Consumers are returning to experiences, whether dining out or travel or live events. These once generated over $470 billion in annual consumer spending. Much of this spending ground to a halt over the past year. With rising vaccinations and falling case counts, will consumers once again seek out experiences as they did before, and can foodservice distributors capitalize on a return to the experiential occasion?
This session will examine the latest data on consumer spending, attitudes, and movement patterns to help multi-unit restaurant and hospitality operators anticipate the right moves to once again engage consumers
Operators - keep a finger on the pulse of consumer needs and pent-up demand for the experiential occasion.
Distributors - anticipate recovery for various segments of the operator landscape.
Manufacturers - collaborate effectively with supply chain partners through strategic insights into where growth can be found in the market
the footsteps of Millennials, Gen Z has taken a liking to chains such as Olive
Garden and Starbucks, proving everything is cyclical, according to Piper
Sandler's latest Taking Stock with Teens survey.
Institute took a
closer look at the survey and how this highly influential demographic could
impact the food industry. Key findings are noted below.
We spoke to
Mark Beal, author of DECODING GEN Z: 101 Lessons Generation Z Will Teach
Corporate America, Marketers & Media, and a professor at Rutgers
University, for more insight on Gen Z purchasing trends.
about following in the footsteps of Millennials and more about what I call, the
four P's, in food brands that Gen Zers love, purchase and advocate via social
media: purpose, partnerships, posts and -plus-ups," said Beal.
that Gen Z consumers are looking for brands with purpose, and that partnerships
with celebrities are also appealing to the age group. "McDonald's is
leading the way with partnerships with Travis Scott, BTS and Saweetie," he
Gen Z engages with brands that are active with social media posts, such as Wendy's.
like Wendy's that consistently post engaging content on what I call Gen Z's
"Big Three" Instagram, TikTok and YouTube, gain affinity
with this cohort," Beal added.
"plus-ups," with the majority of Gen Z still in college or high school, most
are looking for value. Beal noted that promotions such as Taco Bell's "Steal A
Base, Steal A Taco" World Series promotion each October is popular with the
Sandler survey looked closely at what was top of mind for Gen Z consumers:
What does Gen Z
care about? This fall, the survey found that Gen Z is particularly focused on
issues such as environment (15%) and racial equality (13%).
platforms do they engage with? Instagram continues to lead the pack in monthly
usage at 81%, followed by Snapchat at 77% and TikTok at 73%.
Where is their
money going? For male members of Gen Z, food is the top category of spend at
21%, while for females, it comes in second (21%), behind clothing.
comes to brands, Beal found that, of Gen Zers ages 13-24 across the U.S., 91%
said they will research a company or brand to ensure they operate in a
purposeful way before buying their product.
purposefully includes being environmentally friendly, supporting charities
important to Gen Z and taking meaningful action in response to the pandemic and
the Black Lives Matter awakening," he said.
Sandler looked at several food categories and what brands were most popular
with Gen Z. Here are some key stats from fall 2021:
Restaurants: Among average income teens, Chick-Fil-A
(15%), Starbucks (10%), McDonald's (5%), Chipotle (4%), and Olive Garden
(4%), reigned supreme, nearly the exact same from a year ago.
Snacks:Goldfish (12%), Lays (12%), Cheez-It
(10%), Doritos (7%), and Cheetos (5%), were found to be the top
snacks with Goldish taking the lead over Lays from a year ago.
Notably, over half of teens (53%)
said they typically prefer healthy snacks. However, when asked what their
favorite snack brand was, only 3% listed fruits, vegetables, or nuts.
Meat: Just 14% of
teens consume plant-based meat. Of those that do, Impossible Foods was
the brand of choice among 40% of consumers, while Beyond Meat followed
Of the 86% who do not consume
plant-based meat, 38% are willing to trying it, down from the 40% since spring
COVID-19 insights, 76% of teens plan to visit a retail store in the next six
months. Here are more key stats on shopping channels:
its top position with 52% of upper-income teens naming it as their favorite
is the most prominent channel for teens—with 30% of their time spent in this
channel. Food Institute Focus
May Have Changed Restaurant Dining Forever
The latest National
Restaurant Association overview of the industry indicates the pandemic may
have changed dining forever, and experts say many of the changes implemented as
survival tools are here to stay.
external pressures are forcing restaurant operators to invest in technology and
systems that improve their ability to manage the day-to-day business," Greg
Grambling, managing director at Solomon Partners, told The Food
Institute. "Weaker operators and those that lack scale are increasingly at
a competitive disadvantage, resulting in winners and losers and ongoing
consolidation through M&A."
assessment found restaurant revenue in 2020 totaled just $659 billion, down
from the $899 billion initially projected. Revenue for 2021 is projected at
are more pessimistic now about returning to normal than they were in the
spring, with those expressing hope falling from 70% in March to 32% in August.
