Comment: How to meet changing demand in US foodservice

In a guest column, David Henkes, vice president at foodservice analysts Technomic, outlines how operators are responding to changing consumer demand, outlining how manufacturers serving the sector can react.

Technomic projects the foodservice industry will add US $700bn dollars in annual sales over the next ten years in the United States, impacting restaurants, retailers, suppliers and distributors. The potential for growth in these sectors is staggering but largely dependent on companies’ ability to recognise changing consumer preferences and commitment to investing in innovation.

Customisation, freshness and sourcing three areas on which US foodservice operators are focusing, Technomic says

Customisation, freshness and sourcing three areas on which US foodservice operators are focusing, Technomic says

Right now, Millennials are driving trends in the foodservice industry – not only in the US but globally – creating a shift in how operators are presenting foodservice options, presenting challenges and opportunities for suppliers already serving (or interested in serving) the sector.

In the US, “build-your-own” fast-casual concepts with visible custom preparations (e.g. Chipotle, Blaze Pizza, etc.) are dominating growth (up 23.3% in 2014). Restaurant operators have taken the back-of-house preparation and put it in full view of the customer, allowing patrons control over what goes into their meal. As more diners seek out transparency in their foodservice experiences, operators who allow their customers’ greater control over their meal, even at full-service restaurants, will appeal to a broader demographic.

Service style directs a large part of consumer perception, but ingredients play an equally important role. According to Technomic’s Generational Consumer Trend Report, 68% of Millennials polled visit fast-casual brands once a month or more. And of all attributes measured, freshness is most likely to influence Millennials to purchase food or beverages at restaurants. In addition, and what should be of particular interest to fresh food manufacturers, 41% say they are even willing to pay more for foods and beverages that are fresh.

Beyond restaurant operations, retailers and grocery stores are beginning to capitalise on the fresh trend, most notably at US speciality food retailers like Whole Foods Markets, which has become a destination for retail meal solutions and fresh salad- and hot-food bars. These companies excel at exuding fresh perception by offering the consumer a completely transparent dining experience: the ingredients come from the store itself, meals are prepared onsite and guests can customise ingredients to their liking.

Fresh ingredients lead consumer demand, followed closely by the quality of products offered. Many factors can contribute to quality perception (e.g., freshness, premium ingredients, skilled preparation, etc.) that it should not be a stretch for foodservice companies to incorporate at least one – and they will be looking for suppliers to assist them in doing so. Most importantly, quality perception ties directly in with the brand’s sourcing practices. Sourcing can include everything from where and how the product was grown or farmed, to the use of artisanal and craft ingredients, to the perceived authenticity of the product.

A US chain that does a standout job of expressing the quality of its products is the fast-casual bakery café brand Panera Bread. It has always been a part of Panera’s branding to bake fresh bread throughout the day, but as the brand has grown and evolved, so has the chain’s commitment to quality. The company’s food policy statement includes three core tenets: clean ingredients (no artificial additives), a transparent menu (disclosure of nutritional content) and a positive impact on the food system. Panera is today one of the largest and most well-respected limited-service chains in the country and it continues to strengthen its brand identity by promoting its commitment to quality products.

Of all the key factors driving growth in the foodservice industry, innovation efforts will be a critical factor helping foodservice operators retool and reinvent their businesses. Here manufacturers can play a critical role, with operators often working with suppliers on innovation.

Whether it is technological apps and digital ordering platforms, inspired food offerings or a new service style, the foodservice industry must continue to innovate to maintain its customer base and garner new business. Clover Food Lab in the US is an example of a chain that continues to evolve and innovate with consumer demand. The brand has garnered a large following by serving daily sourced, made-from-scratch cuisine. Because of the nature of the sourcing, Clover updates is digital menu board daily and guests can download an app that gives approximate food-preparation times.

Consumer needs are no longer predictable; as a new generation takes the helm, foodservice companies that are sensitive to shifting consumer values will come out ahead. The same holds for their suppliers. As the next ten years play out in the foodservice industry, the ability to recognise growth opportunities now will be paramount to a company’s long-term success – and that of its suppliers.

To read the article, visit Just-Food


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