Consumers are returning to experiences, whether dining out or travel or live events. These once generated over $470 billion in annual consumer spending. Much of this spending ground to a halt over the past year. With rising vaccinations and falling case counts, will consumers once again seek out experiences as they did before, and can foodservice distributors capitalize on a return to the experiential occasion?

This session will examine the latest data on consumer spending, attitudes, and movement patterns to help multi-unit restaurant and hospitality operators anticipate the right moves to once again engage consumers

  • Operators - keep a finger on the pulse of consumer needs and pent-up demand for the experiential occasion.
  • Distributors - anticipate recovery for various segments of the operator landscape.
  • Manufacturers - collaborate effectively with supply chain partners through strategic insights into where growth can be found in the market

REGISTER TODAY and join us on October 26th at 11:00 am central!



Gen Z Consumers Seek Brands with Clear Purpose

Following in the footsteps of Millennials, Gen Z has taken a liking to chains such as Olive Garden and Starbucks, proving everything is cyclical, according to Piper Sandler's latest Taking Stock with Teens survey.

The Food Institute took a closer look at the survey and how this highly influential demographic could impact the food industry. Key findings are noted below.

Behavior and Habits

We spoke to Mark Beal, author of DECODING GEN Z: 101 Lessons Generation Z Will Teach Corporate America, Marketers & Media, and a professor at Rutgers University, for more insight on Gen Z purchasing trends.

"It's less about following in the footsteps of Millennials and more about what I call, the four P's, in food brands that Gen Zers love, purchase and advocate via social media: purpose, partnerships, posts and -plus-ups," said Beal.

Beal noted that Gen Z consumers are looking for brands with purpose, and that partnerships with celebrities are also appealing to the age group. "McDonald's is leading the way with partnerships with Travis Scott, BTS and Saweetie," he said.

Additionally, Gen Z engages with brands that are active with social media posts, such as Wendy's.

"Food brands like Wendy's that consistently post engaging content on what I call Gen Z's "Big Three" Instagram, TikTok and YouTube, gain affinity with this cohort," Beal added.

As for "plus-ups," with the majority of Gen Z still in college or high school, most are looking for value. Beal noted that promotions such as Taco Bell's "Steal A Base, Steal A Taco" World Series promotion each October is popular with the group.

The Piper Sandler survey looked closely at what was top of mind for Gen Z consumers:

  • What does Gen Z care about? This fall, the survey found that Gen Z is particularly focused on issues such as environment (15%) and racial equality (13%).
  • What social platforms do they engage with? Instagram continues to lead the pack in monthly usage at 81%, followed by Snapchat at 77% and TikTok at 73%.
  • Where is their money going? For male members of Gen Z, food is the top category of spend at 21%, while for females, it comes in second (21%), behind clothing.

Brand Preferences

When it comes to brands, Beal found that, of Gen Zers ages 13-24 across the U.S., 91% said they will research a company or brand to ensure they operate in a purposeful way before buying their product.

"Operating purposefully includes being environmentally friendly, supporting charities important to Gen Z and taking meaningful action in response to the pandemic and the Black Lives Matter awakening," he said.

Piper Sandler looked at several food categories and what brands were most popular with Gen Z. Here are some key stats from fall 2021:

  • Restaurants: Among average income teens, Chick-Fil-A (15%), Starbucks (10%), McDonald's (5%), Chipotle (4%), and Olive Garden (4%), reigned supreme, nearly the exact same from a year ago.
  • Snacks: Goldfish (12%), Lays (12%), Cheez-It (10%), Doritos (7%), and Cheetos (5%), were found to be the top snacks with Goldish taking the lead over Lays from a year ago.
    • Notably, over half of teens (53%) said they typically prefer healthy snacks. However, when asked what their favorite snack brand was, only 3% listed fruits, vegetables, or nuts.
  • Plant-Based Meat: Just 14% of teens consume plant-based meat. Of those that do, Impossible Foods was the brand of choice among 40% of consumers, while Beyond Meat followed with 31%.
    • Of the 86% who do not consume plant-based meat, 38% are willing to trying it, down from the 40% since spring 2021.

Shopping Channel Preference

Regarding COVID-19 insights, 76% of teens plan to visit a retail store in the next six months. Here are more key stats on shopping channels:

  • Amazon maintained its top position with 52% of upper-income teens naming it as their favorite e-commerce site.
  • Specialty retail is the most prominent channel for teens—with 30% of their time spent in this channel. Food Institute Focus

COVID-19 May Have Changed Restaurant Dining Forever

The latest National Restaurant Association overview of the industry indicates the pandemic may have changed dining forever, and experts say many of the changes implemented as survival tools are here to stay.

