Is Demographic Shift Disrupting Food and Beverage Sales?
Yeah, this months’ entry is a tad “deep” but we’ll do our best to make sense of it all as it’s our mission. Manufacturers, vendors and operators are experiencing a “perfect storm” of change in consumer eating behaviors and in what food and beverages guests are consuming. Shifts in taste, life-style and pocketbooks are driving those in food service and the supply chain to extremes resulting in loss in market share and check average alike. Advice and suggestions we have in abundance; however, it’s just as the challenge of “leading a horse to water” and you know the rest. Here’s what we see unfolding in the “food-chain” marketplace with a couple of those suggestions for good measure.
Allow us to play economist and state, “assume casual dining is shrinking” and with only a 1 percent rise in traffic, primarily due to dinner home delivery, that’s better than the alternative (Nation’s Restaurant News, 7/3/18) but it also offers additional challenges. While there is an uptick in sales due to home delivery there is potentially a double to triple-digit loss in beverage sales for each of those home-delivered meals, especially Adult Beverage sales! Case-volume purchases indicate that smaller chains (3 to 19 units) are outpacing large chain purchase volumes at 5% to 2% year ending in May, respectively. This might suggest that demographic shift is toward what consumers consider as cutting edge in their menu and beverage offerings, including healthy fare, and a hip vibe doesn’t hurt either.
It is generally accepted that both Millennials and GenZ are driving new food and beverage consumption trends (CNN Money, 7/5/18) as both groups are more open to experimenting with their food and beverage options. These two groups, over 76 million strong, are following their GenX brothers and sisters in seeking a better product for which they’re willing to pay a higher price while actually consuming less. We see that reflected in sales data when the “craft” category – across all product segments – demonstrates higher dollar sales at a lower volume of product traffic. These consumer cohorts seek value to which they attach key words to include; craft, heritage, hand-made, regional, premium, age-quality and small batch. That’s also why they consider mass-market beer to be “stale” or too corporate and that’s driving them to discover smaller, local producers and purveyors of both food and beverage.
Just as any other consumer group they desire to be “in charge” of their consumable purchasing decisions and would never consider the beverage or restaurant choice of their parents to be aligned with their value and lifestyle perceptions. That perception includes the shift toward wine and away from beer according to CNN (Food and Wine, 7/3/18) when in 2002 beer was 54% of alcohol sales with wine at 37% with those figures shifting to 46% and 37% in 2017, respectively while spirits held steady. This change in purchasing behavior is reflective of the interest in healthier and “better for you” food and beverage products at both the retail level and on restaurant menus. The dinosaurs didn’t do a good job of adapting to change; however, we should as I’d like to think we’re a tad smarter.
All this information about market trends is helpful but what does it mean in the end, specifically, when operators are looking at dwindling bottom lines. To those sitting in a corporate chain restaurant office our first suggestion would be to approach your challenges in an entrepreneur mindset instead of the “group-think” that may paralyze action. Independent and small chain operators are closer to their guest base, we suggest leveraging your daily interactions and conversations with those guests to learn their interests and which foods and beverages they’re seeking. Beyond those suggestions we invite you to contact us at www.themenuspring.com and thanks for your reviews!