Real disposable income is forecast to grow, inflation will remain moderate, and unemployment will continue to inch downward in the year ahead. While consumers’ mindset for cautious, controlled spending is expected to remain in place for some time, our forecast of traffic and dollar growth for 2014 shows improved performance compared to 2013.
There will always be winners, despite an overall weak growth trend
We do see areas of continued or expected strength in consumer demand. For example, our forecasts indicate traffic will build for fast casual restaurants, sub shops, and gourmet coffee/donut outlets. Additionally, convenience stores are likely to experience traffic growth as they take advantage of consumers’ current tendency to “trade-down” from more expensive options. Food retailers offering convenient meal solutions make up another market segment projected to see continued growth, and it should capture more visits from traditional restaurants.
Current food trends will continue in 2014
The expected rise in beef prices and lower chicken prices will be reflected in menu offerings. New and different non-beef parings of foods will result in overall growth for chicken products and a dampening of beef orders resulting from expected price increases.
The growing diversity of the US population drives shifts in menu offerings
Beyond the overall impact of supply and price, changes in the composition of the US population will support shifts in menu offerings. The influence of the growing US Hispanic population is reflected in the increased popularity of fruits, juice drinks, and more flavorful spices and seasonings. The growing Asian population carries its influence on menus, as well, with noodles, rice, specialty sauces, and other foods and flavors. These menu changes will not only attract new customers, they will assist in holding the interest of existing customers.
Boomers and seniors will continue to increase their visits
Boomers and their older counterparts have been less affected by prolonged high unemployment and the recession. These individuals have continued to visit restaurants at an ever-increasing rate. While their food and beverage preferences may differ from those of the younger set, many older consumers are bringing their ‘younger’ preferences with them. Boomers have become less “different” from the overall population than were their predecessors when it comes to food preferences. Their importance to the foodservice industry will continue to grow; the group is too large and important to be overlooked.
Over time, the success of various promotions has ebbed and flowed . . . expect operators to find new ways to incent customers to visit their restaurants
Years ago, paper coupons were the incentive used most often by operators to attract customers. Coupons then gave way to tiered pricing strategies, combo meal offers, sweepstakes, and value menu items. Today, coupons are again a popular incentive, in part due to their growing online availability. The popularity of combo meal deals gave way to value menus and straight discounted price offers. More recently, loyalty rewards have been used more often by many operators. Going forward, rotating offers and creating new ways to entice consumers to visit must be a part of any operator’s marketing plan.
Mobile technology will be key to building relationships with existing customers
Building stronger relationships among a chain’s customers has taken on new meaning with the growing importance of mobile technology. The need today is to communicate with customers at any time, where ever they are. In most cases, this means reaching out to them via their mobile devices. These are becoming even more important tools for consumers, and the expectation is that most of their needs can be met through these devices. Consumers’ use of mobile devices for ordering and paying for meals and reporting on the meal experience will continue to grow as mobile technology becomes even more integrated into everyday life.
Watch for growing interest in access to healthy menu offerings
Consumers’ interest in healthy meal options is tied to the health needs of Boomers and older individuals, the growth in ethnic groups accustomed to fresh food preparation, and greater awareness of the need for and benefits of healthy eating among younger generations. One place we’re seeing this is in the growing number of consumers who tell us they prefer gluten-free foods, not because of required dietary restrictions, but because of the benefits of overall healthier eating. They expect operators to deliver against perceptions of healthier eating with menu emphasis on fresh ingredients and freshly-prepared foods.
Fine dining restaurants will continue to fare well
Fine dining, from our view, has fully recovered from the recession and is growing. Supported by the segment of the population least impacted by the economic slowdown, these restaurants have made efforts to become “more contemporary.” They are now more casual in décor and accepting of casual attire. This trend and growing appeal is expected to continue.
New businesses, new concepts will emerge
Entirely new concepts are emerging on the landscape. An example is the My Fit Foods chain that offers freshly-prepared meals that can be taken home and heated up or eaten on premises. Outlets like Lyfe Kitchen, which address the interest in fresh, healthful food, will increasingly appear on the scene. In addition, operators are making more concerted efforts to provide their food where their customers work, with catering. Creative, new, exploratory – expect to see more attempts to find the new niche, the next “fast casual.”
Source: The NPD Group, Inc.