According to a Recent Study/Survey … Mid-July 2016 Edition

by MRM Staff 15 Min Read

As part of our mission to be the go-to resource for on-the-go restaurant industry professionals, Modern Restaurant Management magazine (MRM) offers highlights of recent research. This mid-July edition is jam-packed with information to keep you in the know.

The Latest in POS

According to Starfleet Research, almost one-quarter (24 percent) of operators who have not purchased a new restaurant management and point-of-sale (POS) system within the past three years plan to do so in the next 12 months. Part of the impetus involves data security compliance. The growing need to accept new payment methods, including chip-and-pin cards and e-wallet apps, also ranks as high priority. So, too, are the benefits of migrating from on-premise installation to cloud-based deployment.

POS mobility, which enables tableside ordering and payment processing, is also influencing purchase decisions. For some, the biggest selling points are improvements in features and functionality. These are evident in the built-in inventory control and labor management capabilities as well as the marketing, guest relationship management and loyalty program management capabilities.

Just as important, according to the research, are the robust data analysis and performance reporting capabilities that many solutions now offer and which can help them better manage their operations and identify more opportunities for improvement.

The research is based on data collected from 162 qualified survey respondents across different types of food and beverage services organizations. The content was independently produced, providing for unbiased, fact-based information. The underwriters of this Smart Decision Guide include the following industry leaders: Agilysys, Infor, Matre’D, Oracle Hospitality and TouchBistro.

Starfleet Research released The 2016 Smart Decision Guide to Restaurant Management and POS Systems featuring expert insights and unbiased recommendations for deploying next-generation solutions to reduce costs, increase revenues and improve guest satisfaction. The 40-page guide is now available for complimentary download and can be accessed here.

Fast-Casual Growth Up

Results for Technomic Inc.'s annual Top 250 Fast-Casual Chain Restaurant Report are in, revealing another year of industry-leading growth for the fast-casual dining segment. In year-over-year results, cumulative sales for the Top 250 fast-casual chains were up 11.6 percent, a moderate decrease from the 13.5 percent growth rate observed in 2014. Aggregate unit growth also clocked in at 9.6 percent, essentially remaining level with the prior year's mark of 9.5 percent. Of the 250 chains featured in this year's report, over 90 had year-over-year sales and unit growth rates both in the double digits.

The major players in the segment laid a strong foundation for growth as each of the top 10 chains had year-over-year sales marks surpassing 6 percent. Also moving the needle were the menu clusters of pizza, chicken, and the specialty category. Fast-casual pizza, bolstered by the resounding success of build-your-own concepts like Blaze Pizza, MOD Pizza, and Pie Five Pizza Co., saw its sales grow at a blistering cumulative clip of 36 percent. Chicken-focused chains also excelled in 2015, growing as a group at a rate of 16 percent on the shoulders of brands such as Zaxby's, Wingstop, and Raising Cane's. The specialty category, encompassing a diverse mix of menu types, such as BBQ, ethnic, and health-focused, had a noteworthy year as well, growing its sales by 17 percent overall. Chains such as Dickey's Barbecue Pit, Zoe's Kitchen, and Freshii were just a few of the players making waves with their strong growth in this menu cluster.

"Whether it's for pizza, sandwiches, or salads, we have seen customization transition from being an amenity for consumers to becoming a necessity," says Darren Tristano, President of Technomic. "As evidenced partially by the notable explosion of build-your-own pizza chains, customizability has become a hallmark of successful fast-casual chains and is firmly in place as an expectation among consumers looking either to trade up from traditional fast food or down from casual dining."

The Technomic Top 250 Fast-Casual Chain Restaurant Report provides comprehensive chain rankings by sales volume and unit count, key trends and themes, growth-chain spotlights, and much more.

Review Feedback

Original Review, the first provider of in-house restaurant review technology for real-time diner feedback, released findings from a new national consumer survey of 500 men and women (21+) living within 20 miles of a major metro area, who have used a restaurant review site at least once. The online survey unveiled  feedback regarding restaurant reviews, service, complaints and promotions.

