THE FUTURE OF FOODSERVICE
In 2019 and according to the Bernstein Research analysis, Millennials will surpass the Baby Boom generation in spending power. Generation Z (which includes those born after 1996) currently represents 26% of the population; its presence is expected to grow up to 40% by the year 2020.
In my Report on new consumer tribes 2018 I gave you a global vision of how the new generations are changing our HORECA, HOSPITALITY & TOURISM industry, from the point of view of the consumer but also from the other side, from the point of view of the business sector.
Today I have prepared a new delivery of the report in which I analyze what the new Horeca tribes expect from the foodservice.
MILLENNIALS & FOODSERVICE: BETWEEN ULTRAPERSONALIZATION AND CONVENIENCE
If we analyze the behavior of Millennials, based on prestigious international studies, we discover that foodservice is mainly asked for two things and that it is not easy to determine which of them is more important for them: ultrapersonalization of nutrition and gastronomic offer and convenience.
In the article What Millennials Want and How Is This Changing the Food Industry, journalist and editor Kerri Adams points to personalization as the main demand that Millennials make to the foodservice industry and as the characteristic that is making it evolve the most.
What does personalization mean when we talk about Millennials and foodservice? It means three things:
- Control or greater control of the client in terms of the configuration of the dishes and menus consumed in catering establishments or at home.
- More demand for nutritional information and traceability by the client, with respect to the dishes they will consume (something that is transforming the foodservice industry, promoting environmental awareness among the members of the same and giving rise to the new RSC Generation ).
- Demand for adaptation of the gastronomic offer and the way of relating to the catering establishments to the new consumption moments of the millennials, more casual than those of previous generations and at different times.
In the words of Cara Rosenbloom, a registered dietitian and president of Words to Eat By, Millennials “love personalization. They want to personalize the flavor and personalize their food. ” And this also implies the convenience, since they look for simple options to carry, to consume and that do not require preparation on their part (or that is the least elaborate possible).
This first generation that I analyze is, in addition to one of the most interesting segments as a customer, protagonist of a new generation of hoteliers. Not only are your habits as consumers important, but they represent a new way of doing business.
Your differences with previous generations? They have traveled more, they have lived through the era of personalization and the beginning of connectivity. They are pioneers in understanding social networks. And probably your approach when setting up a business is more courageous, more risky. Millennials are your clients, yes, but do not take your eyes off them because they are your best competition. The one that will make you leave your comfort zone and start thinking differently.
According to the study by Bernstein Research, Millennials are the tribe of consumers who eat the most out of their home and more prepared food (either to take away from the restaurant, or from food stores), as well as the less-used kitchen (hence, they even are beginning to design homes without kitchens, as Marius Robles told you in the II edition of Restauració Summit).
The data is clear: Millennials eat in restaurants at least once every 15 days.
The result is what we are seeing: on the one hand, the number of food establishments that include prepared meals or that improve their existing options grows (I remind you, for example, of this news that I compiled for you in my NewsBallarin: Mercadona enters in the battle of the dishes ‘ready to eat’ as well as Carrefour, El Corte Inglés or Dia). In this sense, the report “Power of Foodservice at Retail”, published by the Food Marketing Institute (FMI), states that “in many ways, millennials are driving the trend of food service in retail” and adds: ” So it is essential to understand this segment of buyers. “
And on the other hand, it increases both the number of ghost restaurants (those that have no room, but only work with delivery service) as the number of restaurants that offer delivery, take away and grab & go services, as well as improve existing ones (if you read the Report on Digitalization in the Restoration Sector in which we collaborated from HIP, you also find references to the technological improvements that restaurants demand related to the delivery).
Technologies such as mobile order and delivery apps play a key role in making eating more convenient for Millennials.
In this context: “It is not surprising to find that Millennials allocate most of their budgets for food to prepared foods (7.5% vs. 6.6-6.9% of previous generations)” states the study of Bernstein Research.
Another interesting fact: it does not matter the purchasing level of the Millennial generation. Prepared foods are, at all levels, the main item in which they invest their budget for food. But why?
What do the prepared foods have and go out to eat outside that Millennials like so much? The answer is found in the report that the market research agency Mintel Group Ltd elaborated in 2015: Convenience.
Food has never been so close. One click Through an app. From the computer, mobile or Tablet. We have never had as many leisure options at home as now: Netflix and JustEAT (or Deliveroo, or Glovo …) and a whole catalog of food – from pizza and Chinese to vegan options – to prefer the sofa and blanket to go out in a unpleasant night of January. We have never talked so much about cooking nor have we had so much content about food and its preparation and, paradoxically, the figures of the delivery service grow every year. How can we not expect this generation, who lives with a finger on the screen of their smartphone, to be so attracted by this option?
GENERATION Z & FOODSERVICE: VALUES AND EXPERIENCES
According to a Unidays survey published in early 2018, Generation Z spends much of its spending on food, to the point that “spend more on food than their predecessors” and prefer to save on other items of expenditure to allocate more proportion to food.
Generation Z is the first that we can properly consider as a digital native, a generation that has grown up surrounded by mobile phones, tablets, computers and internet access, tools that give them a long geographic reach when influencing and being influenced in their purchase decisions, also in the foodservice, confirms the survey.