"These external pressures are forcing restaurant operators to invest in technology and systems that improve their ability to manage the day-to-day business," Greg Grambling, managing director at Solomon Partners, told The Food Institute. "Weaker operators and those that lack scale are increasingly at a competitive disadvantage, resulting in winners and losers and ongoing consolidation through M&A."

The NRA assessment found restaurant revenue in 2020 totaled just $659 billion, down from the $899 billion initially projected. Revenue for 2021 is projected at $789 billion.

Restaurateurs are more pessimistic now about returning to normal than they were in the spring, with those expressing hope falling from 70% in March to 32% in August. September was just marginally better at 36%.

By 2030, the NRA said, the definition of "restaurant" likely will change, and the eateries will serve and employ a different demographic.

Perhaps one of the most significant findings in the report was though the widespread availability of vaccines increased consumers' ability to dine on site, off-site dining actually increased between August 2020 and August 2021, from 72% of meals to 79%. Pent-up demand for on-premises dining fell from 83% in April 2020 to 47% last month.

Upgrading takeout and delivery packaging proved key to surviving the pandemic, with fine dining establishments forced to make the greatest pivot.

Restaurant revenue began making a steady recovery from February, at $55.5 billion, climbing to $71 billion in June but then leveling off in July and August at $72 billion.

Restaurant operators listed their five top challenges in September:

  • Recruiting employees 59% (up from13% in September 2020)
  • Food costs 15%
  • Coronavirus 13% (down from 67% in September 2020)
  • Sales volume 7%
  • Government 4%

The recruitment figure is telling. Bureau of Labor Statistics figures show restaurant employment fell by 41,500 in August, this despite a push by the industry to increase wages, which rose by 6.2% in the last year. Just a handful of states – Idaho, Montana, Utah and South Dakota – saw the level of restaurant employment rise in August, compared to August 2019.

"Working for tips or minimum wage alone does not establish enough long-term employment loyalty, which is why there is such a labor shortage," Baron Christopher, a turnaround consultant and growth strategy expert at Red Baron Consulting, as well as a self-described foodie and supper club cook, told The Food Institute.

"If your top servers and bartenders were part owners [or sharing in profits] would they leave or ghost you? No way. Would they steal from you or cheat customers? No. Would they manage inventory flawlessly? You bet your ass!"

The cost of food also is a factor. The NRA overview noted average wholesale food prices are up 5.5% compared to last year, yet menu prices rose just 4.1% (grocery store prices are up 2.3%), with the cost of fats and oils up the most, 38%.

The prices of other commodities also rose:

  • Poultry 22%
  • Pork 21%
  • Beef 17%
  • Wheat flour 14%
  • Eggs 8%
  • Fruit 5%
  • Dairy 2%

Only vegetables fell in price, down 15%.

The combination of higher labor and commodities costs are squeezing profit margins, with casual dining and fast casual taking the biggest hit, followed by family dining, quick service, fine dining, and coffee and snack.

Casual dining and fine dining restaurants are reducing menu items to try to curtail costs and deal with supply chain issues. Mike Paribello, vice president of marketing at Grecian Foods Kronos, said one way to overcome menu shrinkage would be for manufacturers to offer "kits" to allow restaurants to prepare meals with fewer steps, thus cutting labor costs.

"One of the changes that I've seen, and one that is hopefully permanent, is how the industry has worked through the pandemic as a united group," Paribello said. "This cooperation means more opportunities, and revenue, for everyone and helps all deal with the rapidly changing economy and society."

Full-service restaurants are also facing customer demand for more outdoor dining options as a result of the delta variant.

"Some restaurants found themselves in ‘lucky leases,' with plenty of outdoor space, windows, rooftops, and otherwise COVID-friendly architecture," Christopher said. "Others were not so lucky, especially street-level or basement joints in New York, Boston and elsewhere, with cramped interiors, no windows and zero outdoor seating. Coastal fish taco shacks with dozens of picnic tables became goldmines because of their open-air architecture and landscape design."

Thirty-five percent of consumers said they were more likely to choose a restaurant if alcoholic beverages could be included in the order – this was especially true of Millennials, 53% of whom said that would be a determining factor.

Millennials also were the most likely to support subscription services (71%), followed by Gen Z (67%), Gen X (60%) and baby boomers (36%).

Seventeen percent of consumers said restaurants rely too much on technology while 37% said not enough tech is employed. How can restaurants better use technology?

  • To ease payment and ordering 52%
  • To improve customer service 51%
  • To improve/increase takeout and delivery options 49%
  • To speed operations 46%
  • To provide more detailed information on offerings 44%
  • To provide more entertainment options 29%

Consumers used technology most to look up menus online (57%) and to look up locations and hours (45%). Just 18% of consumers said they used mobile payments with Gen Z adults the biggest adopters (30%).

