According to a Recent Study/Survey … End-of-May 2017 Edition

by MRM Staff 25 Min Read

This  End-of-May 2017 edition of Modern Restaurant Management (MRM) magazine's research round-up includes Open Table's survey on what guests do and don't want from tech at the restaurant table, an AMEX survey on how both restaurants and guests are embracing technology, pastas plummeting popularity, millennials beefing up brands, top growth barriers and beer industry statistics.

Millennials and Brand Equity

Millennials are beefing up restaurant brands, awarding higher than average brand equity to Coffee and Quick Service, Casual Dining and Chicken restaurants, according to new research from The Harris Poll's 29th annual EquiTrend Study, which measures brand health over time. The study, which reveals the strongest brands across the media, travel, financial, automotive, entertainment, retail, restaurant, technology, household and nonprofit industries based on consumer response, also indicates that Fast Casual Mexican and Pizza chains have notably lower brand equity among baby boomers.

According to Harris Poll's research, when analyzing restaurant brand equity by generation, Coffee and Quick Service Restaurant brand equity is nearly 5 points (+4.7) higher among millennials compared to baby boomers, while Casual Dining and Chicken restaurants are each four points higher. Conversely, Pizza (-8.0) and Fast Casual Mexican (-7.6) restaurants see a marked gap among baby boomers, pushing the overall equity for these restaurant categories below average. Since brand equity tends to resist movement, the equity gains and declines among restaurant brands is significant.

"Restaurants continue to adapt to the millennial lifestyle, and advancements in ordering methods such as Starbucks' mobile app and Chick-fil-A's 'Mom Valet' are likely influencing millennials' higher brand equity scores," said Joan Sinopoli, vice president of brand solutions at The Harris Poll. "While the millennial dollar is powerful and attractive—and many are clearly enjoying their rising disposable income— baby boomers already have the cash to spend on meals out and need to be courted. The baby boomer versus millennial gap among pizza chains and Mexican restaurants may reflect boomers' needs to eat healthier and the fact that they no longer have kid palates to please – and that signals opportunity for restaurants on the healthier end of the chain continuum to target them in their messaging and menu offerings." 

The EquiTrend Brand Equity Index is comprised of three factors—Familiarity, Quality and Purchase Consideration—that result in a brand equity rating for each brand. Brands ranking highest in equity receive the Harris Poll EquiTrend "Brand of the Year" award for their respective categories. This year, more than 100,000 U.S. consumers assessed more than 4,000 brands (including 90 restaurant brands) across more than 450 categories. 

The 2017 Harris Poll EquiTrend Restaurant Brands of the Year

Burger Restaurant

Five Guys

Casual Dining Restaurant

The Cheesecake Factory

Chicken Restaurant

Chick-fil-A

Coffee and Quick Service Restaurant

Starbucks Coffee Shop

Fast Casual Mexican Restaurant

Moe's Southwest Grill

Ice Cream and FroYo Shop

Ben and Jerry's Ice Cream Shop

Pizza Chain 

Papa John's Pizza

Sandwich Shop

Subway


This year marks Starbucks' debut as Coffee and Quick Service Restaurant Brand of the Year, narrowly surpassing three-time honoree Dunkin' Donuts. While Familiarity, Quality and Purchase Consideration scores are tight between Starbucks, Dunkin' Donuts, Krispy Kreme and Einstein Bros Bagels, Starbucks pulls ahead based on the strength of its Familiarity score.

Harris Poll's research shows that 11 percent of millennials and 10 percent of Gen X consumers visit Starbucks daily, higher than the generations' restaurant visit averages (five percent millennials, one percent Gen X).

"Given the ever-present morning rush lines at Starbucks, the fact that millennials and Gen X make daily Starbucks runs might not be entirely surprising, but it is telling," said Sinopoli. "With its engaging rewards app and high-end Starbucks Reserve brand, Starbucks is proactively pursuing millennials and quite frankly, doing it better than most right now."

Five Guys, first time Burger Restaurant Brand of the Year, ousts two-time honoree In-N-Out Burger, followed by (in order): Shake Shack, Wendy's, Culver's, Whataburger, McDonald's, SONIC America's Drive-In, Smashburger and Steak 'n Shake. 

While McDonald's holds the highest Familiarity score across all brands measured in Harris Poll's EquiTrend study, Five Guys leads the Burger Restaurant category in Purchase Consideration, pushing it to the top of the list.

"The burger brand category has become less fragmented, as regional brands expand and become available in more parts of the country," said Sinopoli. "This is certainly the case with Five Guys, who has shed its 'small regional player' designation as it expands its footprint and marketing budget—along with its fandom, which is a tremendous contributor to brand equity."

Moe's Southwest Grill retains its Fast Casual Mexican Restaurant Brand of the Year title for the second consecutive year. While Moe's continues to have relatively low Familiarity, it leads the category in Quality and Consideration scores. Similar to other highest-ranked brands, Moe's sees higher equity ratings among millennials (+5.8), compared to older consumers.

"Moe's has a unique tie to pop culture and knack for engaging customers that's appealing to its core consumer," said Sinopoli.

