than conventional livestock.
is that consumers who are allergic to crustaceans should steer clear of insect
protein. "Prioritizing allergen labeling related to edible insects is essential
for building consumer confidence," said Kazaks.
Intrigue Among U.S. Consumers
research shows that there is a growing curiosity about insect-based protein
products among some consumers," explained Kazaks. "This is driven by factors
like sustainability and health consciousness."
illustrate where consumers currently stand on the subject, Kazaks shared
findings from a recent study of U.S. adults which assessed their acceptance of
mealworms as an edible insect, as well as their previous experience with insect
because familiarity breeds acceptance, prior exposure to insect protein
significantly impacted consumers' comfortability with mealworms. "Those who had
previously consumed insects showed higher willingness to buy mealworm
products," said Kazaks. And notably, "more than one third of participants had
another big determinant of how consumers felt about edible insects. "Younger
adults had significantly higher willingness to buy than adults aged 35 or
older," Kazaks explained. This could signal that insect protein will continue
to gain acceptance in the U.S. as younger consumers grow into their buying
power—but only time will tell.
It is also
worth noting that mealworm protein was most appealing when served in protein
bars and restaurant dishes, indicating two potential entry points on the path
to consumer adoption. "The opportunity for familiarity and exposure is
increasing as there is growth of new products featuring insects in the
marketplace, and [edible insects are] featured in trendy restaurants across the
country," said Kazaks.
Insects as Future Food
products show promise in the U.S., but industry adaptability to changing
consumer preferences and regulations is crucial to realize their potential,"
Food and Drug Administration (FDA) has made some progress establishing
regulations for insect-based food products, but much is still left open to
interpretation. Presently, insect protein falls under the umbrella of the FDA's
general human and animal food regulations. The regulatory organization has
commented that "bugs/insects are considered food if that is the intended use."
regulations become more defined and standardized, it will create a more stable
and predictable environment for producers, encouraging further growth in the
industry," noted Kazaks. "The right mix of innovation, education, and policy
support can help achieve a more sustainable and diverse food future."
sustainable nature of insect protein could end up being the key to consumer
adoption over time. "As concerns about the environmental impact of food
production grow, more companies and entrepreneurs are likely to invest in
insect farming," said Kazaks.
"In a world
where consumers are increasingly receptive to exploring a variety of food
sources, insect products are positioned to claim a substantial presence
alongside plant-based and cell-based alternatives," she said. Food
Sales, Traffic Continue Decline in September
sales were up 0.6% on a comparable dollar sales basis even as comparable
traffic slid 3.3%, according to Black Box Intelligence by guestXM.
Comparable sales were up 1.5% in August and 2.8% in July.
In fact, the
sales growth rate was the softest experienced by the industry in over two years
– the last time the restaurant industry saw this type of growth was February
2021, the last month of the pandemic period in which the industry lapped pre-COVID
check growth is decelerating on a year-over-year basis, according to Black Box
Intelligence. Consumers continue to spend more on average as they go out to
eat, but the rate at which the check has increased is moderating significantly
in recent months. Full
same-store sales at McDonald's grew 8.8% as U.S. same-store sales grew
8.1%; McDonald's revenue climbed 14% this quarter as price hikes boosted sales
above Wall Street estimates, reported CNBC (Oct. 30). Full
Hut sales in the U.S. diminish Yum Brands' revenue. Pizza Hut's
same-store sales growth was weaker than expected, driving down Yum Brands'
earnings despite net sales rising 4% due to strong performance from KFC
and Taco Bell, reported CNBC (Nov. 11). Full
Starbucks' quarterly earnings beat Wall Street
estimates as domestic same-store sales rose 8%. In China, its second-largest
market, same-store sales rose 5%, all fueled by a robust fall menu and
premiumization of its top drinks, including the 20th anniversary of the Pumpkin
Spice Latte, reported CNBC (Nov. 2). Full
posted same-store sales of 7.2% for its Burger King division in the most
recent quarter, falling below estimates of 8.71%. The company noted weaker
household budgets are forcing customers to pull back on restaurant food,
reported Reuters (Nov. 3). Full
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