Consumer Trends 2011 Report :: Foodservice

 Hope for a better 2011

An economic turnaround will help prevent next year from being one to forget.

 By Sam Gazdziak, Editor

 The year 2010 saw more brown-bag lunches and home-cooked dinners than it did to-go orders and trips to the local restaurant. As people continue to pay close attention to their own financial bottom lines, the foodservice industry is still looking for ways to bring consumers back into their restaurants while maintaining profitability through these rough economic times.

The foodservice industry, in spite of the struggles of 2010, does seem more optimistic heading into 2011. The National Restaurant Association’s Restaurant Performance Index, a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry, had an Expectations Index rating of 101.1 in September—the most recent data available. That number represented the industry’s overall feelings about the next six months of business, and it is up 1.0 percent from August and its strongest level in five months, reports the NRA.

Forty-three percent of restaurant operators expect to have higher sales in six months, and 38 percent of restaurant operators said they expect economic conditions to improve in six months. However, restaurants are still turning to bargain menus and limited-time offers to entice diners with cheaper offerings. Chili’s recently introduced a “$20 Dinner for 2” option, selling two entrees and an appetizer for $20.

As long as customers will shy away from spending too much at restaurants, foodservice operators will look for ways to operate more economically. Eric Giandelone, director of foodservice research at Mintel, thinks restaurants will rely more on less expensive cuts of meat in 2011.

“With restaurant traffic not being as high as it’s been in the past, and consumer spending certainly not being as high as it’s been in the past, there’s still a need to maintain operating margins,” he says. “Certain cuts of meat that can be accented with marinades or sauces can allow for the protection of these margins.”

Foodservice operators also will have to deal with the rising costs of raw materials, as increases in grain prices will lead to higher-priced bakery and meat items. McDonald’s, for example, has already announced that it will be increasing prices in 2011. If more restaurant chains and stand-alones are forced to raise their prices as well, they will increasingly turn to less expensive alternatives to their present meat cuts.

Comfort in comfort foods

The struggle of attracting customers has also led restaurants to become more risk-averse in what they put on their menu, says Giandelone.

“Some restaurants are doing some interesting things on their menu, but they’re doing them with things that they know have strong appeal, especially among their customer base,” he says. He points to hamburgers as an example, noting that many fast-casual restaurants have greatly expanded their burger options.

A recent report from the Foodservice Research Institute’s MenuMine service noted that hamburgers or steakburgers are now on more than half of independent or chain menus. Furthermore, more than 200 burgers were added to the menu in the first eight months of 2010, either as a menu item or a limited-time offer. The average chain/independent restaurant with burgers on the menu lists 5.5 various burgers, and the burger category as a whole has grown 6 percent compared to five years ago, while the price has risen 22 percent to an average of $6.43.

“That’s partly because it’s a relatively low-priced item, but it’s also something that is going to garner widespread appeal,” Giandelone says. “They’ll dress it up a little bit and make it different, but it’s going to be something that everybody’s going to be familiar with.“I think we’re going to see these traditional American menu items in 2011,” he adds.

Calorie counting in 2011

One piece of legislation that may have a big impact on the foodservice industry in 2011 and beyond is Section 4205 of the Affordable Care Act. That act set new federal requirements for nutrition labeling for foods sold at chain restaurants and similar retail food establishments with more than 20 locations.

Those affected restaurants are required to have calorie counts on the menu, effective March 23, 2011, though Giandelone believes that the Food and Drug Administration will give restaurants extra time to get their menus in order.

Giandelone says that the FDA requirements are still being tweaked, and the administration is still accepting comments from the industry. There is also a question of whether or not the calorie counts will actually have an impact and cause consumers to find lighter options.

Still, there is the possibility that the new menus may cause restaurants to look for healthier preparations or leaner cuts of meat for their entrees, so meat suppliers will have to be prepared to offer more options if they are requested.