Baja Fresh Mexican Grill and Taco Bell follow Moe's in brand equity ratings.Chipotle, which led the category from 2013 – 2015 but now ranks below the category average, gained a notable 4.8 points versus a year ago, but has yet to fully recover from its decline driven by issues with food-borne illness.

Additional restaurant findings include:

  • Overall, restaurants receive above average brand equity scores, and Ice Cream and FroYo Shops, a new category measured this year, leads all restaurant categories in brand equity (69.2).
  • Ben and Jerry's Ice Cream Shop is the inaugural Brand of the Year in the Ice Cream and FroYo Shop category, based on its strong Quality and Purchase Consideration ratings – scores which are among the top ten across all award brands.
  • Subway is the Sandwich Shop Brand of the Year for the seventh consecutive year. The brand has shown strong and stable equity over the last 13 years, and while it holds similar equity scores across generations, its reported frequency of visits favor younger generations. 
  • The Cheesecake Factory makes its study debut as the Casual Dining Brand of the Year, leading the category in Quality and Purchase Consideration. Its brand equity is largely driven by younger consumers.
  • For the fourth consecutive year, Chick-fil-A takes Chicken Restaurant Brand of the Year honors. The restaurant's brand equity is boosted by millennials (9 equity points higher compared to baby boomers) and consumers with children. (Equity score of 73 among consumers with kids, 66 consumers without kids.) 
  • For the first time since 2012, Papa John's is the Pizza Chain Brand of the Year. It shows a significant increase in Quality and Purchase Consideration to unseat Pizza Hut, which held the top brand honor for the last four years. Following Papa John's (in order): Blaze Pizza (new to EquiTrend in 2017), Pizza Hut, and Marco's Pizza (new to EquiTrend in 2017). 


The 2017 Harris Poll EquiTrend Study is based on a sample of 102,617 U.S. consumers ages 15 and over surveyed online, in English, between December 30, 2016 and February 21, 2017.  The survey took an average of 30 minutes to complete. The total number of brands rated was 4,052. Each respondent was asked to rate a total of 40 randomly selected brands. Each brand received approximately 1,000 ratings. 

Threats on Horizon for Food Industry

The restaurant industry and other foodservice operators are on a tear, with sales growth outpacing retail for a decade, and revenues surpassing retail for the first time in 2015. But despite that, foodservice industry professionals see a number of threats on the horizon – in the form of rising food and labor costs and fierce price pressure from groceries that offer prepared foods – according to a new study by global management consulting firm L.E.K. Consulting.

Restaurant operators said the most significant barriers to growth over the next three years were rising food costs from suppliers and rising labor costs.

Overall, the industry is marked by significant optimism. More than three quarters (78 percent) of foodservice professionals expect growth to increase over the next three years compared to the last three years. That's slightly up from the 2014 study (76 percent). And seventy-six percent think there is less than a one-in-five chance of a recession impacting their business in the next three years.

"However, despite overall optimism, foodservice professionals do recognize they will have to respond to cost and competitive pressures if growth is to continue," says Manny Picciola, Managing Director in L.E.K. Consulting's Food and Beverage Practice and an author of the study. He adds that, according to the survey, restaurants and other foodservice establishments plan to fight back by updating their menu offerings, negotiating better terms with suppliers and creating digital services like online ordering.

The 2017 L.E.K. National Foodservice Operators Study, which surveyed 230 restaurant and foodservice operators responsible for or directly involved in purchasing decisions, finds that restaurant professionals are concerned about:

Rising food and labor costs, and increasing competition: Restaurant operators said the most significant barriers to growth over the next three years were rising food costs from suppliers (40 percent) and rising labor costs (38 percent). Twenty-three percent see increasing competition as a growth threat. 

A growing price gap between restaurants and groceries: Restaurant and foodservice costs increased 2.7 percent last year – driven by the price of labor – while groceries and other food retailers experience deflation. Retailers are passing lower food prices along to consumers, while restaurants must increase menu prices to cover labor. The result? A widening gap between the cost of eating out and the cost of eating in.

Groceries selling prepared foods – and eating into restaurant profits. The line between foodservice and retail is blurring: Almost 80 percent of foodservice professionals say retail prepared foods will be a threat to their business within the next three years. And more than 70 percent say prepared foods are a threat today.

An emerging threat from online food sellers: Online grocery/meal providers and online ordering services are another emerging competitive threat. More than half of foodservice professionals say these online entrants will be a threat to their business within the next three years. Amazon Fresh and Grubhub/Seamless are especially strong contenders, they say.

To respond, restaurant and foodservice professionals are considering these moves:

Standing out with healthier ingredients: Almost half (44 percent) of foodservice professionals say they view healthy and nutritious foods as a way to boost revenue, and 36 percent said the same of locally sourced ingredients.

Creating digital services: Over the next three years, foodservice professionals expect about a 10 percent increase in online ordering, and about a quarter of them plan to enhance their delivery services to counter competition from online food sellers.

Buying pre-prepared foods from suppliers: Nearly half (44 percent) of the restaurant and foodservice professionals who buy pre-prepared foods from suppliers do so because it helps them save on labor costs, and 38 percent say buying pre-prepared foods is actually cheaper. 

