Food Industry. Facts. Insights. Consulting.
Selected Foodservice Industry Innovation Forces Prepared by:
November 2009 Project #13509
Introduction
Who We Are Consulting firm dedicated to foodservice Tracking industry performance for 40+ years Market assessments and opportunities for
Manufacturers Ingredient suppliers Operators Distributors Associations
Ron Paul, Founder
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Menu Development Activity Most Active Menu Categories At Top 250 Chains in First Half 2009 716
369 236
230 103
Entrees
Appetizers
Sandwiches
Note: Non-alcoholic beverages only Source: Technomic Menu Monitor, First Half 2009
Desserts
Beverages
4
Seafood Tops Center of Plate
50
Shellfish
Proteins Added by Top 150 in First Half 2009
101
104
Fish
63
Seafood
18 Chicken
Beef
Legal Sea Foods’ Spice-Crusted Salmon, Grilled Fruit & Mushroom Quinoa
Pork
5
Source: Technomic Menu Monitor, First Half 2009
Innovation Forces Are Numerous
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Communication / Technology Innovation
Technology Enables New Approaches
Web-based meeting planning
Touchscreen ordering kiosks
iPhone ordering application
Sheetz Bros. Coffee truck
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Bottom Line: Social Media Won’t Wait
Number of Years it Took to Reach an Audience of 50 Million
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Source: Facebook as cited by money.cnn.com, March 11, 2009
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Naked Pizza Tweets Success Tracks Twitter-driven sales at the register ď ˝ An April 23rd Twitter-exclusive promotion accounted for 15% of sales for the day
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Tweets to Eats
+ VERDE: 6PM-9PM@UCLA Gayely & Strathmore; 10:00PM2AM@The Brig - Abbot Kinney and Palm in Venice
= ROJA: 12PM-3PM@Hannam Chain 2740 W. Olympic Blvd in K-Town; 7:30PM-9PM@Santa Fe Springs - next to the secret warehouse
KOGI SPECIAL! Korean Burger w Chile Salted Watermelon! @ ALL LOCATIONS! 3:06 PM May 13th from txt
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Kogi’s Korean Short-Rib Tacos
Sesame-Chili Salsa Roja, Korean Chili-Soy Vinaigrette, Cilantro-Green Onion-Lime Relish, Crushed Sesame Seeds, Sea Salt, Radish & Lime 12
Web 2.0 Upside + Downside: Give Up Some Control Of Your Brand This new era will demand more “crisis management� skills
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“Recycling” Innovation
Burgers Are the New….Burgers Burger Development Trends 2006 - 2009 Hamburger
Cheeseburger
Specialty Burger
2006
110
143
165
2009
100
136
215
% change
-9%
-5%
+30%
Ave. Price $
$7.16
$8.18
$8.80
% change vs. ‘06
10%
15%
14%
Ave. Price $
$3.58
$4.04
$4.93
% change vs. ‘06
15%
19%
6%
Menu Items
FSR Menu Pricing
LSR Menu Pricing
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Source: Technomic Menu Monitor, First Half 2009 Base: Top 250 Chains
Slider’s Are HOT
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Burger Wars Continue
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Beef Still Leads Burger Proteins 28%
Ground beef
31% 15%
Angus
19% 7%
Chicken
4% 4%
Sirloin
3%
Turkey
Fish/Seafood
Bison
7% 2%
Top 250 Casual Dining FSRs Leading/Independent FSRs
2% 1%
Source: 2009 Burger Consumer Trend Report, Technomic Base: 150 incidences Casual Dining Emerging & Independent FSRs, 373 incidences in the Top 250 CDR
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The Pool Is Getting Crowded Burger chains expanding The Counter, 5 Guys, Smashburger, etc. Elite chefs enter the game Sodexho introduces The Original Burger Company
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Survival Innovation
Across Income Groups, Many Consumers Have Felt a Direct Impact “Has the economy had a direct impact on you?"
“Yes” by Income <$35,000
Yes 70%
No 30%
74%
$35,000-$59,999
71%
$60,000-$99,999
70%
$100,000-$149,999 $150,000+
59% 66%
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Price Has Been Increasingly Important to All Groups In 2009, consumers will:
Total
TQ*
Rely more on moneysaving options
71%
70%
Seek out special offers
64%
62%
Order less expensive items
33%
31%
Visit less expensive restaurants
29%
30%
INSIGHT Insight
*TQ = Top Quintile household income (median after tax income = $158,388). This group represents 40% of all FAFH spending! 22
Demonstrating Value and Affordability Absolute price points “Barbell” pricing Happy Hour migrating beyond the bar Free! offerings
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Lower Price Points Demonstrate Value “Value menus” evident in all segments
Small Plates, Small Prices
Big Eat, Tiny Price
Business Lunch Menu
Lower prices on core menus
Reductions on 100 Items
New Items for $5
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“Barbell” Pricing: Balancing Premium and Lower-Priced Options Discounting common drinks, raising prices for specialty options
Premium options in test balance “Why Pay More?” menu Wines by the glass in three portion options 25
The Food-Centric New Happy Hour $2 snacks in afternoon
Penny perks for sides or extra entrée
Half-price smoothies from 5-6
Kids eat free on family night
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“Casualization” of Upscale Dining through Comfort Foods Next evolution after deep discounting? Prix-fixe menu; new ideas about future of fine dining New burger menu High-end celebrity chefs shifting to casual dining 27
â&#x20AC;&#x153;What is the long term consequence of deep discounting?â&#x20AC;? Full Service Steak Restaurants Quarterly Sales Reports Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
-9%
-9%
-19%
-22%
-18%
Flemings (Outback)
-10
-20
-20
-22
Longhorn (Darden)
-5
-6
-5
-7
-6
Morton's Restaurants
-8
-12
-24
-26
-17
Outback Steakhouses
-8
-10
-8
-10
Ruth Chris Steakhouse
-7
-19
-19
-23
-24
Stoney River
-8
-18
-17
-20
-17
Capital Grille (Darden)
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Mandated Innovation
Mandated Menu Disclosure Gaining momentum and support NRA supports LEAN Act Overrides various local mandates Provides protection from lawsuits
Jury is out on the real impact
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NYC Consumers Surprised by Calorie Counts; Higher than Expected “Have you been surprised by the calorie counts?”
“Are they …”
Base: Have read calorie information = 203
Base: Surprised by calorie content = 163
Yes 80%
No 20%
Higher than expected
89%
Source: Technomic Economic Impact Update, August 2009 Base: 300 NYC residents
10%
About what expected 1%
Lower than expected
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Operators Investing in Health & Nutrition in Myriad Ways Special equipment for fortified tea Kids’ menu: broad-based overhaul to enhance nutritional profile
Iced tea with probiotics
Mediterranean options
Emphasizing “pure” options 32
Key Takeaways
Key Takeaways Innovation sources are many – challenge your cross functional teams to get engaged Some sources of innovation are unavoidable; get ahead of the wave as early as possible Menu disclosure Technology
Find ways beyond core menu pricing to show your value How can you stimulate demand in this environment while balancing profitability and customer frugality? 34