Delivery, pure & simple and transparency were hot topics on the last day of the NAG Conference.
By Erin Rigik Del Conte, Senior Editor
The last day of the National Advisory Group (NAG) Conference kicked off with a session on foodservice delivery. Speaker Bonnie Riggs, director, industry analyst, foodservice, The NPD Group, and moderator Ed Burcher, foodservice marketing and strategy, FriendShip Stores, tackled the issue of who is ordering delivery and how c-stores can compete in the space.
The range of foods customers can have delivered today has skyrocketed.
“We’ve had six quarters in a row is flat to negative growth in the restaurant industry. The one bright spot seems to be delivery, which is 3% of the market—out of 62 billion visits—but it was the only growth area,” Riggs said.
Today there is an increased availability of third-party delivery options, which means restaurant owners no longer have to run that segment of the business. However, three-fourths of consumers who use delivery indicate they use the restaurant’s own delivery driver—they don’t know it’s maybe a third-party. Because they think it’s coming from the brand itself this can reflect poorly on the brand if food is late, etc.
If you’re moving into delivery, having a digital presence is key.
Dominos is growing double-digits as a result of its strong digital program.
In 2017 compared to 2013, delivery overall is up 7%. Pizza sales are down. But when you take pizza (which is roughly 63% of meals) out of the equation, the balance has grown by 35%. Of that 35%, QSR burgers accounts for 30% of that 35% growth (a result of McDonald’s entering the delivery market via UberEats), followed by QSR sandwiches (29%), full service (27%) and fast casual (13%).
Millennials are leading the delivery charge. The top reason given for choosing delivery is “I don’t have to leave home” (50%), followed by “It’s easier than cooking” (38%).
Nearly one-third of Millennials indicate they use delivery more than once a week, whereas 46% of boomers and up use delivery less than once a month.
Foodservice online delivery is only in its second inning it will continue to grow,” Riggs advised. Dinner dominates delivery, but opportunities exist to grow the delivery foodservice business during other dayparts, especially the weekday lunch. Consideration must be given to maintaining temperature of food when offering delivery. Price is a barrier to growth among older generations. Customers are highly interested in loyalty rewards that are easy to use and worth their while. Friendly service is also key.
“Delivery and digital build loyalty and drive sales growth in a declining (overall restaurant) market,” Riggs concluded.
In an Operations Boot Camp closing session led by NAG Executive Director and CSD’s Editor-in-Chief John Lofstock, foodservice consultant Keith Solsvig, outlined eight key market trends. Two of the most important today are “Simple & Pure” and “Transparency 360.”
Simple & Pure means “staying away from complex things we don’t understand from things we do to foods we eat.” It’s an attempt to get away from what is perceived as being ‘bad,’ such as additives in food. He noted there is double-digit continuous growth for clean label-related new product development.
Transparency 360 involves knowing where food is coming from and understanding the whole chain from beginning to end. Is it local? How is it sourced?
Gen Z and Millennials grew up with technology and value transparency with access to detailed information. Solsvig noted 73% of consumers feel better about food companies that are transparent.
Dr. Nancy Caldarola, Ph.D., R.D., general manager of The Food Training Group, shared a number of ideas to help c-stores compete on food.
“No matter what, you have to look at your demographics and what they want,” she said. Customers invested in changing their lifestyles via healthful food with pure and simple ingredients, are not usually in the lowest income groups.
Regardless of what area a c-store choses to pursue, education of the customer is crucial in attracting people who will be loyal to your brand. If you choose to move into healthy, transparent and fresh & pure, don’t just put foods on the shelf. Educate customers about the offerings in this area and why it’s important to your chain. Become known for this area.
“Things you can do to (achieve) that include education, awareness, building a program, connecting with things people like to do, and then say, ‘Not only do we put things on the shelves, we walk the talk with a program,’” Caldarola said. She gave the example of enmarket, as a c-store chain doing this well.
“You have to build the business. Help people understand your brand and what you stand for. What are you doing to make yourself stand out? Why should I buy coffee from you? Why come to you for lunch? What are you doing to make my life easier? Are you doing the digital elements?” Caldarola asked retailers to ponder.
Mark your calendars: NAG 2018 is set for Sept. 9-12 at Ponte Vedra Inn and Club in Ponte Vedra Beach, Fla.