Survey respondents are neutral-to-positive on how the current political landscape will affect the industry. While most think the election of Donald Trump will have little effect on their businesses, nearly a third believe it will have a positive effect, citing potential lower taxes and fewer regulations.

"The foodservice industry is healthy – but professionals are watchful," says Rob Wilson, an L.E.K. Managing Director and an author of the study. "They recognize that a strong competitive response will be needed in order to sustain current rates of growth."

Q2 Restaurant Confidence Survey

Bellwether Food Group released the second quarter 2017 Restaurant Consumer Confidence Index (RCCI). The quarterly RCCI (January, April, July and October) represents the overall U.S. population and measures consumer attitudes and behaviors toward restaurant usage and spending.

“The recent Restaurant Consumer Confidence Index survey shows a very pessimistic outlook for the restaurant industry. It should give every restaurant operator across the country an extra incentive to increase the level of hospitality they provide their guests,” said John Hamburger, President, Restaurant Finance Monitor.

“Our clients have been asking us for a predictive tool around consumer restaurant spending, and we’re now able to provide that,” said Rob Hardy, Founding Partner of Bellwether Food Group. “The January report accurately predicted the downturn in consumer traffic and spending in Q1 2017.”

When asked how they thought they would be doing financially a year from now 43 percent of consumers expect to be worse off. Hardy added, “Expectations for how often consumers will eat in restaurants over the next three months were down almost across the board for segments and dayparts, with only dinner at casual dining and fine dining showing any uptick.”

The report also confirmed that rising health care costs are taking a toll on the restaurant spending and that consumers see a value gap between eating at home when compared to eating at restaurants.

  • 42 percent of consumers prefer going out to restaurants vs. cooking at home
  • 61 percent of consumers feel that restaurant meals are too expensive compared to cooking at home
  • 29 percent of consumers are eating out at restaurants less because of higher health insurance costs
 What Diners Do and Don't Want from Technology

OpenTable released the results of its latest "Technology and Dining Out" research survey, which explores diner sentiment toward the use of technology before, during and after the dining experience.

"Technology throughout the restaurant industry continues to evolve, cater to and sometimes conflict with what diners actually want," said Scott Jampol, Senior Vice President of Marketing, OpenTable. "The goal for this research study is to deliver insights focused on diner sentiment and behaviors that can elevate the overall dining experience and level of hospitality as well as identify areas where technology might deter from the joy that it is inherent to gathering around the restaurant table."

Insights from the March 2017 survey of more than 4,700 OpenTable diners across the United States include:

Before the Meal

Ticketing is still niche: Only 11 percent of diners are interested in pre-paying for meals.

Creepy or Cool? 35 percent of diners think it's creepy for restaurants to Google them prior to arrival (compared to 31 percent in 2015).

Seat me like a VIP: 56 percent of diners want restaurants to know their preferred table or seating area. 72 percent of diners believe choosing a table or seating area would improve their experience.

Remember me: Diners also want restaurants to know special dates, such as birthdays or anniversaries (45 percent), number of times visited (35 percent) and dietary preferences (26 percent).

Waiting game: 78 percent of diners said the ability to use technology to add themselves to a waitlist before they arrive at the restaurant would improve their dining experience.

Specials: 64 percent of diners are interested in learning about specials, offers and promotions.

During the Meal

Halt the robots: 68 percent of diners agree that automation, including robots taking orders or preparing food in restaurants, is a bad thing and takes away from the restaurant and hospitality experience.

Don't text and dine: 51 percent of diners say they hate it when people they're dining with use tech during a meal because it disrupts their experience.

Technically solo: When eating alone, diners want their tech to keep them company. 19 percent use their phones several or multiple times while eating solo at a fine-dining restaurant (32 percent for those under 34) compared to 41 percent of diners (and 69 percent for those 34 and under) dining solo at a counter service restaurants. 

Oh Snap!: 25 percent of diners always or frequently take a photo to remember the experience (50 percent for those 34 and under).

Tech to try: Diners want to experiment with new technology they've never used before, with 35 percent open to mobile payments, so they don't have to wait around for the check or even a button on the dining table to alert staff to an issue (37 percent).

After the Meal

Loyalty: 22 percent of diners always or frequently interact with a restaurant's loyalty program.

Restaurant apps: Only six percent of diners are very likely to download the app of an individual restaurant chain to their phones or tablets.

  OpenTable's first "Technology and Dining Out" study was released in 2015.

Diners and Restaurateurs Embrace Tech Trends

Digital technology, including emerging trends in online ordering and delivery services, tabletop ordering, and the influence of social media, is changing the way consumers discover, interact with and experience restaurants, according to the 2017 American Express Restaurant Trade Survey. While diners’ appetites for new technology vary widely by generation, Millennials are leading the charge in favoring and adopting new dining preferences that blend the convenience of technology with social conscious trends, including food waste reduction and a preference for locally-sourced ingredients.