Few restaurants said they would go back to pre-pandemic, business-as-usual once the pandemic is over with 68% (quick service and fast casual) to 76% (fine dining) saying they would keep at least some of the changes implemented. Food Institute Focus

Restaurants Place Expensive Bets Ahead of Winter Outdoor Dining

Restaurant owners and operators are gearing up for another winter of outdoor dining.

While many had to scramble in 2020 to find tents and propane heaters, restaurateurs are adding higher-quality permanent setups for the coming winter, reported The Wall Street Journal (Oct. 7). Going even further, some are preparing for outdoor dining to become a permanent option. Full Story

Owners Make Expensive Bets

With more time to make arrangements than last year, restaurant owners are investing large amounts of money on what they anticipate diners will want when temperatures drop. In addition to outdoor equipment and décor, some owners are tweaking menus to offer warm, well-executed dishes and hot-themed drinks.

Such plans are all a risk given what is going on in the foodservice industry, from supply shortages to a lack of workers. However, owners are betting on the creative setups being enough to lure more diners out of their homes.

The Push for Permanent Street-Side Dining

Some restaurant operators are pushing to keep their outdoor dining structures around permanently, reported CNBC (Oct. 3). Full Story

San Francisco's board of supervisors already voted in favor of making dining parklets permanent, while Atlanta and Philadelphia are among the cities considering similar measures.

New York City is currently hammering out the details for more sustainable outdoor dining rules following Mayor Bill de Blasio's decision to make its Open Restaurants program permanent a year ago. The city's planning and transportation departments launched a citywide public engagement process for design rules on permanent outdoor setups, reported CBS New York (Oct. 6). The guidelines will be released in the spring, and the application process is anticipated to start late next year. Full Story

However, not all are in favor of these types of measures. Some nearby retailers have filed complaints about noisy outdoor customers and the loss of parking spaces.

Opponents have also complained about sanitation and the safety of outdoor dining structures. Recently a Manhattan sanitation truck accidentally picked up a street-side dining structure with a person inside, dragging it down the street.

Sentiment Surrounding Federal Vaccine Mandate

Meanwhile, only 9% of restaurant chains believe they have a program in place that won't need to be changed under the Biden Administration's Path Out of the Pandemic COVID-19 Action Plan, which will mandate vaccines or weekly testing at companies with 100 or more employees, according to Black Box Intelligence.

Additionally, as abuse towards foodservice workers abounds, some restaurant operators are concerned about "policing" mandates for guests. Cities including New York City, Los Angeles, New Orleans, San Francisco already have policies in place or plans to require customers to show proof of vaccination to eat at restaurants or participate in other indoor activities. Food Institute Focus

Store News:

  • Scooter's Coffee will open 25 locations in South Carolina. Full Story
  • Chicken Salad Chick will open 50 locations in the Midwest over the next four years. Full Story
  • Marco's Pizza will open 15 stores in the Tampa, Florida, market by the end of 2024. Full Story
  • MOOYAH Burgers, Fries & Shakes will open 15 new locations in Palm Beach County, Florida, over the next 10 years. Full Story
  • Papa John's International will open 100 stores across Texas by 2029. Full Story
  • In a $220 million deal, SPB Hospitality acquired J. Alexander's Holdings, which operates 47 upscale restaurants including J. Alexander's, Stoney River Steakhouse and Grill, Redlands Grill, Overland Park Grill, and Merus Grill. Full Story
  • McDonald's Corp. set a new target to cut global greenhouse gas emissions to net zero by 2050, from the beef in its burgers to the light bulbs in its restaurants, reported Reuters (Oct. 5). Full Story
  • 800 Degrees Pizza is set to open 500 ghost kitchens with Reef. It's part of a major growth push for the pizza chain, which is also planning to launch thousands of robotic pizza kiosks, reported Restaurant Business (Sept. 28). Full Story 
  • Pizza chain Lou Malnati's has been acquired by investment firm Meritage. The Chicago-style pizza business, which has 71 locations, was valued at $500 million in the sale, reported Restaurant Business (Oct. 1). Full Story 
  • Kitchen United acquired software and ghost kitchen developer Zuul. The acquisition, Kitchen United's first, is expected to help it expand into the New York City and New York metro markets. Full Story
  • Burger King will test Impossible Foods' meatless nuggets in several markets, making it the first fast-food chain to offer the company's new chicken alternative. Customers in Des Moines, Iowa, Boston and Miami will be able to try the plant-based Impossible Nuggets, reported CNBC (Oct. 6). Full Story
  • The Chefs' Warehouse acquired substantially all of the assets of Silver State Meats, a Las Vegas-based beef, chicken, and pork provider. Full Story
  • Meanwhile, The Chefs' Warehouse acquired select assets from Martin Preferred Foods. The deal allows Chefs' Warehouse to continue building out in Texas and gives Martin the ability to shift its focus to manufacturing value-added proteins. Full Story
  • Eggs Up Grill, a 50-unit chain in the "better breakfast" segment, is breaking sales records. Same-store sales for the Spartanburg, South Carolina-based chain were up 27% in September, and the company is set to open 12 new locations this year, reported Restaurant Business (Oct. 5). Full Story 
  • Wendy's plans to tap data analytics and artificial intelligence to speed up drive-through orders and home deliveries, anticipate return customers' favorite meals, and even keep burgers from burning on the grill. The chain announced a deal with Google Cloud to develop advanced software capabilities that will use the tech giant's data and AI to build voice-recognition software, computer-vision systems, mapping apps and other digital tools, reported The Wall Street Journal. Full Story
  • BurgerFi International agreed to pay about $161 million to acquire Anthony's Coal Fired Pizza & Wings from L Catterton. Full Story

