Consumer and Food Service Trends Q3 2021 - KAGOME USA
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Consumer and Food Service Trends Q3 2021
TABLE OF CONTENTS
Fewer Diners Seek Visible Safety Cues ............................. 1
30 Menu Trends to Watch ...................................................... 2
Technomic Insight Operator Recovery .................................. 3
What’s driving the labor crisis? ............................................. 4-10
Restaurant Employment Situation ................................ 4
Short-term Challanges, Child and Family Care .............. 5
Teen Participation, Long-term Challenges .................... 6
Regional restrictions and changing CDC guidelines continue to
create challenges and questions—even in areas with high vacci-
nation rates. Nevertheless, restaurant operators must continue to
Q3 WHERE strike a delicate balance between guests still seeking these extra
visible precautions and those who may feel such measures are
ARE WE no longer needed.
NOW?
Technomic Industry Insights
July 2021
Fewer Diners Seek
Visible Safety Cues
Nearly half of Americans are
fully vaccinated (49.2%), and
Technomic Ignite Consumer
brand ratings data shows that
more diners have increased
overall restaurant frequency
quarter over quarter. More than
three-fifths (62%) now say that
they visit or order food from a
restaurant once a week or more
frequently, up from 60% in the
first quarter.
In addition to increased week-
ly restaurant usage, changes
in demands for visible safety
protocols signal that a growing
number feel more comfortable
dining out again. Compared
to Q1 2021, the percentage
of consumers now looking for
safety cues has dropped signifi-
cantly across all measures.
Expectations regarding dining
room restrictions and mask
usage are among some of the
greatest declines registered. A
growing number also appear
less fearful of self-serve bever-
age stations.
Base is 27,300 consumers ages 18+ per quarter, Source: Technomic Ignite Consumer
1
30 Menu Trends To Watch
1 Ararat 21 Jacoque
Middle Eastern spice blend Mexican dairy product based
combining urfa biber, fenu- on fermented milk
greek and smoked paprika 22 Jaja Sauce
2 Aveze Asian bean-based sauce
French yellow gentian-based 23 Kimchi Burgers
liqueur Popular handheld topped with
3 Avgolemono fermented Korean vegetables
Sauce or soup made with egg 24 Macaroni and Beer
yolk and lemon juice mixed Cheese
with broth Mac paired with beer-infused
Image Source: Shutterstock.com
4 Bacanora cheese
Agave-derived spirit 11 Chile Jam 25 Makdous
5 Bagel and Lox Riffs Sweet and savory condiment Levantine/Iraqi walnut- and
Nontraditional versions of the 12 Elote Beyond the Cob red pepper-stuffed eggplant
classic breakfast pairing Mexican street corn inspirations dish
6 Bone Broth Bloody in varied dishes 26 Meat Marmalade
Bloody Mary cocktails infused 13 Flavored White Rus- Spreadable preserve made
with animal bone stock with beef or other meat
sians
7 Breakfast Cookies Classic vodka-Kahlua-cream 27 Mexican Oregano
The traditionally sweet dessert cocktail with new flavor infu- Southwestern U.S./Mexican
menued as a breakfast item sions herb related to lemon verbena
14 Fried Cauliflower 28 Millet
The popular vegetable served in Small, round cereal grain
a fried preparation 29 Mole Vinaigrette
15 Furikake Fries Mole sauce in a vinegar-based
French fries topped with the dry dressing
Japanese seasoning 30 Non-Japanese
16 Global Corn Dogs Sushi
International version of the Raw fish dish with flavorings
American fried item from other global regions
17 Grain Desserts
Sweets featuring quinoa, barley
or other cereal grains
8 Breakfast Poutine
Morning inspirations of the Ca-
18 Halva
Western and Central Asian
nadian potato and cheese curd
flour- or nut butter-based con-
dish
fections
9 Buttermilk Braising
Non-chicken meats braised in
19 Hard Seltzer Cocktails
Adult beverages featuring the
buttermilk, such as pork fast-growing category of drinks
10 Candied Salmon 20 Herbed Bacon
Cured and cold-smoked fish Bacon topped with rosemary,
thyme, sage or other herbs
Source: Technomic Emerging Eats Q3 2021
2
TECHNOMIC INSIGHTS
OPERATOR RECOVERY
Although the nagging pandemic situation has yet to fully resolve itself,
several current diner demands have come into sharp focus. In order to
emerge successfully from the COVID-19-induced environment, it’s cru-
cial for restaurant operators and suppliers to understand these growing
expectations. Technomic has uncovered some key insight into what it
takes to steal share, win more occasions and grow future business.