Take-Out Tech to Grow

Millennial consumers are more likely than any other generation to order take-out using a mobile app or website, according to the survey, which covers a wide array of consumer trends impacting the restaurant industry. For example, Millennials were twice as likely (62 percent) than Baby Boomers (28 percent) to have used a restaurant’s mobile app or website to order take-out in the past month. When it comes to ordering and delivery services like Grubhub and Seamless, Millennials are significantly more likely (58 percent) to have used such a service than Gen-Xers (35 percent) or Baby Boomers (21 percent). Restaurant operators are taking notice. Twenty-four percent of restaurateurs currently use an online ordering and delivery platform like Grubhub or Seamless, and another 31 percent say they are planning to or are considering adopting such services. Additionally, 24 percent of restaurateurs are currently offering the ability to order ahead through their own website or mobile app, and another 42 percent plan to or are considering adopting the technology.

“The survey results confirm what we’ve long heard, especially from our Millennial diners: that consumers value being able to order the foods they love, on mobile or desktop, from their favorite local restaurants,” said Stan Chia, chief operating officer, Grubhub. “Online ordering and delivery not only meet the expectations of today's busy, convenience-minded diners, but also drive order volume and increase revenue for restaurants. A trusted partner is essential to ensuring that restaurateurs spend their time making food and focusing on the diner experience, rather than managing and delivering orders.”

To Tip or Not To Tip

Consumers’ tipping practices and preferences also differ by generation. In recent years, some Restaurateurs have discouraged tipping or adopted policies that do away with the practice in their establishments, usually in favor of higher wages for the servers. According to the survey, 15 percent of restaurants have already adopted or plan to adopt a no-tipping policy, and 14 percent said they might eliminate tipping if their competitors do. At the same time, the majority of consumers (63 percent) say they prefer being able to tip their server. However, when broken down by generational groups, preferences differed. Millennials are the generation most likely to prefer not to continue tipping (46 percent) compared to Gen-Xers (34 percent) and Baby Boomers (32 percent). However, Millennials were more likely (18 percent) to support having a service charge added to their bills in lieu of a tip than Gen-Xers (8 percent) or Baby Boomers (6 percent). Additionally, when paying with a credit or charge card, the majority of customers (59 percent) will add the tip to their card. Millennials, however, are more likely to leave a cash tip when paying with a credit or charge card (46 percent) than Gen-Xers (36 percent) or Baby Boomers (36 percent).

Diners More Likely to Post about their Plate than their Date

Social media is a key component of the dining experience for consumers. Among diners who post about their restaurant experiences on social media, they are nearly twice as likely to post photos of their meal/drink (16 percent) than the people they are dining with (9 percent). Millennials also stand out in this category – nearly three-quarters (72 percent) will post about their restaurant experience on social media, including one-quarter (25 percent) who will post photos of their meal/drink. It’s no surprise, then, that 83 percent of restaurateurs view social media as having a very or somewhat positive impact on their business, and a majority use some type of social media promotion for their business, most frequently Facebook (85 percent) and Instagram (46 percent).

With a Positive Financial Outlook, Restaurateurs Plan Tech Investments and Hiring; Fight Food Waste

Overall, restaurant operators are generally positive about the future. More than half (54 percent) say revenues are greater than they were one year ago, and nearly three-quarters (72 percent) are expecting a continued increase during the next 12 months. Part of this optimism is reflected in planned technology investments – two-thirds (65 percent) have plans for tech investments in the next 12 months – as well as hiring – more than eight-in-ten plan to hire both front and back of house staff in the next year (83 percent, each).

Innovations are being planned to stay competitive as well, particularly in restaurants’ ability to combat food waste and make better use of local ingredients:

  • Half of restaurant owners/managers believe food waste has a significant impact (48 percent very/somewhat) on their restaurant’s profitability, and most are taking some measures for reducing it.
  • 38 percent of restaurateurs are repurposing ingredients or offering special menu items made with excess food.
  • Six-in-ten evaluate their inventory (61 percent) or train staff on waste reduction (59 percent), and over half (53 percent) monitor the portion sizes they provide to their customers to reduce waste.
  • When it comes to locally-sourced ingredients, 44 percent of restaurants currently use them, and another four-in-ten are either planning to (15 percent) or are considering doing so (24 percent)

Diners agree. More than half of consumers (56 percent) believe that it is important for a restaurant to use locally-sourced ingredients in their menu. Like restaurant owners, they too don’t want to see their food go to waste. The vast majority of diners (83 percent) say they ask to have their leftover food wrapped. For some, making leftovers their actual in-restaurant meal is not off the table – 27 percent percent of consumers are likely to order a meal made from leftover ingredients. When focusing on generational groups, Millennials are more likely to embrace this concept (39 percent) than Gen-Xers (24 percent) and Baby Boomers (19 percent).

Tech at the Table: Keeping the Human Touch in a Digital World

Restaurants are increasingly turning to digital technology to enhance customers’ dining experiences. Currently, seven percent of restaurant owners/managers use automated customer service technology such as digital kiosks or table-side ordering. However, that trend is expected to grow as 26 percent say they plan to or are considering adopting this technology in the future. While the majority of consumers (75 percent) favor a restaurant with traditional wait staff who can provide in-person service, 25 percent say they prefer restaurants with digital customer service platforms. That percentage is even higher for Millennials (39 percent). This disparity shows that restaurants should strongly consider their target customer base, or pairing traditional customer services with the convenience of technology at the table, when deciding how to augment their approach to servicing with technology.

