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DMA PowerPoint Presentation, November 2009
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November 2009Project #13509
Selected Foodservice IndustryInnovation Forces
Food Industry. Facts. Insights. Consulting.
Prepared by:
Introduction
3
Who We Are Consulting firm dedicated to
foodservice Tracking industry
performance for 40+ years Market assessments and
opportunities for Manufacturers Ingredient suppliers Operators Distributors Associations
Ron Paul, Founder
4
Menu Development Activity
Note: Non-alcoholic beverages onlySource: Technomic Menu Monitor, First Half 2009
716
369
236 230
103
Entrees Appetizers Sandwiches Desserts Beverages
Most Active Menu Categories At Top 250 Chains in First Half 2009
5
Seafood Tops Center of Plate
Proteins Added by Top 150in First Half 2009
Source: Technomic Menu Monitor, First Half 2009
Legal Sea Foods’Spice-Crusted Salmon,
Grilled Fruit & MushroomQuinoa
101 104
63
18
50
Seafood Chicken Beef Pork
Fish
Shel
lfish
6
Innovation Forces Are Numerous
Communication / TechnologyInnovation
8
Technology Enables New Approaches
Web-basedmeetingplanning
Touchscreenorderingkiosks
iPhoneordering
application
Sheetz Bros.Coffee truck
9
Bottom Line: Social Media Won’t Wait
Number of Years it Took to Reach an Audience of 50 Million
9Source: Facebook as cited by money.cnn.com, March 11, 2009
10
Naked Pizza Tweets Success
Tracks Twitter-driven sales at the register An April 23rd Twitter-exclusive promotion
accounted for 15% of sales for the day
11
Tweets to Eats
VERDE: 6PM-9PM@UCLA -Gayely & Strathmore; 10:00PM-2AM@The Brig - Abbot Kinney
and Palm in Venice
ROJA: 12PM-3PM@Hannam Chain -2740 W. Olympic Blvd in K-Town;
7:30PM-9PM@Santa Fe Springs - next tothe secret warehouse
KOGI SPECIAL! Korean Burger w Chile SaltedWatermelon! @ ALL LOCATIONS!
3:06 PM May 13th from txt
+ =
12
Kogi’s Korean Short-Rib Tacos
Sesame-Chili Salsa Roja, Korean Chili-Soy Vinaigrette,Cilantro-Green Onion-Lime Relish, Crushed Sesame Seeds,
Sea Salt, Radish & Lime
13
Web 2.0 Upside + Downside:Give Up Some Control Of Your Brand
This new era will demand more “crisismanagement” skills
“Recycling” Innovation
15
Burgers Are the New….Burgers
Hamburger CheeseburgerSpecialtyBurger
Menu Items2006 110 143 1652009 100 136 215% change -9% -5% +30%
FSR Menu PricingAve. Price $ $7.16 $8.18 $8.80% change vs. ‘06 10% 15% 14%
LSR Menu PricingAve. Price $ $3.58 $4.04 $4.93% change vs. ‘06 15% 19% 6%
Burger Development Trends2006 - 2009
Source: Technomic Menu Monitor, First Half 2009 Base: Top 250 Chains
16
Slider’s Are HOT
17
Burger Wars Continue
18
Beef Still Leads Burger Proteins
Source: 2009 Burger Consumer Trend Report, Technomic Base: 150 incidences CasualDining Emerging & Independent FSRs, 373 incidences in the Top 250 CDR
28%
15%
7%
4%
3%
2%
1%
31%
19%
4%
7%
2%
Ground beef
Angus
Chicken
Sirloin
Turkey
Fish/Seafood
Bison
Top 250 Casual Dining FSRs
Leading/Independent FSRs
19
The Pool Is Getting CrowdedBurger chains expanding
The Counter, 5 Guys,Smashburger, etc.
Elite chefs enter the game
Sodexho introduces TheOriginal Burger Company
Survival Innovation
21
Across Income Groups, ManyConsumers Have Felt a Direct Impact
No
30%Yes
70%
“Has the economy had adirect impact on you?"
74%
71%
70%
59%
66%
<$35,000
$35,000-$59,999
$60,000-$99,999
$100,000-$149,999
$150,000+
“Yes” by Income
22
Price Has Been Increasingly Importantto All Groups
In 2009, consumers will: Total TQ* Rely more on money-
saving options 71% 70%
Seek out special offers 64% 62%
Order less expensive items 33% 31%
Visit less expensiverestaurants 29% 30%
*TQ = Top Quintile household income (median after tax income = $158,388).This group represents 40% of all FAFH spending!
INSIGHTInsight
23
Demonstrating Value and Affordability
Absolute price points “Barbell” pricing Happy Hour migrating beyond the
bar Free! offerings
24
“Value menus” evident in all segments
Lower prices on core menus
Lower Price Points Demonstrate Value
Small Plates,Small Prices
Big Eat, Tiny Price Business LunchMenu
Reductions on 100 Items New Items for $5
25
“Barbell” Pricing: Balancing Premiumand Lower-Priced Options
Discounting common drinks, raisingprices for specialty options
Premium options in test balance“Why Pay More?” menu
Wines by the glass in three portionoptions
26
The Food-Centric New Happy Hour
$2 snacksin afternoon
Half-pricesmoothiesfrom 5-6
Penny perksfor sides orextra entrée
Kids eat freeon familynight
27
“Casualization” of Upscale Diningthrough Comfort Foods
Next evolution after deep discounting?
Prix-fixe menu; newideas about future offine dining
New burger menu
High-end celebritychefs shifting tocasual dining
28
“What is the long term consequence ofdeep discounting?”
Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
Capital Grille (Darden) -9% -9% -19% -22% -18%
Flemings (Outback) -10 -20 -20 -22
Longhorn (Darden) -5 -6 -5 -7 -6
Morton's Restaurants -8 -12 -24 -26 -17
Outback Steakhouses -8 -10 -8 -10
Ruth Chris Steakhouse -7 -19 -19 -23 -24
Stoney River -8 -18 -17 -20 -17
Full Service Steak RestaurantsQuarterly Sales Reports
Mandated Innovation
30
Mandated Menu Disclosure
Gaining momentum andsupport
NRA supports LEAN Act Overrides various local
mandates Provides protection from
lawsuits Jury is out on the real
impact
31
NYC Consumers Surprised by CalorieCounts; Higher than Expected
“Have you been surprisedby the calorie counts?”
Base: Have read calorie information = 203“Are they …”
Base: Surprised by calorie content = 163
Yes
80%
No
20% 1%
10%89%
Higherthan
expected
Aboutwhat
expected
Lowerthan
expected
Source: Technomic Economic Impact Update, August 2009Base: 300 NYC residents
32
Operators Investing in Health &Nutrition in Myriad Ways
Specialequipment forfortified tea
Kids’ menu:broad-basedoverhaul toenhancenutritional profile
Emphasizing“pure” options
Iced tea withprobiotics
Mediterraneanoptions
Key Takeaways
34
Key Takeaways Innovation sources are many – challenge your
cross functional teams to get engagedSome sources of innovation are unavoidable;
get ahead of the wave as early as possible Menu disclosure Technology
Find ways beyond core menu pricing to showyour value
How can you stimulate demand in thisenvironment while balancing profitability andcustomer frugality?