#1 Get the Order Right
Operators are finally beginning to catch a glimpse
92% state that order accuracy is
of true post-pandemic dining behaviors. While it still
may be premature to assume that off-premise orders
important/very important when se-
will not cannibalize dine-in business (or vice versa) in lecting an LSR for an occasion.
some way, most operators will do anything possible
to hold onto those to-go and delivery orders. Want to 75% state that quality of takeout
keep your off-premise business strong? Triple check packaging is important/very
that order before it goes out the door. Now, check important when selecting an LSR for an
it again—and be sure your packaging is up to the occasion, up from 69% in the prior
challenge no matter the ultimate dining destination. four-quarter period.
#2 Prioritize Innovation and Enjoy the Benefits of Mixing It Up
Consumers love a good reason to place restaurant orders. Keep providing justification by tempting them
with limited-time or seasonal offers. Maintain a robust innovation pipeline and remember that how far you
reach is up to you. Surprising and delighting guests does not always require a complete brand reinven-
tion or comprehensive SKU overhaul. Among Gen Z’ers and Millennials, the number of recent
occasions driven by the need for novelty has grown 26% over the past two years. As a de-
cision driver, the importance of offering limited-time or seasonal items has increased by 3 points at LSRs
and 4 points at FSRs year over year.
#3 Social Responsibility is Everyone’s Duty and Your Opportunity to Shine
Although your community-based activities should speak for themselves, don’t forget to remind consumers
how invested you truly are. Let us know about your good deeds in detail, and actively encourage guests
to participate in your charitable passions.When choosing a restaurant for an occasion, the importance of
social responsibility and giving back to the local community are both significantly higher than they were
one year ago—and that holds true at both LSRs and FSRs. The good news? More consumers are giv-
ing restaurant chains credit for social responsibility efforts in the past four quarters compared to the prior
period. Average social responsibility ratings for both LSR and FSR chains has increased year over year.
Source Operator Recover:
Consumers in Year Zero Aug2021
3
What’s driving the labor crisis?
By all accounts, the restaurant The goal of this white paper its workforce. Yet the indus-
industry is roaring back to life as is to evaluate those potential try remains about 1.5 million
vaccination distribution spreads, changes and help foodservice workers short of its pre-pan-
dine-in restrictions are lifted operators, distributors, sup- demic employment base.
and, improved weather through- pliers and others serving the Job openings in the hotel and
out most of the country sends industry to begin developing restaurant sectors have risen
consumers flocking to restau- strategies around the lon- dramatically since vaccine
rants to dine with friends and ger-term ramifications of the distribution expanded begin-
family. Operators are reporting labor crisis in the restaurant ning in January. By March
same-store sales approaching, industry. As always, Tech- and April 2021, job open-
and in some cases exceeding, nomic will continue to update ings in these sectors had
pre-pandemic levels as pent-up our thinking on the outlook for reached their highest level
demand drives the dine-in surge this industry as the situation ever recorded. These spikes
and off-premise orders remain evolves. were quickly eclipsed in May,
strong. when more than 1.3 million
For restaurant operators ea- Restaurant
openings were reported,
ger to return to full capacity, Employment representing a 35% increase
however, significant headwinds Situation vs. April and an even more
remain as the restaurant in- astonishing increase of 48%
dustry struggles to fill jobs to Restaurants currently employ vs. May 2019, well before the
meet this booming demand. 10.8 million workers, a massive pandemic.
The biggest challenge facing rebound from last April when
operators in this current recov- the industry shed almost half of
ery period is finding staff willing
to work. There are numerous
other factors that are impacting
employment in the restaurant
industry; these effects will be
felt not only during the immedi-
ate post-pandemic recovery, but
well into the future. Given the
broader societal shifts emerg-
ing as a result of the pandemic,
differing generational viewpoints
toward traditional business
workplace models, as well as
looming demographic changes,
it’s important to begin thinking
about the longer-term implica-
tions for the restaurant industry
and how industry norms and
cost structures will be reshaped
in the future.