Key findings include: 

  • Nearly 70 percent of consumers have a significant distrust of restaurant review sites; more than 50 percent of respondents were aware of scandals around fraudulent reviews
  • 95 percent of respondents say they use review sites to search for new restaurants; over 70 percent of respondents are concerned if reviews are old or sparse 
  • 90 percent of respondents would participate in using a fast and easy way to comment on their dining experience if they knew that management would see it
  • A poor dining experience can result in the loss of a customer:
  • 92 percent indicated that they have stopped visiting a restaurant because of one bad experience with food
  • 71 percent of respondents have stopped visiting a restaurant because of one bad experience with service
  • 90 percent say they would likely return to a restaurant where they had a bad experience with food or service if they had the ability to communicate directly with management and felt their concerns were taken seriously and there was an effort made to make it better Unknown-2

Other notable findings include:

  • More than 84 percent of respondents appreciate it when restaurants reach out with specials and would give their email to receive special discounts and promotions
  • Nearly 60 percent of respondents are very likely to return to a restaurant if they are offered a gift on their birthday or anniversary
  • Appreciation is key: respondents agree (95 percent) that they feel more appreciated by a restaurant when they feel their feedback is taken seriously
Menu Prices Strategic Increases

Data from Technomic's PriceMonitor program shows that average prices have risen at some midscale, family style restaurants since the first quarter of 2015. For example, average prices at Denny's have increased roughly 4 percent across 13 U.S. markets since the beginning of last year: Cheeseburgers (+3 percent), Chicken Strips/Nuggets (+4 percent) and Steak & Eggs (+4 percent). Similarly, IHOP shows average price increases across the same markets, according to PriceMonitor data: Bacon Cheeseburgers (+3 percent), Chicken/Country Fried Steak (+3 percent) and Turkey Sandwiches (+4 percent).

Lower commodity prices have, in part, made these wage pressures more manageable. Since May 2015, wholesale prices have fallen year over year in some high-volume categories: Eggs (-50 percent), Beef/Veal (-21 percent), Processed Turkey (-8 percent), Fish (-6 percent) and Chicken (-5 percent). However, while commodity prices have dropped, menu prices seem to be increasing rather steadily. For the time being, this trend appears to help offset the effects of higher labor costs as many operators are giving back price increases through higher wages.

"With many operators serving lower- and middle-income groups that seek value in the form of dollar menus and combo meals, paying higher wages will ultimately result in higher menu prices," says Darren Tristano, President of Technomic. "Operators need to best assess where consumers are willing to spend more and take price increases that will be easily accepted [to] avoid losing customer visits."

Up to the Table

Ketchup and mustard along with other assorted seasonings have historically been the condiment grouping on restaurant tables, but mayonnaise, a condiment mainstay for oh-so-many years, was never part of the table top clique until now.  New packaging and debunking the myth that commercially-produced mayo needs to be refrigerated have helped to push it to the top…of the table that is, according to The NPD Group. Enterprising manufacturers found a way to package mayonnaise to fit in with the table top crowd and as a result, case shipments of table top mayo from broadline foodservice distributors to commercial and non-commercial foodservice outlets have had year-over-year gains, reports NPD Group.  

Case shipments of table top mayonnaise from broadline distributors to commercial and non-commercial foodservice outlets increased by 3 percent in the year ending April 2016 over an 18 percent gain same period year ago, according to NPD Group’s SupplyTrack®, a monthly tracking service that tracks every product shipped from major foodservice broadline distributors to over 500,000 commercial and non-commercial operators. Table top mayo case shipments to non-commercial foodservice outlets increased by 12 percent in the period over year ago. In the commercial segment, the full service segment had the largest gain in case shipments of table top mayonnaise among restaurant operator segments, with an 11 percent increase over last year.

