Chapter 2
Emerging hybrid foodservice concepts are blurring the traditional channels.
Industry observers call them disruptors, and they mean that in a good way. Just as Uber has changed the taxicab business and Airbnb has upended the lodging industry, innovative new food and beverage channels are emerging to redefine the traditional foodservice status quo. These include:
Taken together, these innovative options for food and beverage represent the leading edge in emerging specialty segments. According to Datassential, this translates to younger, more trend-conscious consumers. One-third of consumers, in fact—particularly Millennials and Gen X—want something completely different when trying a new restaurant or foodservice concept.
In addition, younger consumers indicate stronger interest in almost all foodservice trends, from mobile ordering and delivery-only restaurants to juice bars and premium vending.
And as Technomic points out, even though the overall penetration of these innovations may be low compared to more established channels like fast casual, these emerging concepts are often the incubators for today’s hottest foodservice trends, and consumers have developed strong preferences for these formats.
GEN Z SPOTLIGHT Roughly 40% of Gen Zers—more than any other generation—say they are increasingly eating food on the go, and nearly a third say they often have no choice but to eat meals on the run. Source: Technomic, Gen Z: What is the Next Consumer Generation Eating and Drinking? (April 2019)
Sources: Datassential/IFMA Consumer Planning Program 2017/2018, Emerging Concepts & Disruptors; Technomic, Now and Next: Lessons from Emerging Channels for Food and Beverage (2019); Technomic, Gen Z: What is the Next Consumer Generation Eating and Drinking? (April 2019)
First the challenge: Technomic Consumer Brand Metrics data confirms that the off-premise trend of cooking at home is rising, with a sharp increase year over year of diners staying in. An increase of 5% more Millennials in the last four quarters, compared to previous quarters, said they would have made food at home if they had not visited a restaurant during a recent dining event, and 4% more households with children under 12 said so. But fortunately, there’s a fine line between purchasing a meal away from home and cooking it at home, and meal kits are on that line.
The meal kit industry is expected to grow to between $3 billion and $5 billion in value over the next 10 years, prompting foodservice operators to offer meal kits based on their own menu favorites.
According to Datassential, in fact, meal kits including subscription delivery services like Blue Apron and Freshly are giving traditional takeout and on-premise dining a run for their money. These packages of fresh, pre-portioned foods and recipes for preparing homecooked meals promise the best of all possible worlds:
In addition to signing up for delivery services, says Technomic, consumers are buying single or family-style meal kits in supermarkets and other retail stores, as retailers such as c-stores make room along store perimeters for meal kits as a new hallmark of grab-and-go food. There’s also room for restaurant and noncommercial foodservice operators, such as B&I, to get in on the trend and offer take-home kits for time-pressed customers to make when they are not on-premise.
60% of consumers say that they purchase meal kits at least once a month, while nearly a fifth (19%) buy kits once a week or more.
GEN Z SPOTLIGHT Millennials and Generation X consumers are 321% more likely to purchase meal kits than are older generations. Source: Nielsen, The Mindset of the Meal Kit Consumer Study, March 2017
Sources: Technomic, Foodservice Digest (2017); Datassential Insider Special Report July 2018, U.S. Meal Kits; Technomic Omnibus February 2019
It’s 11 o’clock at night, and you’re in a hotel far from the town center, or in a hospital keeping watch, or in the middle of the late shift on the job. And you’re thirsty and hungry. Fresh vend, pantries, and micromarkets, and other innovative self-service concepts offer the ultimate blend of quality and convenience.
Welcome to the brave new world of easy access, self-service 3.0 venues that fill the need for satisfying food and beverage in times and places that others cannot go. According to Technomic, these emerging channels are blurring boundaries and changing perceptions of both quality and convenience.
Fresh Vending: Updated refrigerated vending, such as prepared salads, prepared sandwiches, yogurt, baked goods, and specialty beverages
Micromarkets: Self-serve, self-pay mini-marketplaces, typically housed in corporate offices and hotels
Pantry Foodservice: Grab-and-go formats where food, beverages, and snacks are provided free of charge; typically situated in office settings, but also in hotels
Pantries and micromarkets work well because they are so customizable. For instance, a mini-mart in a hospital can sell fresh plants and stuffed animals for gifts, while a pantry in a hotel can stock local foods and beverages.
The expectation of anytime, anywhere foodservice, even when there’s no staff to serve it, is what sets these innovative new concepts up for success. Tap-and-go payment, speed of service, and easy onsite access keep patrons from going elsewhere, making them a boon for incremental sales.
Fresh vending is on the rise, says Technomic, thanks to attractive new next-gen equipment and service models that allow for a rotating selection and frequent restocks for freshness.
GEN Z SPOTLIGHT 65% of Generation Z consumers have purchased food or beverages from fresh vend in the past year, while 22% have used micromarket and 18% a pantry. Source: Technomic, Now and Next: Lessons from Emerging Channels for Food and Beverage (2019)
Source: Technomic, Now and Next: Lessons from Emerging Channels for Food and Beverage (2019)
Delivery-only “ghost restaurants,” pop-ups, and food trucks are redefining what it means to be in the foodservice business.
Ghost restaurants, also known as delivery-only or virtual eateries, are increasing in number. Although they don’t offer a physical location for dine-in or takeout, customers can place their order online for delivery to their location, often via third-party vendor. Some ghost restaurants encompass multiple concepts, such as pizza, fried chicken, sandwiches, and breakfast.
16% of consumers have tried delivery-only restaurants, and 45% have heard of them. Another 18% are interested.
For the operator, a ghost restaurant doesn’t require a high investment or overhead costs, and they are easier to test. They also create new supply locations for consumers in rapidly growing markets. Technomic expects them to become more sophisticated as the market matures—especially among chains: shared kitchens, customer pickup, and mobile kitchens.
With fewer than 100 locations in operation and less than $100,000 in sales, ghost restaurants are nonetheless expected to become more of a factor in foodservice.
Think of pop-ups as the ultimate form of an LTO (limited-time offering). As with food trucks, many brick-and-mortar restaurants began life as a pop-up, with a hopeful chef/operator working from a borrowed restaurant or other location with a kitchen or room for equipment and seating. Pop-ups generate excitement and engagement (particularly through social media), and for test-marketing new concepts and menus. Pop-ups also offer the opportunity to highlight personal causes, raise money, or provide a sense of belonging.
Food trucks are the most familiar of the virtual kitchen disruptors, according to Technomic. These mobile, curbside vendors, known to 91% of customers, often specialize in cutting-edge street food trends and global specialties; fans can try new things at a relatively low price.
Food trucks drive frequency—92% of users visit once a week. Operators can take advantage of low start-up costs and overhead, and a leg up to open a brick-and-mortar operation. Twitter helped propel the food truck trend into the spotlight with info on location and menu specials. Now social media, food truck “pods,” and festival appearances create trendy buzz.
48% of consumers are familiar with pop-up restaurants, and 13% of consumers have tried one. Another 20% are interested.
GEN Z SPOTLIGHT Food trucks are extremely popular with Generation Z customers, 62% of whom use them. Their prevalence on college campuses and in festival settings and their popularity on social media has helped drive their success. Source: Technomic, Now and Next: Lessons from Emerging Channels for Food and Beverage (2019)
Sources: Datassential/IFMA Consumer Planning Program 2017/2018, Emerging Concepts & Disruptors; Technomic, Trends and Directions in Emerging Specialty Segments, 2019; Datassential/IFMA Consumer Planning Program 2017/2018, Delivery Dynamics; Technomic, Now and Next: Lessons from Emerging Channels for Food and Beverage (2019)