Technomic Roadblock to Recovery - US
4
The restaurant industry is not The increase in leisure/hos- enacted during the pandem-
alone in its struggle to fill job pitality wages (a large portion ic as the primary cause of
openings. Total job vacancies captured by restaurants) is their recruiting challenges.
in the United States increased more than four times that of all The consensus is that po-
to 9.3 million in April from 8.3 industries tential hires are sitting on
million in March of 2021, high- the sidelines as COVID relief
lighting the fierce competition aid is a comparable income
from other industries for avail- substitute. Many stories are
able workers. making the rounds regarding
operators receiving count-
Workers in the foodservice less number of employment
and accommodations sector applications, but very few
quit their jobs at record levels applicants are appearing for
in April. The quit rate, which re- interviews (as simply sub-
fers to the percentage of people mitting a job application is
who voluntarily leave their jobs a requirement for receiving
over the period, reached 5.6% unemployment benefits).
in April, an all-time high for the Restaurateurs are not alone
industry and more than double in viewing federal unem-
the overall total rate across Despite employing a variety of ployment subsidies as a
industries. approaches—from increasing hindrance to hiring. So far,
starting pay and offering sign-on twenty-five states have with-
The cost of labor is skyrocket- and referral bonuses to hosting drawn several months early
ing within the restaurant sector, job fairs and offering incen- from federal unemployment
increasing 12% in April 2021 tives to potential workers who programs that are scheduled
versus April of last year. complete an on-site applica- to run through September 5
tion—90% of restaurant employ- in an effort to spur greater
Restaurant Monthly ers in a survey conducted by participation in the workforce.
Year-over-year Restaurant Business (May 15,
Child/Family Care
Hourly Wage 2021) report that hiring is more
difficult than it was before the Parents with children have a
Change* pressing need for affordable
pandemic. What are underlying
reasons for this? and reliable child care to be
able to return to work; at the
Short-term same time, childcare pro-
grams are facing their own
Employment
challenges as the economy
Challenges reopens. The Massachusetts
In the same Restaurant Busi- Business Coalition for Early
ness survey, the overwhelming Childhood Education reports
majority (79%) of operators that one out of five childcare
point to federal subsidies on centers have not reopened
state unemployment payments since the pandemic hit.
Moreover, childcare pro-
grams are also contending
with their
Technomic Roadblock to Recovery - US
5
own unprecedented staffing “Rusty” or Inexperienced
shortages, leading to fewer Workforce
spots and long waiting lists. The long duration of dine-in
This situation is exacerbated closures and capacity restric-
by concerns that children tions in many areas means that
have not yet been approved returning employees are “rusty”
for vaccination. Similar labor and will require retraining, while
shortages remain for in-home Image Source: Shutterstock.com new hires requiring full training
caregivers for elderly or dis- may represent a substantial
abled family members, resulting percentage of staff. Addressing
in family members filling that Teen labor force ongoing recruiting and training
role and leaving them unable participation has been needs amid the current surge
to commit to work away from adds additional stress and work
home.
declining for several
demands for both unit-level
Health Concerns and decades
managers and current staff
Vaccination Status members and could accelerate
As of June 21, 65% of the the already high quit rate in the
adult population has received employees are reluctant to industry.
at least one vaccine dose join an industry which has
and 56% are fully vaccinated. significant interaction with the
While this is laudable progress, Long-term
public, post-pandemic.
a relatively large portion of the Challenges
population has not yet been Beyond these near-term
Lower Teen Participa- issues, other longer-term labor
vaccinated, leaving workers
with health concerns or vulner- tion in the Labor Force challenges are expected to face
able family members at home Although teenagers have the restaurant industry in the
feeling uncomfortable returning traditionally been viewed as a years ahead.
to the workplace until higher key option for boosting staff-
levels of vaccination are at- ing in restaurants during the
Wages and Working
tained. Further, according summer months, the reality is
that teen labor force partici- Conditions
to a recent poll conducted Over the past fifteen months,
by CNN (https://cdn.cnn. pation has been declining for
several decades. There has many people across a wide ar-
com/cnn/2021/images/04/29/ ray of industries have taken the
rel3d.-.coronavirus.pdf), more been a recent boost to teen
employment rates, with the time to reevaluate their working
than a quarter of American life and job/career choices
adults say they do not intend to promise of higher wages and
job flexibility. However, this and as a result, many former
get the vaccine. For an industry restaurant industry workers are
in which many restaurateurs spike has only made a small
dent in abating the overall choosing not to return to their
are requiring their staff to be former employers—or to the
vaccinated, this further reduces labor problem, and it is ex-
pected to be short-lived as industry. With everyone in the
the eligible labor pool. Addition- industry—and in many others—
ally, some potential the summer wanes and teens
return to school.
