Sandwich Chefs, Bonbo, Australian Pork and Select Fresh Providores discuss the latest opportunities for operators due to consumer demand.
The unpredictable nature of consumer food trends are part and parcel of doing business in the QSR industry. One year may spell out challenges for players in one segment whilst others see a surge in popularity.
Getting a grasp on how such trends shape the industry is crucial to deciphering the secrets of success. At this year’s QSR Media Sandhurst Fine Foods Conference & Awards 2019, Melissa Pepers, founder of the competitive strategy firm Bonbo, classified trends into four categories: fads, category trends, movement trends, and generational trends.
“Your most immediate trends, your fads, they can last anywhere from one day to a week and a half. You don't want to pivot your whole business model to it because it's gone before it's started. But it's a great way to enter the conversation and use conversation to your advantage,” she said.
“The next is category trends, which can last anywhere from around three months to even a few years. And that's where you want to put in unique menu items. You want to deliver campaigns based on on whatever trends in that lifespan are relevant to your business. Then you have movement trends, which are often the "-isms", things like #MeToo. Specific executions of popular terms like pescatarian versus flexitarian, plant-based versus vegan. With those trends, you’ll want to look at creating entire product lines around that. And then you have generational trends, which constantly increase and amplify with each new generation. With those, you want to just make sure that your business moves towards them a little bit more because they were around to stay.”
Pepers pointed out that challenge of analyzing trends, of course, is creating a viable strategy around them. Brands need to ensure that the trends actually resonate with their consumers and that they drive behavior related to purchasing food, as well as to make sure that they can deliver on those trends efficiently and sustainably.
The growth of niche or specialty food
Among the many trends in Australia’s foodservice industry is the growing strength and performance of those who are catering to specific niches in the market.
John McFadden, Business Development Manager of Select Fresh Providores pointed out that there is so much choice in the market now compared to several years ago that consumers have begun to make better decisions around their consumption.
“People are a lot more in tune with their body, fitness, health, and what they are consuming. So if I look at my parents, my grandparents thirty, forty, fifty years ago, those options were never available so much back then as to what they are now,” he said.
McFadden noted that the wealth of choice is borne from the innovation and creativity of players in their respective segments. The rise of niches signifies a continued growth of innovation and competition in the space.
“If someone next door is doing something a little bit more innovative and a little bit more creative, [your customers] will jump ship very quickly. And they’ll tell their friends through social, they'll post about it, they'll tag it. And before you know it you’re left behind,” he said. “It's important that brands that continually evolve with the desires of a changing market. It's important to test the market. Consumers change all the time and their preferences change.”
In light of this, Gary Powell, National Network Development Manager for the brand Sandwich Chefs, however, warned against players wanting to carve out their own niche markets. Players in the specialty market must first ensure that their chosen niche is a sound business move.
“Without a sound business model, fads and niche markets will come and go. Given the cost pressures in the industry an operator with a great idea, to occupy an exclusive niche, must ensure that product can be turned into a profitable business, any niche operator has to consider that,” he said.
“In our business at the moment, we're occupying a niche of speciality gourmet sandwiches, and very conscious that we have to make a business out of it and our franchise partners have to make some money out of it. So we consider and embrace diversification, even though we are still a niche, and therefore create an experience where we can satisfy a lot of our customers’ needs.”
Pepers pointed out that the reason for niches’ growing popularity affirms the overall change in preference of consumers in a fragmented market towards more experience-based consumption.
“Compared to a mass concept, niches resonate more deeply, and the more deeply you can resonate with people, especially your target markets, the more you are going to change that behavior, and that leads to profitability. So it's not a surprise that niches are growing, and they'll continue to grow,” she said.
As the rise of food courts and food halls attempt to cater to this demand of more premium experiences, this trend is also making its way onto menus.
“On an individual level, for each business, premiumization, actually has a different definition for every customer. So what quality is to your customers a different to what quality is for your next-door neighbor. And that's where you're going to see premiumization change your business over time, because it's going to be different depending on what your customers are. So you really want to understand based on behavior, what is quality for them, as well,” Pepers said.
Authenticity and provenance are two of these factors. Venessa Barnes, Foodservice Business Development Project Manager of Australian Pork, said that more consumers are demanding more localized and transparent sourcing to their meat.
“I think provenance is definitely a key driver within a business. Consumers are demanding to know where their products come from. And they want to know the transparency behind those products that they're using on their menus. And they do care about whether it is Australian or not,” she said.
Transparency is key to authenticity, Powell pointed out, and it can serve to differentiate your brand from its competition.
“It means that where we say we use stall free, hormone free pork, we actually use it. Those things differentiate us and gives our customers the authenticity they want," he said.
Yet, despite this preference towards premium food, Powell pointed out that brands should be aware of the upper limits of consumer spending. Offering premium products above the price point expectations of your customers is one sure way of losing sales.
“The consumer wants a premium product. But at some point, there is a limit to their appetite and capacity to pay for it. The business model, accounting for all business costs will be driven by the value of your average transaction; you have to get a certain number of customers to come in and pay a specific amount of money on average. Its safe to assume that the higher the price point the less customers you will attract and that there's an upper limit in terms of value that customers will attribute to your product. It’s a balance we are very conscious of at Sandwich Chefs, a national network with stores operating in very different local markets,” he said.
From a supplier's perspective, Sandhurst Fine Foods CEO Mimmo Lubrano cited the need to "smoothen out" supplies as a challenge in order to ensure stability in prices.
"You don't want pricing to go up and down like crazy; you want your pricing to be fairly consistent (so) you got to then work ahead of seasons and with farmers, knowing when the next thing is going to happen. If you're a food supplier looking to get into [the] QSR [industry], they want consistency, delivery and really good systems as well," he said.
Closely linked with the consumers’ demand for authentic, premium food is the sustainability factor towards the production of that food.
McFadden said that more and more consumers are becoming aware of how the foodservice industry is processing its food and are being vocal about sustainability-related issues such as food wastage.
“What we're noticing in the industry in particular is that processing has actually jumped quite dramatically. The sustainability part, the wastage part of that [processing] sits with us, not with our end user,” he said. “Food waste continues to be at the forefront of a lot of things that we do.”
Consumers becoming more conscious of their consumption is a global phenomenon. Pepers mentioned a possible new trend in Denmark within the trend of clean labeling in food products, where retail brands label their carbon footprint on their products.
“I think that that's actually hugely competitive for businesses. And I could see it becoming the new trend for clean labeling that replaces massive free-from lists, which is the current trend. Carbon footprint could be the next one.”
Plant-based and vegan options dominate the list of trends concerning sustainability, with consumers all over the world buying meat alternatives from companies like Impossible Foods and Beyond Meat. However, that does not mean that meat is going away.
“It's all driven by consumer behavior, obviously. But I think it's a really interesting space to watch at the moment when it comes to the protein space because we are seeing the uprising of the plant based meals and the championing of vegetables at the moment,” Barnes said, adding that whilst there is an uprising of plant based centre of plate options, venues are using protein to up sell.
“With protein, we are going to be heading into a global shortage. Trends are trends, but everybody still wants to have their protein. That's just the way it is. I think it's, it's just an interesting space to watch,” she adds, stressing the importance of having a procurement forecast and locking in supply.
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