September was just marginally better at 36%.
By 2030, the
NRA said, the definition of "restaurant" likely will change, and the eateries
will serve and employ a different demographic.
of the most significant findings in the report was though the widespread
availability of vaccines increased consumers' ability to dine on site, off-site
dining actually increased between August 2020 and August 2021, from 72% of
meals to 79%. Pent-up demand for on-premises dining fell from 83% in April 2020
to 47% last month.
takeout and delivery packaging proved key to surviving the pandemic, with fine
dining establishments forced to make the greatest pivot.
revenue began making a steady recovery from February, at $55.5 billion,
climbing to $71 billion in June but then leveling off in July and August at $72
operators listed their five top challenges in September:
59% (up from13% in September 2020)
Food costs 15%
(down from 67% in September 2020)
Sales volume 7%
recruitment figure is telling. Bureau of Labor Statistics figures show
restaurant employment fell by 41,500 in August, this despite a push by the
industry to increase wages, which rose by 6.2% in the last year. Just a handful
of states – Idaho, Montana, Utah and South Dakota – saw the level of restaurant
employment rise in August, compared to August 2019.
tips or minimum wage alone does not establish enough long-term employment
loyalty, which is why there is such a labor shortage," Baron Christopher, a
turnaround consultant and growth strategy expert at Red Baron Consulting,
as well as a self-described foodie and supper club cook, told The Food
"If your top
servers and bartenders were part owners [or sharing in profits] would they
leave or ghost you? No way. Would they steal from you or cheat customers? No.
Would they manage inventory flawlessly? You bet your ass!"
The cost of
food also is a factor. The NRA overview noted average wholesale food prices are
up 5.5% compared to last year, yet menu prices rose just 4.1% (grocery store
prices are up 2.3%), with the cost of fats and oils up the most, 38%.
of other commodities also rose:
Wheat flour 14%
vegetables fell in price, down 15%.
combination of higher labor and commodities costs are squeezing profit margins,
with casual dining and fast casual taking the biggest hit, followed by family
dining, quick service, fine dining, and coffee and snack.
dining and fine dining restaurants are reducing menu items to try to curtail
costs and deal with supply chain issues. Mike Paribello, vice president of
marketing at Grecian Foods Kronos, said one way to overcome menu
shrinkage would be for manufacturers to offer "kits" to allow restaurants to
prepare meals with fewer steps, thus cutting labor costs.
"One of the
changes that I've seen, and one that is hopefully permanent, is how the
industry has worked through the pandemic as a united group," Paribello said.
"This cooperation means more opportunities, and revenue, for everyone and helps
all deal with the rapidly changing economy and society."
restaurants are also facing customer demand for more outdoor dining options as
a result of the delta variant.
restaurants found themselves in ‘lucky leases,' with plenty of outdoor space,
windows, rooftops, and otherwise COVID-friendly architecture," Christopher
said. "Others were not so lucky, especially street-level or basement joints in
New York, Boston and elsewhere, with cramped interiors, no windows and zero outdoor
seating. Coastal fish taco shacks with dozens of picnic tables became goldmines
because of their open-air architecture and landscape design."
percent of consumers said they were more likely to choose a restaurant if
alcoholic beverages could be included in the order – this was especially true
of Millennials, 53% of whom said that would be a determining factor.
also were the most likely to support subscription services (71%), followed by
Gen Z (67%), Gen X (60%) and baby boomers (36%).
percent of consumers said restaurants rely too much on technology while 37%
said not enough tech is employed. How can restaurants better use technology?