Beer Industry's Economic Benefits

From brewers and beer importers to beer distributors and  retailers, the Beer Institute and the National Beer Wholesalers Association (NBWA) today released Beer Serves America, an economic study that highlights how the U.S. beer industry generates more than 2.23 million jobs, providing $103.3 billion in wages and benefits to American workers and families.

The study, based on government and industry data, estimates the wages provided, the economic contribution generated, the taxes paid and the number of jobs supported by the American beer industry.

"Beer is more than a refreshing adult beverage. The beer industry is vital to the United States, generating nearly 2.23 million jobs and contributing more than$350 billion to the American economy," said Jim McGreevy, President and CEO of the Beer Institute. "Beer Serves America demonstrates how brewers, beer importers and beer industry suppliers are creating jobs, providing wages and benefits to working Americans and supporting the economy in every state and every congressional district."

NBWA President and CEO Craig Purser said, "America's beer distributors are proud to provide nearly 135,000 jobs with solid wages and great benefits to employees at more than 3,000 facilities, located in every state and congressional district across the country. Independent beer distributors generate significant economic contributions in their communities through local business-to-business commerce, investments in local infrastructure and capital assets and tax revenue. Through a wide range of services, distributors work to build beer brands of all kinds – from large, familiar labels to start-up, craft brands and imports from around the world – and to deliver vast consumer choice in the marketplace."

Key findings from the Beer Serves America report include: 

  • Brewers and beer importers directly employ 64,745 Americans. About 58 percent of brewing jobs are linked to large and mid-sized brewers and beer importers.
  • Beer distributors directly employ 134,240 Americans. 
  • Overall, the beer industry contributes more than $350 billion in economic output, which is equal to nearly 1.9 percent of the U.S. Gross Domestic Product.
  • Suppliers to the brewing industry – enterprises that manufacture bottles, cans and kegs, cardboard case boxes, brewing equipment or marketing displays – generate nearly $115.3 billion in economic activity and are responsible for more than 491,800 jobs alone. 

The Beer Serves America study was compiled by an independent economics firm John Dunham and Associates. It is the most comprehensive analysis of the industry available, using data collected directly from private companies, Dun and Bradstreet, the U.S. Bureau of Labor Statistics, the Alcohol Tobacco Tax and Trade Bureau (TTB) and the U.S. Bureau of Economic Analysis.

Foodpreneurials Growing

 10 Best Design's report, Research on 'Foodies,' Digital Design, and the Entrepreneurial Spirit, asked roughly 400 people from around the U.S. about everything from physical activity to religious involvement and beyond. Especially intriguing was the fact that individuals who self-identified as 'Foodies' were actually 49.86 percent more likely to want to start a company of their own within their lifetimes than their 'Non-Foodie' counterparts.

"We thought there might be some overlap of 'Foodies' and experience in digital design," a 10 Best Design spokesperson said. "We had no idea they'd be 50 percent more likely to want to become business owners."

As it turns out, people who currently or have previously worked in digital design are also about 34.95 percent more likely to call themselves Foodies, and these Foodies tend to be more active in community service and charitable donations at rates of about 30 percent and seven percent, respectively.

American Organic Sector Gaining 

The robust American organic sector stayed on its upward trajectory in 2016, gaining new market share and shattering records, as consumers across the United Statesate and used more organic products than ever before, according to the Organic Trade Association's (OTA's) 2017 Organic Industry Survey.

Organic sales in the U.S. totaled around $47 billion in 2016, reflecting new sales of almost $3.7 billion from the previous year. The $43 billion in organic food sales marked the first time the American organic food market has broken though the $40-billion mark. Organic  food now accounts for more than five percent—5.3 percent to be exact—of total food sales in this country, another significant first for organic. 

Organic food sales increased by 8.4 percent, or $3.3 billion, from the previous year, blowing past the stagnant 0.6 percent growth rate in the overall food market. Sales of organic non-food products were up 8.8 percent in 2016, also handily surpassing the overall non-food growth rate of 0.8 percent.

The survey also showed that organic is creating jobs. More than 60 percent of all organic businesses with more than five employees reported an increase of full-time employment during 2016, and said they planned to continue boosting their full-time work staff in 2017. 

"The organic industry continues to be a real bright spot in the food and ag economy both at the farm-gate and check-out counter," said OTA's CEO and Executive Director Laura Batcha. 

The $15.6-billion organic fruits and vegetables sector held onto its position as the largest of the organic food categories, accounting for almost 40 percent of all organic food sales. Posting an 8.4 percent growth rate, almost triple the 3.3 percent growth pace of total fruit and vegetable sales, organic fruits and vegetables now make up almost 15 percent of the produce that Americans eat.