The myth that commercially-produced mayo needs to be refrigerated for food safety reasons played a role in keeping it behind doors (refrigerator doors) rather than on the top of the restaurant table.  According to food scientists, commercially-produced mayonnaise, versus homemade, undergoes strict quality tests and, if anything, because of its acidic nature slows the growth of the bacteria associated with food- borne illnesses.  As long as it’s not contaminated with other foods or a dirty utensil, which could happen with any condiment and is one of the reasons protective tops were designed, store bought mayo does not need to be refrigerated (homemade mayo usually does).  Refrigerating commercial mayonnaise after opening has more to do with quality and extending its shelf life than it does with spoilage.

Purchasing Food Online: The New Normal?

Whether it's out of convenience, an effort to save money, or a necessity to get just the thing you're looking for, online shopping has become a staple for many, according to results of a recent Harris Poll®. And it's moved beyond just perusing for clothes and electronics; Americans are also searching for sustenance. In fact, 31 percent of Americans purchased food products online in the past six months. That works out to be 45 percent of online shoppers purchasing food on the Internet.

Some, however, have a greater proclivity for online food purchasing than others. The activity is most prevalent among:

  • Millennials (36 percent vs. 31 percent of average Americans);
  • College grads (35 percent vs. 26 percent high school education or less);
  • Parents (37 percent vs. 28 percent of those without kids); and,
  • Those in an urban setting (38 percent vs. 30 percent suburban & 25 percent rural).

What's on the menu?
 Looking to what types of products are purchased, no one category of food takes the proverbial cake. There's just an 8 point spread between the most popular and least popular product purchases, with snacks (20 percent) and non-alcoholic beverages (17 percent) at the top, and baking products and frozen foods at the bottom (12 percent each). 

But what is it that makes a food product a good fit for online purchasing? Americans say two main factors: something that's non-perishable or has a long shelf life (49 percent), or a product that's difficult to find in stores (48 percent). About 4 in 10 also say something easy to ship (39 percent), while 3 in 10 each say a product they don't need right away (32 percent) or something they like to stock up on (31 percent).

When it comes to the specific brand that ends up on their doorstep, online shoppers are split on whether they only buy brands they already use (32 percent), are willing to try new, but familiar brands (34 percent), or are willing to try any brand, even those unfamiliar (34 percent).

Out with the old?
 Not quite… Just 10 percent of all Americans (29 percent of online food shoppers) say the habit has replaced some or all of their routine grocery shopping trips. Online food purchasers are most often seeking something special that they can't find in their grocery store (52 percent). Another 24 percent use it as a crutch to replace critical items when they're running low.

Much like shopping in a traditional grocery store, everyone has their own method for online shopping. Virtual food shoppers are nearly split on whether they use a shopping list (51 percent) or simply browse (49 percent) for what will ultimately end up in their shopping cart. However, online browsers are more willing to try new brands (77 percent) than those who rely on a list (60 percent).

New Protein Sources

Global Edible Insects Market size is poised to exceed USD 522 million by 2023, as per the latest research report by Global Market Insights, Inc. Increasingly positive outlook on insect or bug consumption, as a healthy, alternative and sustainable protein source will drive demand.

Beetles dominated demand and were valued at USD 9.7 million in 2015. Key human consumption patterns involve the use of insects as a whole or in powder form for flour, protein bars and other snacks. Grasshoppers, locusts and crickets could see significant demand gains, estimated at more than 42 percent CAGR up to 2023. Pet foods have seen increasing use of grasshoppers as dried, whole or frozen form for fish, turtles, birds and pets.

Food products use cricket, mealworm and grasshopper powders, rich in protein content having all essential mineral and amino acids. Black soldier fly larvae and maggots considered as substitute in fishmeal feed in aquaculture industry, are consumed either whole or as processed meal. Grasshoppers, beetles, crickets, cockroaches, termites, scale insects, flies, bees, wasps and ants are food sources for poultry which may fuel edible insects market growth.

A robust and clearly define regulatory guideline for registration, classification and commercialization of insect-based foods will be critical for industry evolution. Presently, while bug-based foods are sold across the U.S. as well as EU, participants are somewhat in the dark with respect to labelling and selling guidelines.