To ease payment
and ordering 52%
customer service 51%
improve/increase takeout and delivery options 49%
To provide more
detailed information on offerings 44%
To provide more
entertainment options 29%
used technology most to look up menus online (57%) and to look up locations and
hours (45%). Just 18% of consumers said they used mobile payments with Gen Z
adults the biggest adopters (30%).
restaurants said they would go back to pre-pandemic, business-as-usual once the
pandemic is over with 68% (quick service and fast casual) to 76% (fine dining)
saying they would keep at least some of the changes implemented. Food Institute Focus
Place Expensive Bets Ahead of Winter Outdoor Dining
owners and operators are gearing up for another winter of outdoor dining.
had to scramble in 2020 to find tents and propane heaters, restaurateurs are
adding higher-quality permanent setups for the coming winter, reported The
Wall Street Journal (Oct. 7). Going even further, some are preparing for
outdoor dining to become a permanent option. Full Story
Make Expensive Bets
time to make arrangements than last year, restaurant owners are investing large
amounts of money on what they anticipate diners will want when temperatures
drop. In addition to outdoor equipment and décor, some owners are tweaking
menus to offer warm, well-executed dishes and hot-themed drinks.
are all a risk given what is going on in the foodservice industry, from supply
shortages to a lack of workers. However, owners are betting on the creative
setups being enough to lure more diners out of their homes.
for Permanent Street-Side Dining
restaurant operators are pushing to keep their outdoor dining structures around
permanently, reported CNBC (Oct. 3). Full Story
Francisco's board of supervisors already voted in favor of making dining
parklets permanent, while Atlanta and Philadelphia are among the cities
considering similar measures.
City is currently hammering out the details for more sustainable outdoor dining
rules following Mayor Bill de Blasio's decision to make its Open Restaurants
program permanent a year ago. The city's planning and transportation
departments launched a citywide public engagement process for design rules on
permanent outdoor setups, reported CBS New York (Oct. 6). The guidelines
will be released in the spring, and the application process is anticipated to
start late next year. Full Story
all are in favor of these types of measures. Some nearby retailers have filed
complaints about noisy outdoor customers and the loss of parking spaces.
have also complained about sanitation and the safety of outdoor dining
structures. Recently a Manhattan sanitation truck accidentally picked up a
street-side dining structure with a person inside, dragging it down the street.
Surrounding Federal Vaccine Mandate
only 9% of restaurant chains believe they have a program in place that won't
need to be changed under the Biden Administration's Path Out of the Pandemic
COVID-19 Action Plan, which will mandate vaccines or weekly testing at
companies with 100 or more employees, according to Black Box Intelligence.
as abuse towards foodservice workers abounds, some restaurant operators are
concerned about "policing" mandates for guests. Cities including New York
City, Los Angeles, New Orleans, San Francisco already have policies in place or
plans to require customers to show proof of vaccination to eat at restaurants
or participate in other indoor activities. Food Institute Focus
Coffee will open 25
locations in South Carolina. Full Story
Salad Chick will
open 50 locations in the Midwest over the next four years. Full Story
open 15 stores in the Tampa, Florida, market by the end of 2024. Full Story
Burgers, Fries & Shakes will open 15 new locations in Palm Beach
County, Florida, over the next 10 years. Full Story
will open 100 stores across Texas by 2029. Full Story
In a $220
million deal, SPB Hospitality acquired J. Alexander's Holdings,
which operates 47 upscale restaurants including J. Alexander's, Stoney
River Steakhouse and Grill, Redlands Grill, Overland Park Grill,
and Merus Grill. Full Story
Corp. set a new
target to cut global greenhouse gas emissions to net zero by 2050, from the
beef in its burgers to the light bulbs in its restaurants, reported Reuters (Oct.
5). Full Story
800 Degrees Pizza is set to open 500 ghost kitchens with Reef. It's part of a
major growth push for the pizza chain, which is also planning to launch
thousands of robotic pizza kiosks, reported Restaurant Business (Sept.
28). Full Story
Pizza chain Lou Malnati's has been acquired by investment
firm Meritage. The Chicago-style pizza business, which has 71 locations,
was valued at $500 million in the sale, reported Restaurant Business (Oct.