Technomic Roadblock to Recovery - US
6
Only 13% of restaurant operators in the
Restaurant Business survey believed that
they are losing employees to other indus-
looking to hire, the competition
tries that are paying higher wages
is more intense than ever. Al-
though wage competition
is indeed fierce, the tradition-
shopper/chef, etc. Others
al compensation models and
signed on with third-party
demanding working conditions
grocery and food delivery
of the restaurant industry have
services, which had already
also become obstacles to work-
been luring restaurant workers
Workforce
force restoration. Surprisingly, Demographics
before the pandemic with the
only 13% of restaurant oper- An examination of the pro-
promise of flexible hours. As
ators in the Restaurant Busi- jected share of households
warehouse/distribution centers,
ness survey believed that they (by age of head of house-
last-mile delivery retailers and
are losing employees to other hold) reveals an issue not
other industries such as con-
industries; however, Technom- only likely to impact foodser-
struction with soaring demand
ic believes this impact is more vice spending in the future,
added hundreds of thousands
substantial. but also the available work-
of jobs with pay starting at or
Nearly half of all restaurant force. The share of house-
well above the $15 minimum
workers were abruptly thrust holds between the ages of
wage long-sought by restaurant
into unemployment in March 25 and 44 is projected to
workers, many former restau-
2020 due to policy mandates decline between 3 percent
rant employees grasped these
that shuttered restaurants. and 7 percent by the year
opportunities to restore their
In the past, these employees 2025, highlighting the small-
income.
could readily find employment er available pool of potential
at another restaurant, but this employees for the restaurant
The challenges for the
option evaporated during gov- industry. The U.S Bureau of
restaurant industry are
ernment-mandated shutdowns Labor Statistics also projects
two-fold: 1) Many former
for dine-in occasions. While the number of teens in the
employees subsequently found
full-service restaurants swift- labor force, a traditional pool
that they enjoyed no longer
ly pivoted to offering takeout of candidates for the indus-
having to rely on the largess of
and curbside pickup, this shift try, will drop by 660,000 over
consumers for their daily in-
placed a spotlight on the in- the next 10 years. Moreover,
come, no longer having to work
dustry’s heavy reliance on tips as already mentioned, the
late at night or on weekends
to provide income for front-of- percentage of teens partici-
and finally receiving benefits
house workers, as consumers pating in the workforce had
such as health insurance, sick
are less accustomed to tipping already been declining since
pay, tuition assistance and
for takeout orders. 1979 and this decline is ex-
more that they were seldom of-
With no safety net available, pected to continue.
fered in the restaurant industry;
many restaurant workers were In addition, recent amend-
and 2) The higher wages and
forced to seek other employ- ments to the U.S. immigra-
benefits offered by other indus-
ment. Some swiftly switched tion program
tries for entry-level positions will
to self-employment, offering
continue to significantly impact
a wide array of services from
unit-level economics for restau-
pressure cleaning to lawn care
rants.
to personal
Technomic Roadblock to Recovery - US
7
have further reduced the num- to keep up while working longer
ber of available workers for hours in a highly stressful envi-
restaurant jobs, although chang- ronment. This has been made
es in policy could potentially even more challenging by high
increase immigration levels after levels of demand and impatient
the pandemic is over. Neverthe- customers.
less, it’s clear that the industry The government-mandated
may no longer be able to rely on shutdown at the onset of the
the government’s HB-2 program pandemic highlighted significant
Image Source: S.Hoy
to augment the workforce. differences in workplace culture,
Industry Reputation not only in comparison to other
The price of
One of the greatest challenges industries, but also in how differ-
to overcome in the aftermath of ently operators treated their em-
the pandemic is the industry’s ployees in this unprecedented chicken has
long-standing reputation. Al- situation. Some operators dug increased by
21%
though chain restaurants and into cash reserves to continue
more forward-thinking operators paying staff at some level until
have integrated more profes- PPP loans became available or and in the years ahead. Other
sional approaches to business set up food distribution centers challenges discussed above
operations over the past few to provide meals to furloughed may require fundamental re-
decades, the industry has long employees, while others abrupt- structuring of traditional com-
been known for high turnover, ly dismissed long-term staff and pensation models and working
transient workers and in some shuttered the business until conditions at the unit level to
cases, unprofessional manage- reopening became an option. provide a better working envi-
ment practices. This reputation Not surprisingly, operators that ronment and enable the restau-
has been exacerbated in recent provided as much support as rant industry to become more
years by reality television shows possible to their teams and competitive with other indus-
that drive ratings by placing a maintained communications are tries/fields as an industry of
spotlight on unsavory business achieving better results in bring- choice.