Produce has traditionally been the entry category for consumers new to organic, in large part because in the produce aisle the benefits of organic are probably the easiest to understand. We touch the fruit or vegetable, smell it, and immediately make that connection between that carrot, for example, growing in clean healthy soils and putting it into our bodies. Across all organic food categories, shoppers are placing high value on freshness and convenience. In produce, grab-and-go salads and ready-to-eat veggies (fresh or frozen), were top sellers.

Consumers in recent years have sought clean products abundant in protein, and sales of organic protein-rich meat and poultry shot up by more than 17 percent in 2016 to $991 million, for the category's biggest-ever yearly gain.  Continued strong growth in that category should push sales across the $1-billion mark for the first time in 2017. Growing awareness of organic's more encompassing benefits over natural, grass-fed or hormone-free meats and poultry is also spurring consumer interest in organic meat and poultry aisles.

The organic condiment category isn't one of the headline organic food categories, but some interesting trends are happening there nonetheless. Organic dips, for one, posted stellar growth in 2016 of a whopping 41 percent, with $57 million in sales. And sales of organic spices swelled by a big 35 percent to $193 million.

Confirming a trend that's now fairly established, the OTA survey showed that today's consumers aren't just eating more organic, they're also using more organic products in their wardrobes, their bedrooms and bathrooms and throughout their homes.

Sales of non-food organic products increased by almost nine percent to $3.9 billion. Organic fiber, supplements and personal care products accounted for the bulk of those sales. Adequate supplies of organic textiles are a continuing challenge in the organic fiber market. However, U.S. organic cotton farmers produced a record 17,000-plus bales in 2016, which should help alleviate some supply concerns.

Increasing consumer awareness that what we put on our body is as important as what we put in our body is driving the growth in organic fiber sales, while a growing desire for transparency, clean ingredients and plant-based products is spurring sales of organic supplements and personal care products.

"Organic products of all sorts are now found in the majority of kitchens and households across our country," said Batcha. "But the organic sector is facing challenges to continue its growth. We need more organic farmers in this country to meet our growing organic demand, and the organic sector needs to have the necessary tools to grow and compete on a level playing field. That means federal, state and local programs that help support organic research, and provide the organic farmer with a fully equipped tool kit to be successful."

Pasta Popularity

Pasta, it’s long been at the heart of Italian cooking, but now it seems that consumers in Italy are saying ‘Pasta La Vista’ to this traditional dish. Indeed, new research from Mintel reveals that sales of pasta in Italy had a compound annual growth rate (CAGR) of -2 percent between 2011 and 2015, with sales falling to 908,100 tonnes in 2016.

Mintel research reveals that health is the reason this national cuisine has fallen on hard times. Indeed, today, almost one quarter (23 percent) of Italians say they are limiting the amount of pasta in their diet for health reasons, rising to 28 percent of those aged 55 and over.

While Italians still consume the biggest volume of pasta per capita globally, they are cutting back on this traditional staple. Mintel research finds that retail per capita consumption of pasta in Italy fell to 15.2 kg in 2016, down from 17.0 kg in 2011 and it also seems their tastes are changing. In 2015, just 7 percent of Italians said they consumed any gluten-free pasta, while 13 percent ate organic pasta and 36 percent wholewheat pasta. By 2016, however, one in three (33 percent) Italians said they had eaten gluten-free pasta, with 8 percent eating it once a week or more, while 63 percent had used or eaten organic pasta, with 21 percent eating it once a week more.  Meanwhile, 75 percent had eaten or used wholewheat or wholegrain pasta, with 30 percent eating it once a week or more.

Although Italians are turning their backs on tagliatelle, pappardelle and fettuccine, according to Mintel they remain in the top three pasta eating nations. In 2016, only the Brazilians (1,223,500 tonnes) and Russians (1,184,900 tonnes) consumed more.

Jodie Minotto, Global Food and Drink Analyst at Mintel, said, “Health concerns over carbohydrate intake continue to plague sales of pasta, especially in Italy where retail sales have been in constant decline every year since 2009. The rising popularity of protein and the resurgence of low carb diets have made for a challenging environment for pasta, which is being shunned in favour of foods perceived to be healthier or more supportive of weight management efforts. New product development centred on positive nutrition and tapping into the ongoing interest in gluten-free food will help to polish pasta’s image.”

However, it’s not just in Italy that consumers are curbing their love of pasta. Across the globe ‘carbophobia’ is impacting sales. According to Mintel, the CAGR for pasta between 2011 and 2015 was -2 percent in UK, and completely flat in Australia, Canada, France, and the US.

In the U.K., as many as 22 percent of adults are limiting their carbohydrate intake for health reasons; meanwhile, one fifth (20 percent) of users regularly substitute pasta, rice and noodles with vegetables in the style of familiar carbohydrates. Across Europe, consumers are cutting down on pasta for the sake of their well-being, with 19 percent of those in Spain, 16 percent in Poland and 15 percent in Germany and France (respectively) limiting the amount of pasta they’re eating for health reasons.

Away from Europe, in the U.S. a significant 41 percent of consumers perceive rice and grains to be healthier than pasta.