Key insights from the report include: 

  • Global edible insects market size will exceed USD 522 million in sales by 2023, with estimated gains at 42 percent CAGR. Bug-based flour and energy bars together saw over 54 percent of all edible insects market share in 2015.
  • APAC, dominated by Thailand, China and Vietnam edible insects market size, was dominant and generated more than USD 12 million in 2015. Insect farming, low raw material cost and transportation cost are influencing industry growth.
  • Europe, led by UK, Belgium, France and Netherlands edible insects market share may see sales of more than USD 46 million by 2023. The EU allows use of insect feed for fish in aquaculture which may drive regional industry growth.
  • North America, led by U.S. edible insects market size, may grow significantly. Strong consumer awareness levels and acceptance will drive regional growth. Beetles and caterpillars together were responsible for more than 45 percent of regional sales in 2015.
  • Brazil and Mexico are largest LATAM markets, as insects have been traditionally consumed not only as a source of food but also due to their medicinal properties. Bug-based flour accounted for over 40 percent of regional sales in 2015.
Mobile Video Revenue to Reach $25 Billion by 2021

Worldwide revenue from mobile video will reach $25 Billion by 2021, according to the latest research by Strategy Analytics. Growth in mobile video revenue will be driven by advertisers seeking to reach an increasing audience of users that are consuming video on their smartphones and tablets. The report, "Global Mobile Video Forecast: 2010-2021", also predicts users of mobile video to more than double to 2 Billion users by the end of 2022, equal to 36 percent penetration among the global mobile users.

The report sizes the worldwide market for mobile video users and revenue on phones and tablets across major regions, from 2010-2021. Mobile video revenue is broken out by business model, including sell-through, rental, subscription and advertising funded.

Social platforms with audience scale, like Facebook, Twitter, WeChat and others are increasingly looking to video to increase user engagement rates while reducing churn, but will offer potential for monetization in future.

Flexitarian Lifestyle is New Trend

Innova Market Insights data shows a +60 percent rise in global food and beverage launches using a vegetarian claim between 2011 and 2015. Launches featuring the term "vegan" also rose to account for 4.3 percent of total introductions in 2015, up from 2.8 percent in 2014 and just 1.5 percent in 2012.

The trend towards reducing meat intake in the diet has led to the emergence of new opportunities to target vegans, vegetarians, non-meat eaters and non-red-meat eaters. New opportunities are emerging too for so-called flexitarians, who mainly eat a plant-based diet, but do occasionally eat meat.

"This trend represents a growing opportunity for high-quality meat alternatives, which is also being reflected in the 24 percent average annual growth in global meat substitute launches recorded between 2011 and 2015," reports Lu Ann Williams, Director of Innovation at Innova Market Insights.

Germany has been leading this trend, with high levels of innovative NPD in meat alternatives and meat substitutes, and 69 percent of consumers claiming to eat meatless meals once a week or more. The US is lagging behind on just 38 percent, although 120 million Americans do already eat meatless meals, so this must represent a major opportunity.

The trend towards flexitarian, vegetarian and vegan diets has accelerated the move toward the use of plant-based proteins as meat substitutes. The majority of meat substitutes are still soy- or wheat-protein based, but products are evolving with alternative protein ingredients such as egg, pea, ancient grains and nuts.

"Paradoxically, another key area of opportunity in meat substitutes may be in targeting meat eaters as much as vegetarians," notes Williams. "While many vegetarians may opt for a diet rich in vegetables and beans, meat eaters may turn to meat substitutes if the product is right. Instead of just finding alternatives, technological solutions also need to be focusing on the development of meat substitutes closely mimicking the taste and texture of meat products."

Summer Imbibing

According to The Harris Poll, nearly two thirds (65 percent) say refreshing is what they're most likely to look for in an alcohol beverage this summer.
Following refreshing, summer drinkers are also looking for fruity (38 percent), crisp (33 percent), and sweet (30 percent) beverages, with about a quarter also aiming for something citrusy (25 percent), or frozen/slushy (24 percent).