practices and personnel in the ing their teams back to work All of this comes to bear at
restaurant and bar industry. and recruiting others. a time when multiple other
Working conditions that include cost pressures are escalating,
long hours, constantly changing Other Rising Costs including:
schedules, few benefits and the Add to Adversity Off-premise costs—including
frequent requirement of working Amid fierce competition across commissions for third-party
late nights and weekends have numerous industries for staff, providers, increased packaging
all contributed to the industry’s the higher wages and benefits costs and other ancillary ex-
reputation as a less-than-de- offered by other industries penses related to off-premise
sirable employer. Due to the for entry-level positions will fulfillment.
current staffing crisis, existing significantly impact unit-level Rising commodity costs—
employees are now struggling economics for restaurants, now the Producer Price Index for
food (wholesale product cost)
demonstrated the highest in-
creases since 2008, driven
by higher raw material costs,
8higher labor productions costs, need to optimize both dine-in Analyze your business flow to
product shortages and elevat- and off-premise experiences. identify opportunities to reduce
ed demand from China. As a Changes that we expect to see days of operation and trim
result, core commodities like as the industry adapts in the business operating hours with
chicken, pork, shortenings/ years ahead include: minimal revenue impact.
oils and grains have increased More automation in both front- Evaluate all areas in which
in cost from 21% (chicken) to of-house and back-of-house technology and software solu-
more than 100% More off-premise-only loca- tions can accelerate staff re-
(grains). In addition, crude oil tions cruiting and training, streamline
is at its highest price in three Fewer dining rooms in the lim- current operations and reduce
years and gasoline prices are ited-service segment and re- time spent on day-to-day oper-
up 37% in 2021, increasing duced dining capacity in full-ser- ational tasks, from daily check-
transportation costs for distri- vice restaurants lists to product preparation.
bution. Increased sanitation Evaluation and improvement Streamline the menu to opti-
expenses—increased expenses of restaurant working conditions mize SKUs and reduce com-
in this category are expected to and retention efforts plexity of production; evaluate
not only remain at a higher level Reinvention of traditional com- options for leveraging val-
than prior to the pandemic, but pensation models used by the ue-added products.
grow further due to increased restaurant industry and more Add or encourage reserva-
dine-in business. While com- effective promotion of career tions and increase promotion of
modity cost increases may opportunities. opportunities for consumers to
recede as supply-chain disrup- order-ahead to optimize busi-
tions are overcome and sanita- RECOMMENDED ness and production peaks.
tion supply needs may decline ACTIONS Off-load off-premise production
over time, increased labor costs Technomic recommends that for both core brand menu and
will remain significant issues for operators and suppliers take the any virtual brands to off-site lo-
operators and suppliers in the following steps to offset the cur- cations/ghost kitchens to reduce
years ahead. rent challenges and position the pressure on dine-in unit staff.
industry for continued success. Identify opportunities for com-
What Does the munication to improve external
Future Look Like? perceptions of career potential
Operators
The longer-term labor force and brand reputation as an em-
Elevate retention to the top of
challenges facing the restaurant ployer of choice.
the priority list and proactively
industry will accelerate other engage with current team mem-
industry trends that existed bers to communicate all steps Food/Beverage
pre-pandemic, as well as ex- being taken to alleviate the Suppliers
pansion of new operating mod- situation. Focus discussions with op-
els driven by reinvention of the Focus on cross-training staff erators on product options to
industry during the pandemic. to handle multiple duties assist in managing labor costs,
The way that restaurants look and potentially increase job including speed-scratch and val-
and operate will be altered to satisfaction. ue-added products.
accommodate a smaller work-
force and the
9Emphasize opportunities for Final Words: On the longer-term horizon,
cross utilization of SKUs to Technomic’s Take ongoing labor constraints and
simplify operations and reduce During the early stages of the escalating labor and product
waste. pandemic, there were significant costs create a compelling need
Review product prep and train- concerns that recessionary fac- to evaluate every opportunity to
ing materials to simplify for new tors and a renewed appreciation create greater efficiencies for
hires and provide more online for cooking at home could hin- reduction of costs. At the same
training modules to support der resurgence of the industry. time, the foodservice industry
remote training. The high levels of off-premise overall must prioritize devel-
Monitor developments in adop- usage throughout the lockdown opment and implementation of
tion of labor-saving equipment, periods demonstrated that con- strategies to improve its reputa-
robotics and new facility design sumers continue to rely heavily tion and viability as a place for
to assess any adjustments on foodservice as a primary long-term employment.
required for your products or source of meals.
preparation instructions.
Identify opportunities to support
operator communications for im-
proving external perceptions of
career potential in the industry
Using Nature’s
Gifts to Make the World
a More Delicous Place.
www.kagomeusa.com
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