While hunger for pasta may be waning, brands are innovating to appeal to consumers’ shifting appetites. Research from Mintel Global New Products Database (GNPD) reveals that one in seven (14 percent) pasta products launched in 2016 were gluten-free, up from just 5 percent of those launched in 2012. What’s more, 18 percent were organic, up from 11 percent launched in 2012, and eight percent were wholegrain, up from 5 percent launched in 2012.

“The trend for gluten-free and low carb diets and the vilification of wheat as a contributor to a variety of ailments, including weight gain, have contributed to the flat and declining sales of pasta in many key markets," noted Minot. " As a result, the pasta category is vastly different to what it was even five years ago. Wheat-free, gluten-free and better-for-you options are now part of the standard pasta range. Consumer demand for natural, unprocessed foods has contributed to the rise in popularity of organic pasta, yet another option pasta brands now need to offer.” 

As consumers shun carbs, some are starting to look for healthier alternatives. In the U.K., 'better-for-you' is a choice factor for 24 percent of consumers when buying pasta. What’s more, pasta made with ancient grains appeals to 22 percent of consumers, while variants made with vegetables appeals to 30 percent. In 2016, 28 percent of all new shelf-stable pasta introductions carried an organic claim in both Europe and the US, while one in 10 (10 percent) introductions carried this claim in Asia Pacific. Low/no/reduced allergen was the second most popular claim in both Europe (22 percent) and the US (20 percent), while over one in 10 introductions carried this claim in Asia Pacific (13 percent) and Latin America (12 percent). Meanwhile gluten-free came in as the third most popular claim in the US (17 percent) and Europe (20 percent).

“All manner of ingredients are being used in next generation ‘pasta’, the latest of which is seaweed. Sourdough fermentation is also being used to improve digestibility of gluten in wheat based pasta.” she concluded.

Michigan Restaurant Statistics

The Michigan Restaurant Association (MRA) has partnered with Cleveland Research, an independent market research firm, to conduct a quarterly survey of restaurant owners with the objective of tracking economic and demographic trends within the restaurant industry on a statewide basis. The Michigan Restaurant Association Industry Trends Report represents the first and only independent statewide research report tracking the state's second-largest private-sector employer.  

Results of the Q1-2017 Trends Report can be found here. Topline data is available to the general public, but MRA members who choose to participate in the study will have the exclusive opportunity to review the complete survey results in-depth.

Participation was strong in the Q1-2017 Trends Report, with nearly 700 MRA member locations and $676 million in annual revenue represented in the survey.  Topline highlights include increased employment opportunities across the state, with one-third of respondents expecting to increase total employment during the next six months, and an expectation that food costs will remain flat this year.  

"We have heard consistently from our membership, particularly our independent operators, that they want better and more Michigan-specific data on their industry," said Justin Winslow, President and CEO of the Michigan Restaurant Association.  "We support our membership and their needs, so we are proud to bring a new level of business insight to our nearly 4,600 member locations across the state."

Additional highlights from the Q1-2017 Trends Report include the following:

Sales across Michigan restaurants slowed to 2.6 percent in the first quarter of 2017 after experiencing 3.6 percent growth in 2016.

A full one third of respondents reported their sales coming in lower than expectations, while only 21 percent of respondents reported sales above expectations.

Traffic improved in the first quarter, but also slowed from 2016, seeing a 2.2 percent gain as opposed to 2.7 percent in 2016.

The restaurant industry in Michigan seems to be facing similar labor pressures reported in other regions of the country.

A healthy Michigan economy with unemployment rates plummeting below 5 percent has made finding and retaining talent a primary concern of restaurant owners. As a result, respondents expect labor costs to rise 0.6 percent from 2016.

Overall, the industry remains hopeful with 44 percent believing business conditions will improve over the next 6 months, while only 12 percent expect them to get worse.

"Traditionally, independent restaurants have had to rely on national trend data, which may or may not be a good benchmark for their business," said Ross Walthall, Director of Foodservice at Cleveland Research.  "Our aim is to bring our analytical rigor and insights to trends in the state of Michigan."

Retail Tech Influence

More than 90 percent of Generation Z say that a strong wi-fi signal is important to them and their overall shopping experience, according to a survey conducted by HRC Retail Advisory (HRC), a leading strategic retail advisory firm. Emerging in-store technologies and positive social media feedback are among the top priorities for both Generation Z and Millennial consumers. The survey, which also revealed a generational shift in how these consumers shop for beauty products, represents the first in a series centered around Generation Z and Millennials’ attitudes, behaviors, and shopping preferences.

“Millennial and Generation Z’s use of technology in-store, their need to stay connected to friends via social media while they shop, and how they’re shopping beauty trends is changing consumer spending patterns. While the latter generation was born with a smartphone in hand, it doesn't keep them from shopping – and even preferring to shop – in brick and mortar stores, as long as they have access to their ever-important social network,” said Farla Efros, President of HRC Retail Advisory. “Generation Z in not only powerful on their own, but they are the ones dragging their Millennial parents (who prefer to shop online), back into the mall as well. Understanding these consumer segments and how they apply to a retailer’s business will be essential, as both of these generations will be crucial to retail strategies going forward.”