1). Full Story
Kitchen United acquired
software and ghost kitchen developer Zuul. The acquisition, Kitchen
United's first, is expected to help it expand into the New York City and New
York metro markets. Full Story
Burger King will test Impossible Foods' meatless
nuggets in several markets, making it the first fast-food chain to offer the
company's new chicken alternative. Customers in Des Moines, Iowa, Boston and
Miami will be able to try the plant-based Impossible Nuggets, reported CNBC (Oct.
6). Full Story
The Chefs' Warehouse acquired substantially all of the assets of Silver State Meats,
a Las Vegas-based beef, chicken, and pork provider.Full Story
The Chefs' Warehouse acquired select assets from Martin Preferred Foods.
The deal allows Chefs' Warehouse to continue building out in Texas and gives
Martin the ability to shift its focus to manufacturing value-added proteins. Full Story
Eggs Up Grill, a 50-unit chain in the
"better breakfast" segment, is breaking sales records.Same-store sales
for the Spartanburg, South Carolina-based chain were up 27% in September, and
the company is set to open 12 new locations this year, reported Restaurant
Business (Oct. 5). Full
Wendy's plans to tap data analytics and artificial
intelligence to speed up drive-through orders and home deliveries, anticipate
return customers' favorite meals, and even keep burgers from burning on the
grill. The chain announced a deal with Google Cloud to develop
advanced software capabilities that will use the tech giant's data and AI to
build voice-recognition software, computer-vision systems, mapping apps and
other digital tools, reported The Wall Street Journal.Full Story
to pay about $161 million to acquire Anthony's Coal Fired Pizza & Wings from
L Catterton. Full Story
on the Move:
Brands named Sabir
Sami to CEO KFC division and Dyke Shipp to KFC president. Full Story
Frozen Custard & Steakburgers named Laura Rueckel chief marketing officer and Erin Walter
VP of brand marketing. Full Story
Brands is promoting
David Graves to president of Pizza Hut U.S. Full Story
Aramark appointed Kim Scott
president and CEO of Aramark Uniform Services. Full Story
John Dunion to COO, Todd Huetinck to SVP of supply chain, and Brian Cassidy to SVP
of Carl's Jr. Operations. Full Story
SUPPLY CHAIN NEWS
Charter Vessels in Next Chapter of ‘Containergeddon'
congestion continues on both U.S. coasts and the situation won't be resolved
any time soon.
To deal with
the pandemic-driven slowdown of sea networks — or, as Steve Ferreira of
shipping consultancy Ocean Audit describes the concern,
"Containergeddon," — major retailers have begun chartering their own vessels to
transport goods from international markets.
at the Ports
globe, staggering port congestion shows no signs of slowing, with more than 50
ships waiting in the Pacific near Los Angeles last week and hundreds more
waylaid in China.
at the Port of Savannah, the third largest in the U.S., nearly 80,000 shipping
containers — 50% more than usual — are piled up to five high with goods moving
out almost as slowly as they were arriving, reported The New York Times
(Oct 10). Full Story
As the port
works through the backlog, more than 20 ships are stuck in the queue with some
anchoring off the coast in the Atlantic for more than nine days.
hundreds of containers have been left at the port for a month or more by
warehouses owners that are inundated with backstock from extra holiday
coming to get their freight," Griff Lynch, executive director of the Georgia
Ports Authority told The New York Times. "We've never had the yard
as full as this."
warehouses and empty shelves in stores also reflect the shortage of truck
drivers needed to carry goods to their next destinations.
To deal with
the sea network bottlenecks, several major retail players including Walmart
Target, Home Depot, Costco, and Dollar Tree, have begun chartering their own
ships, reported Reuters (Oct 7). Full Story
vessels is just one example of investments we've made to move products as
quickly as possible," said Joe Metzger, U.S. executive vice president of
supply-chain operations at Walmart, which has hired a number of vessels
ships, which offer valuable cargo space and can sidestep the container
terminals, will play a critical role in this second pandemic holiday season,
particularly for time-sensitive seasonal goods like that won't sell if they
arrive too late.
are also getting ahead of supply chain issues by advertising Black Friday
specials in October and relentlessly pushing for the holiday shopping season to
begin early. Food Institute Focus
Restaurant Traffic Worst Since March
restaurant sales were up 6.11% in September when compared to September 2019,
restaurant traffic was down 6.31%, according to Black Box Intelligence. The sales growth represented a 0.4%
improvement from August, but results were much weaker than July (8.2%) and June
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