However, flavor preferences do differ by gender. Women are more than twice as likely as men to seek something fruity (51 percent vs. 24 percent), and they're also more likely to prefer:

  • Sweet (38 percent women vs. 22 percent men); 
  • Citrusy (29 percent vs. 20 percent); 
  • Frozen/slushy (34 percent vs. 13 percent); and/or, 
  • Bubbly (20 percent vs. 11 percent). 

Men, on the other hand, are more likely to desire something natural (23 percent vs. 14 percent  women) or handcrafted (18 percent vs. nine percent). While less popular in total compared to other characteristics, men also preferred spicy, smoky, or bitter drinks more so than women. 

When it comes to the summer season, there's no shortage of outdoor places to enjoy a drink. Nearly six in 10 regular drinkers (58 percent) are more likely to "day drink" in the summer than any other season and eight in 10 (80 percent) say they enjoy drinking outdoors at this time of year. An overwhelming nine in 10 adults who plan to drink this summer plan to do so outside in any number of settings, the most popular of which is at a barbeque (65 percent), followed by a picnic (43 percent), around a pool (41 percent), or at the beach (39 percent). About three in 10 will be tipping it back at a patio bar (32 percent) or sporting event (30 percent), with around two in 10 each looking forward to a beverage at a concert/theater (23 percent) or a festival – beer related (18 percent) or not (18 percent). Even outdoor locations that are fewer in number overall were mentioned, such as beer gardens (17 percent) and rooftop bars (14 percent).

Some locations are particularly popular among Millennials (aged 21-34), including:

  • BBQs (76 percent); 
  • Beaches (56 percent); 
  • Around a pool (56 percent); and/or, 
  • Sporting events (40 percent). 

Summer drinkers' favorite alcohol beverage to drink between May and August is beer, followed by spirits/cocktails, while some just want "something fruity" or "anything cold and tasty." Among those who drink each type of alcohol at least several times a year, substantial percentages of adults 21+ are more likely to enjoy the following during the summer compared to other times of the year:

  • Flavored malt beverages (47 percent); 
  • Craft beer in a bottle (45 percent); 
  • Hard cider (34 percent); 
  • Hard soda (33 percent); 
  • Hard seltzer (27 percent); and 
  • Rose' wine (20 percent; rises to 38 percent among females 21-34).
On-Premise Beverage Alcohol Consumption Drops

The on-premise beverage alcohol market was unable to capitalize on an improving economy, as consumption decreased for the third consecutive year.  According to the Beverage Information Group's 2016 Cheers On-Premise Handbook, sales of spirits, wine, and beer were all lower in 2015. Declines across all categories are not a new development, but 2015 saw a drop of 2.6 percent, the largest to date.

While consumption totals for the three beverage alcohol categories were down from 2014, spirits and wine actually experienced retail dollar sales growth over the past year. This development mirrors the overall trend of consumers purchasing more premium beverages. Spirits, which experienced a volume decrease of 0.3 percent, saw a sizable dollar growth of 2.5 percent, while wine (down 0.1 percent in volume) only increased slightly, by 0.1 percent in sales.

The beer category was down 3.0 percent in volume and 1.6 percent in dollars in 2015, but was still ahead in total sales compared to wine and spirits. The increase in dollar sales of spirits and wine was not enough to offset the decline from beer, leading to the overall on-premise sales decline. With so much of the beer industry dominated by the craft explosion, on-premise consumption has slowed; drinking now occurs more at home, driven by off-premise sales.

Label Confusion

Most Americans don't know the true meaning of food labels like "cage-free," "free-range," or "grass fed" and falsely believe that farm animals are protected by laws or independent oversight according to the results of a new national survey by the ASPCA® (The American Society for the Prevention of Cruelty to Animals®).  The survey also showed that, despite their misconceptions, approximately three quarters of consumers surveyed are concerned about the welfare of animals raised for food and are paying more attention than they were five years ago to food labels that indicate how those animals were raised.  

