Where Foodservice Consumers Spend Money: Part 2
According to Technomic, Inc., today’s foodservice industry is roughly a $700 billion market. The current industry is two-thirds restaurant and bar segment, and one-third is convenience, travel, leisure, healthcare, and education. However, this is changing. Overall industry growth is at 3%, but the one-third non-restaurant and bar segment is growing much faster—over 5%. This creates a lot of questions that need answers, especially regarding where foodservice consumers spend their money—and why. Why is it changing now? In my last post, “Understanding Today’s Foodservice Consumers: Part 1,” I talked about how today’s foodservice customers want more options than ever before. Even more than needing options, today’s foodservice consumer practically demands expediency. This leads to smaller, more convenient buying opportunities. The term “convenience store” applies more today than ever before. These types of stores are now regularly taking market share from restaurants and bars. Consumers want a place where they can pick up a multitude of items in one stop—including their lunch or dinner. But more than that, they demand that the food they purchase is fresh and healthy. You see a little bit of difference in buying habits by generation, but much of that difference is simply the reasoning behind the purchase. The dual income generation (a.k.a. Generation X) doesn’t want to make dinner at home. They want to give their families a healthy meal without taking the time to make it themselves. Millennials, on the other hand, are shopping online and having food delivered. Or, if they do stop someplace, their primary goals are to get in, get out, and move on to their next destination as quickly and painlessly as possible—and, remember, the food better be fresh and healthy, too. In the demand for fast, convenient fare, the segment beyond bars and restaurants has a big advantage. Consumers are already stopping there for something else, and if fresh, healthy food options are available, shoppers will be tempted to just pick up their meal rather than make another stop. And that’s the whole point. A convenience store or something similar is just a quick stop on the way, while a restaurant is a destination—something that requires a time commitment. How can individual businesses succeed with the changing market conditions? I can’t predict where the industry or consumers will be in 5, 10, or 20 years. But I can tell you that foodservice companies—whether in the restaurant and bar segment or beyond—that are willing to adapt will be more successful than those that don’t. In addition to adapting for today’s foodservice consumer, there are a few key things you need to understand. 1. Today’s foodservice market is not the same industry it was 10 years ago. Your competition is different—you can’t think in terms of brick and mortar stores anymore. Your biggest competitor may be an online ordering app. Think creatively—after all, your competition is. 2. Understanding your consumer is the biggest advantage you can have. Know who your target audience is. Are you hoping to catch the attention and the dollar of the busy soccer mom or the recent college graduate? Plan and market accordingly. 3. Serve fresh and healthy food options. Your consumers will thank you, but your supply chain and inventory won’t. Be ready for products with a shorter shelf life—think fresh, not frozen or processed. Remember, there are gas stations making fresh sandwiches right in front of you—if they can offer the fresh (yet convenient) food your consumers want, so can you. So whether you’re trying to hold on to market share or take more market share, keep these tips in mind as you plan for how today’s (and tomorrow’s) foodservice consumers spend. Be sure to read part one in my foodservice consumer series, “Understanding Today’s Foodservice Consumers: Part 1,” and look for my upcoming post on how to plan your supply chain around today’s foodservice consumer.