What do consumers of Generation Z ask the foodservice? Two intimately related things: Values and Experiences. To the point that the Unidays study concludes that “about 41% of Generation Z members surveyed said they were more willing to pay more for healthier foods, compared to 32% of millennials who said the same”.
A report prepared by NPD Group concludes that Generation Z seeks “foods that fit their values.”
What are those values? Formed in a culture often focused on the importance of nutrition and good nutrition, members of Generation Z demand traceability, transparent labeling and shorter and more comprehensible ingredient lists.
Concepts such as sustainability, kilometer 0, local cuisine or local product valorization, which were not part of the equation for previous generations – or were not so strongly – are now at the center of the debate and the demands to the industry. The People Product Planet of which I have been speaking for a long time and to which this year we dedicated a session in HIP2019.
Thus, as the purchasing power of Generation Z grows “demand is expected to boost the development of packaged foods that reflect their racial and cultural diversity,” according to research by market research firm Acosta.
What is already growing, spurred by the consumption of the Gen Z, is another service that I have also spoken here and that connects with the delivery and the grab & go: meal kits, which in many cases save them a trip to the store and allow them to make healthier consumption decisions.
When making their consumption decisions, Gen Z look for Values with which to identify themselves, but not only that: they also look for experiences.
The spontaneity which the Gen Z show – according to the Unidays study, only 5% plan their meals in advance and 48% try at least one new restaurant a month – may be behind that search for experiences that is transforming Horeca companies in all subsectors.
To get to Generation Z and as I told you in my article Redefining the customer experience: Strategic Plan, our focus has to be the generation of experience. We are a pioneer sector in the experience.
Most Z children of my friends have very different eating habits than my generation (the X). They opt for healthy options (or at least, what they understand as healthy), have developed a hypersensitivity to everything that concerns the consumption of animals. They have grown up seeing tofu and kale in the shelves of supermarkets. Their identity as digital natives has allowed them access to a lot of information (often misinformation) and they know that their choices are what will modulate the market. And they do them according to a personal code of ethics that they build during their adolescence and that will mark them as adults.
GENERATION ALPHA & FOODSERVICE: ULTRA-DIGITIZATION
Yes, I know what you are thinking. If the Alpha Generation is the one that is being born now … How are we going to know what they will ask the foodservice when they have the purchasing power to use it? We do not need to go that far. The Alfa already are very clear about what to ask the foodservice. Even if they do not know what it is or what they are doing.
You know that I like the maxim that the future is not predicted, it is built. So, in view of how the foodservice industry is developing, the growing importance of digital transformation and trends … let’s project what Alpha Generation is and what foodservice is asking for now.
The Alfa command more than we think. They are prospectors of the restaurants they like, of the food they enjoy, of the spaces in which they feel comfortable. And the parents and grandparents listen to them and incorporate their requests as a decisive factor when making decisions. In catering, hospitality and tourism, the Alfa child is a “covered consumer”, an agent who takes the family to eat sushi at a restaurant, convinces them to dine on pizza delivery or influences them on where to stay for their vacations. Small consumers without a portfolio, but with the power in their hands.
STUDYCASE: YAHOO, MILLENNIALS AND GASTRONOMY
To finish, I want to share with you a very interesting studycase that reflects how to respond to that Millennials’ demand for personalization in food and gastronomic offerings. In its first edition of the “100 Best Workplaces for Millennials” ranking, Fortune magazine collected the characteristics that made businesses and workspaces attractive to the Millennial generation.
Between honest and open communication, collaboration and teamwork, another variable was added: the personalized gastronomic offer.
And this is where Yahoo enters the picture. In the search for a better relationship with its employees – with the internal client, who always says my dear Jordi Vidal (whose training initiative for Udon University employees I have spoken here) – Yahoo has chosen to improve the gastronomic experience of their teams to “create a stronger community through food” they explain from the company.
The way to improve the experience is to offer the personalization of the menus – remember that Yahoo implemented years ago the free dining service for their teams – to which employees contribute by communicating their needs via email, as well as a constant innovation system on weekly menus, which allow staff to experiment with flavors and types of food.
In addition, and to satisfy Millennials’ information needs, Yahoo strives to communicate to its teams the origin of the ingredients, nutritional information and the history behind each menu choice.
Food as a vehicle to create corporate culture, to respond to the demand for convenience of an entire generation and to respond to their need for personalization. A good example to reflect.
DESIGNING THE FUTURE OF THE FOODSERVICE
And if we stop for a moment here… and analyze… we can understand why there is a new generation of companies of collectivities, which serve companies / hospitals / schools a new gastronomic offer. An offer that is not only valued for the cost of the menu, but for other factors such as its nutritional potential or variety, which allows personalization.
It is absolutely fascinating to see how, generation after generation, we are writing the history of hospitality, each of us influenced by our education and environment.
A story that moves towards a future where business models and restaurant pantries will be re-invented to satisfy new consumption habits of generations that will continue to eat (at home, in the restaurant, in the office) and to those who have to listen, understand and satisfy to continue in the game.
I invite you to continue the conversation on my Social Networks. Do you have questions that you would like to ask me? You can do it at [email protected] and at #AskBallarin.
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