To better understand the growing influence of Millennial and Generation Z consumers and the implications for retailers, HRC recently surveyed 1,350 participants in North America on their attitudes, behaviors and influences driving their shopping purchases.

Significant findings of the survey include:

Magic Mirrors and Retail Apps Enhance In-Store Experiences

Magic Mirrors Keep Consumers Connected. When asked if they would use a “Magic Mirror” in dressing rooms to send images through social media, 66 percent of Millennials aged 18 to 34 said they would be at least somewhat likely to use the technology, which is 50 percent more than those aged 35 to 41. In fact, Generation Z and Younger Millennials were found to embrace emerging technologies, particularly if they enhanced a connection with their social network or streamlined the shopping experience.

Retail Apps Favored Over Traditional In-store Payments. 68 percent of Millennials, and 64 percent of Generation Z state that they would likely use a retailer’s app to make an in-store payment. And, the number of consumers favoring apps over traditional payment methods climbs to 78 percent among Millennials aged 25 to 34.

Social Networks Drive Purchase Decisions

Facebook and YouTube Dominate Social Media. Nearly 60 percent of respondents (both Millennials and Generation Z) use Facebook daily, with as high as 72 percent of Millennials age 25 to 34. YouTube ranks second amongst both demographics, with over 55 percent using the platform daily.

Social Media is Essential for Feedback. More than half of respondents (both Millennials and Generation Z) said they use social media to solicit opinions while shopping, and more than 40 percent of respondents said they have made a decision based on feedback from their network, which consists primarily of their peers. Additionally, 25 percent of Millennials say they have returned items based on feedback from social media sites, and Generation Z’s return rate is as high as 62 percent.

Discounts and Influencers Are Key to Shopping Beauty

Amazon and Discount Stores Top Traditional Beauty Stores. With new beauty trends constantly emerging, both Generation Z and Millennials look to Amazon and Discount Stores (ie. Walmart, Target) to shop for products over traditional beauty stores (ie. Sephora, Department Stores, etc.). In fact, when asked where Generation Z has purchased beauty products in the last 6 months 55 percent said Discount Stores and 35 percent said Amazon. For Millennials, 49 percent said they shop Discount Stores and 45 percent on Amazon.

Friends and YouTubers Influence Gen Z Beauty Buys. While Millennials are primarily influenced by the store experience when shopping for beauty (34 percent), Generation Z cites Friends and YouTube Beauty Gurus as their primary influence when shopping (54 percent). Store experience is significantly less important to Generation Z in Beauty purchasing (11 percent).

HRC Retail Advisory’s survey findings are based on a targeted sample of two distinct demographics: Millennials (ages 18-41) and Generation Z (children ages 10-17). The sample size was 675 per group. Respondents were asked about their attitudes and behaviors as it relates to shopping and shopping influencers. The survey was fielded from March 9 – 21, 2017, and was completed through proprietary sample sources amongst panelists who participate in online surveys. The total sample size was 1,350 completes.

Gluten-Free Market Growth

The global gluten-free products market is expected to reach USD 33.05 billion by 2025, according to a new report by Grand View Research, Inc. The market is expected to witness substantial growth over the forecast period mainly on account of the rising incidences of celiac disease, diabetes as well as obesity across the developed economies.

Consumer perception of gluten-free products being diet food is expected to act as a key driver for the industry growth over the next few years. Unique promotional strategies adopted by the major manufacturers including sampling, in-store cooking demonstrations, and shelf tags indicating a consumable to be gluten-free have been playing crucial roles in influencing the product demand.

The growing inclination of consumers towards leading healthy lifestyles, coupled with the association of free-from products to being healthy is expected to have a positive impact on the industry growth. In addition, the rising awareness among consumers to limit intake of gluten to avoid celiac disease and irresistible bowel syndrome (IBS) is expected to aid product demand.

Gluten-free products are perceived to ease digestive ailments, lower the cholesterol level, and be less fattening, which in turn are expected to drive the product demand over the forecast years. Furthermore, the easy availability of the products, through nearly every grocery store, is expected to aid industry growth, most notably in the U.S. and major European countries.

Further key findings from the report suggest: 

  • Bakery products are expected to dominate the industry growing at a CAGR of 10.5 percent over the forecast period on account of the high demand for gluten-free bread in the U.S. and France owing to the increasing incidences of celiac disease
  • Rising consumption of gluten-free pasta in Italy and Germany, coupled with increasing incidences of IBS and celiac disease, is expected to drive the industry growth in Europe. In addition, high demand for rice in Asia Pacific is likely to complement industry growth. 
  • Grocery stores accounted for 70 percent of the overall distribution of the gluten-free products, on account of easy accessibility to a wide range of products under one roof
  • Asia Pacific is expected to be the fastest growing market on account increasing consumption of the products as diet food coupled with unique marketing strategies adopted by the major manufacturers to gain regional share.
  • The major manufacturers in the industry such as Boulder Brands and Hain Celestial Group have adopted different promotional strategies including distribution of free samples and conducting in-store cooking demonstrations to acquire new consumers and gain industry share. 

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