“You would think that restaurant operators would be looking for a way to cut calories, and meat and poultry in particular being calorically dense, you might see either healthier preparation methods or smaller portions,” Giandelone says.

Suppliers as partners

As restaurants are looking for ways to remain profitable as they wait out the economic downturn, they will increasingly rely on their suppliers for assistance.

The forward-thinking food producers will look for ways to expand the traditional supplier-client relationship and become partners.“Probably the No. 1 thing that a supplier can do is help an operator extend a menu with what’s already in the restaurant and the kitchen,” Giandelone says, explaining that restaurants have neither the operating margins nor the customer volume to start experimenting with new ingredients.

“If I [were] an operator, I would look for a supplier to help me with what I’ve got,” he says. “For the supplier, the upside is greater volume,” he adds. “Maybe it’s not going to be more diverse types of offerings, but if you can help them incorporate your meat or your poultry into more items, then you might win on volume.”


Consumer Trends 2011 Report :: Retail

The push for simplicity, healthfulness, quality

Meat and poultry processors competing in the retail marketplace have a wide variety of trends to chase heading into 2011.

By Andy Hanacek, Editor-in-Chief

The “great recession,” as it has been referred to by many media outlets through the past year or so, has changed the mindset of mainstream consumers in ways that the meat and poultry industry (and the food industry in general) may not have anticipated. These changes, too, do not seem to be fleeting fads ready to vanish quickly with signs of an economic recovery. The American consumer has been hit hard, down to his or her core in many cases, and the wounds inflicted will take time to heal. In 2011, the effects of the “great recession” will still be felt—but take heed, processors: There are strategies that you can use to capitalize upon the new consumer outlook. The future is not full of only bright, sunny days ahead, but experts don’t believe the future to be all gloom and doom either.

The home, as restaurant

Processors utilizing restaurant menus as inspiration for products will be well positioned to exploit one of the top trends in 2011, according to Krista Faron, director of innovation and insights for Mintel International.

“We’re still in the throes of a recession, so this concept of ‘trading down’ or ‘trading over’ is still very much applicable,” she says. “We see this as a constant in the lives of consumers now, and it hasn’t dissipated as time has gone on. We’ve really seen that restaurant-to-retail mentality maintain relevance.”

The industry continues to innovate new products and solutions for consumers who want the restaurant experience at home, since they don’t have the budget to go out. It’s all about transforming restaurant quality and flavors into the home environment.

The meals and value-added segments are jumping on this trend in a big way, with mainstream meal companies launching products with meat front and center, such as Stouffer’s Sautes for Two. It builds off the skillet concept that has taken off recently, Faron explains, as many companies have pushed to get restaurant-quality, easy-to-prepare, frozen skillet-style meals to market.

“[Stouffer’s is] really putting the protein front-and-center—for example, the Steak Gorgonzola variety,” she says. “So it’s very much about taking those proteins that we look for and love in restaurants and migrating them to the home.”

Jennie-O Turkey Store has just launched its Nacho Platter that follows this similar “restaurant quality at home” concept, but with a more fun, indulgent spin to it, Faron says.

“There’s taco-seasoned turkey meat, tortilla chips and cheese, and you can make a restaurant-inspired nacho appetizer plate in your microwave at home,” she explains.

Meat portions, under control

Lu Ann Williams, head of research at Innova Market Insights, sees reduced meat content as a trend of which meat and poultry companies must take notice. Williams believes that more environmentally and health conscious consumers are looking to reduce their meat consumption with healthier protein alternatives. But, she says, it doesn’t have to mean gloom and doom for the industry, there are ways to take advantage of this trend.

“A strategy for meat manufacturers to remain relevant is to blend their meat ingredients with another protein component and thereby create a novel reduced-meat product, which can command a good sales premium,” Williams explains. “In The Netherlands, the 100% vegetable hydrated fiber Meatless has been incorporated into a number of meat products in the creation of a healthier meat component.”