There are widespread misconceptions about what common labels actually mean for animal welfare: For example, 65 percent of consumers surveyed believe the term "free-range" ensures that the animal spent most of its time in a pasture. But in reality, there is no legal definition of "free-range" for pork, beef or dairy products. On poultry products, birds must have access to the outdoors, but the size, duration and quality of that outdoor experience is not defined.

Consumers are confused about how animal welfare is monitored on farms: Nearly half of those surveyed believe that an independent inspector verifies the health and welfare of animals living on most farms. Actually there is no independent inspection or oversight of animal welfare on the vast majority of farms – a fact that sparked concern in three quarters of survey takers.

Consumers are willing to pay more for products from farms that were audited to higher welfare standards, and desire more options:  Sixty-seven percent of consumers say they are likely to buy meat, eggs and dairy products bearing a welfare certification label with meaningful standards, even if it meant paying a higher price for those products. In addition, 75 percent of consumers would like stores to carry a greater variety of welfare-certified meat, eggs and dairy.

Refrigeration Getting Hotter

According to the latest research report released by Technavio, the global refrigerated warehousing market is expected to record a CAGR of more than 14 percent until 2020.

Global refrigerated warehousing market expected to record a CAGR of more than 14 percent until 2020.

This report, "Global Refrigerated Warehousing Market 2016-2020,"provides analysis of the market in terms of revenue and emerging trends. For calculating the market size, this report considers revenues generated from the commercial sales of stationery supplies to educational institutes.

Some of the other driving forces behind the growth of the global refrigerated warehousing market are as follows:

  • Rise in trade of frozen food and sea food products
  • Need to reduce food wastage
  • Growth of organized retail sector
  • Rise in trade of frozen food and sea food products

The demand for seafood continues to increase globally, and the significant population growth in China, India, and Brazil is an important demand driver in the frozen fish and seafood industry. Increased demand for seafood has led to a rise in its import and exports within countries, which required cold storage and transportation. China and Norway were the largest exporters of seafood in 2015. China's exports amounted to $20 billion, and Norway exported $10 billion worth of seafood products. While China exported to almost all countries, Norway's exports were mostly to European nations. Fresh salmon constituted the majority of Norway's fish and seafood exports. We estimate that China's exports will grow at a CAGR of 15.68 percent over the forecast period. The European Union was the largest importer of seafood, worth USD 26 billion. The U.S. and Japan followed, with seafood imports by the U.S. amounting to USD 19 billion in 2015.

According to United Nations Environment Programme (UNEP) and World Resources Institute (WRI) about one-third of the food produced every year is wasted. Fruits and vegetables wasted about 25 percent at the production level. In addition, perishable food products are often exposed to fluctuating temperatures during transit and handling, which adds to the wastage. The global population is expected to increase at a rapid pace in the future, which is expected to increase the demand for food products. Based on statistics, in 2015 the number of people suffering from malnutrition or starvation was about 956 million worldwide. Therefore, because of the increase in the global population and the food wastage, the need for effective cold chains is expected to increase substantially in the future. Therefore, the increased need to reduce the food wastage is one of the key drivers contributing to the growth of the market.

Organized retail refers to modern retailing wherein a licensed retailer sells several goods belonging to different categories. It is the modern form of retail or chain stores that are owned or franchised by a central store or entity. The stores are organized and use better store systems technology, including better refrigeration, than traditional/unorganized retail stores and provide consumers with convenience and foods that are safe to consume. Organized retail formats include supermarkets, hypermarkets, forecourt retailers, discounters, and convenience stores. Nowadays, an increasing number of consumers are purchasing grocery items, including frozen and chilled food from organized retail stores. APAC is witnessing a steady increase in the number of modern retail stores. With the growth of the organized retail sector and the increased consumer demand for frozen and chilled food, demand for cold chains has increased and is expected to increase further during the forecast period.

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