Executives on the Move:

  • Yum! Brands named Sabir Sami to CEO KFC division and Dyke Shipp to KFC president. Full Story
  • Freddy's Frozen Custard & Steakburgers named Laura Rueckel chief marketing officer and Erin Walter VP of brand marketing. Full Story
  • Yum! Brands is promoting David Graves to president of Pizza Hut U.S. Full Story
  • MOOYAH Burgers, Fries & Shakes promoted Natalie Anderson Liu to EVP of brand and Mike Sebazco to EVP of operations and development,
  • Aramark appointed Kim Scott president and CEO of Aramark Uniform Services. Full Story
  • CKE Restaurants promoted John Dunion to COO, Todd Huetinck to SVP of supply chain, and Brian Cassidy to SVP of Carl's Jr. Operations. Full Story


Retailers Charter Vessels in Next Chapter of ‘Containergeddon'

Port congestion continues on both U.S. coasts and the situation won't be resolved any time soon.

To deal with the pandemic-driven slowdown of sea networks — or, as Steve Ferreira of shipping consultancy Ocean Audit describes the concern, "Containergeddon," — major retailers have begun chartering their own vessels to transport goods from international markets.

No Room at the Ports

Around the globe, staggering port congestion shows no signs of slowing, with more than 50 ships waiting in the Pacific near Los Angeles last week and hundreds more waylaid in China.

Meanwhile, at the Port of Savannah, the third largest in the U.S., nearly 80,000 shipping containers — 50% more than usual — are piled up to five high with goods moving out almost as slowly as they were arriving, reported The New York Times (Oct 10). Full Story

As the port works through the backlog, more than 20 ships are stuck in the queue with some anchoring off the coast in the Atlantic for more than nine days.

Furthermore, hundreds of containers have been left at the port for a month or more by warehouses owners that are inundated with backstock from extra holiday ordering.

"They're not coming to get their freight," Griff Lynch, executive director of the Georgia Ports Authority told The New York Times. "We've never had the yard as full as this."

Pileups in warehouses and empty shelves in stores also reflect the shortage of truck drivers needed to carry goods to their next destinations.

Retailers Respond

To deal with the sea network bottlenecks, several major retail players including Walmart Target, Home Depot, Costco, and Dollar Tree, have begun chartering their own ships, reported Reuters (Oct 7). Full Story

"Chartering vessels is just one example of investments we've made to move products as quickly as possible," said Joe Metzger, U.S. executive vice president of supply-chain operations at Walmart, which has hired a number of vessels this year.

Chartered ships, which offer valuable cargo space and can sidestep the container terminals, will play a critical role in this second pandemic holiday season, particularly for time-sensitive seasonal goods like that won't sell if they arrive too late.

Retailers are also getting ahead of supply chain issues by advertising Black Friday specials in October and relentlessly pushing for the holiday shopping season to begin early. Food Institute Focus


September Restaurant Traffic Worst Since March

Although restaurant sales were up 6.11% in September when compared to September 2019, restaurant traffic was down 6.31%, according to Black Box Intelligence. The sales growth represented a 0.4% improvement from August, but results were much weaker than July (8.2%) and June (6.9%).



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State of the Restaurant Workforce 2021

Restaurants are stretched thin as they deal with unprecedented staffing shortages. Many are unable to open fully simply because they don’t have enough staff. Employees are leaving for other industries which has an impact on employee and guest satisfaction, ultimately, impacting your sales. Learn more in Black Box Intelligence's 2021 State of the Workforce Report. Learn More

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