Williams says one of the biggest meat innovations of this year comes from the Vion Group, which launched Hackplus in Germany, a line of minced meat products (beef, pork and a beef/pork blend), where part of the meat is substituted with wheat protein. The product is claimed to contain 30 percent less fat and cholesterol, but with the same appearance, taste and preparation characteristics as conventional products.

Care, up and down the supply chain

Animal welfare as a component of corporate social responsibility measures is another trend that Williams sees building into 2011 and beyond.

“An emerging group of consumers believes animals reared for slaughter deserve a far better life than what the mainstream food industry is offering them,” she says, and adds that many processors have opened their eyes to this trend and begun exploiting their positioning in the market.

A good example of a brand exploiting this trend is Gold’n Plump’s Just BARE Chicken, which features a Family Farm Code to trace the chicken back to the farm on which it was raised.

Furthermore, the veal industry’s conversion to group housing shows the industry’s willingness to appease consumer demand, even when science may not support the change 100 percent.

Keep labels clean

“From a macro perspective,” Faron says, “if there’s one trend that we at Mintel think is really driving product development today, it’s simplicity — in all sorts of different forms.”

Often, that simplicity comes in the form of taking out the ingredients consumers don’t know, don’t like or don’t understand.

“It’s about having labels read more like a shopping list than a science experiment,” Faron says. “Everything from Haagen Dazs five in the ice cream case to Pillsbury simply… cookie dough in the chilled case offers great inspiration across the food industry, but there’s still room to grow in the meat and poultry industry.”

While processors remain slower on the uptake in this arena, Faron does see momentum building, and cites Wellshire Tavern Style Uncured Seasoned Deli Ham from Wellshire Farms as one brand jumping ahead of the pack.

“It very clearly markets on the package, ‘Made with only 7 ingredients,’” she says. “So it’s completely taking this concept of Haagen Dazs five and other products we see all across the food industry and making it very applicable to the meat category.”

This is another trend that Just BARE Chicken fits into, and processors should be able to take cues from these products. Faron sees this as a tremendous opportunity for some category leading brands and processors to take a stand and launch some of these products.

Low sodium

As the king of 2011 trends, the 800-pound gorilla of trends, etc., etc., lowering the sodium content of meat and poultry products (as well as other food products) stands as “America’s Most Wanted” trend for 2011. Some processors have jumped into reformulating and innovating their product lines full force, while others are still tinkering with the idea. Yet, says Williams, “in many cases, regulatory pressure is pushing manufacturers to lower the sodium content of their meat products. It is not an easy challenge, as salt plays technological preservation functions in meat products and also adds flavor.”

Furthermore, she says, “less salt” often leaves the impression of “less flavor” in the minds of many mainstream consumers, so some manufacturers are lowering the sodium content without marketing the move heavily. Still, some processors and retailers such as Whole Foods are not afraid of marketing no-salt products, evident via its Mary’s Free Range Chicken rotisserie product, stating clearly on the label “No Salt.”

Faron detects similar strategies from processors through her research in this trend. She sees a wide variety of reactions, from companies such as Sara Lee Corp., which has been more vocal about pledging to make and making sodium reductions in its products, to companies that are lowering sodium behind the scenes rather than marketing their strategy in this arena.

“There are dedicated low-sodium products that are clearly identified as such, prominently featured on the package,” Faron explains. “Those will appeal to consumers who are very conscious of sodium in their diets.”

Realistically, however, the average American isn’t thinking about sodium on their typical grocery shopping trip, she says. And for those customers, reduced sodium isn’t going to be at the top of the benefits list.

“What we’ve seen in the industry typically is ‘stealth health,’ or quiet reduction, where companies pledge to take down sodium by a percentage over a number of years,” Faron says. “The hope is that consumers won’t notice the difference as they continue to eat the same products, and that they cannot ascertain the gradual difference over time.”