Every year at Mattson, we release our New Years Trends, but this year we’re doing it in two phases. This first phase is focused on food away from home, where about half of all dining dollars are spent. Following this are our consumer packaged goods trends.
Twenty years ago, there were 2 options for delivery: pizza or Chinese food. Today there’s no limitation, thanks to third party delivery services such as DoorDash, GrubHub, and up-and-comer, Uber Eats. Data firm Second Measure reported U.S. restaurant delivery sales grew 52 percent year-over-year in May 2019.
These companies allow any restaurant to deliver their fresh, hot food to your home, regardless of service format, type of cuisine, or size. As restaurants start to offer delivery, the dynamics of their business changes. If successful, they’ll need more—and possibly different—space to service the delivery business. But retrofitting restaurants is expensive and disruptive.
When a vacuum exists, something new comes in to fill it. The new thing, which is an old thing called commissaries, is alternatively called ghost kitchens, cloud kitchens, dark kitchens, and other sinister names for what is a pretty smart business model. Restaurants can rent as much or as little offsite cooking space (and sometimes, even chefs) as they need, without having to deal with real estate or renovations.
The buzziest one is from Uber founder Travis Kalanick, who raised $400 Million to build his first CloudKitchens, with hundreds more coming soon. Kitchen United will build 400 kitchen centers and install 5,000 virtual kitchens over 4 years to service operators like Sweetgreen and Chick-fil-A. DoorDash has opened its own commissary kitchen in Silicon Valley, a harbinger of things to come.
Zume started out as a pizza delivery business, but recently pivoted to provide technology and packaging solutions to other restaurants, as operators realize their restaurants aren’t optimized to support the high volumes that come with third party partnerships.
Meanwhile, grocery stores continue to add more prepared grab-and-go foods, becoming, in the process, grocerants: a hybrid place where people not only shop, but dine-in and take-out. In fact, consumer-favorite Wegman’s has partnered with DoorDash to deliver their prepared foods.
Salad chain Sweetgreen has announced plans to grow their 400 “outpost” locations. These business and industry (B&I) locations allow Sweetgreen to take orders from employees and drop them off, en masse, at a central location for individual pickup.
Starbucks has also been rethinking their restaurants. In 2019, they launched “the first-ever...store... designed for Starbucks customers on-the-go.” Called Starbucks Pickup by the java giant, who claims they’re “modernizing and reimagining the customer experience in its stores.”
In 2020, restaurant operators will grow their businesses mostly outside their restaurants, by reimagining what that word can mean.
Working is dramatically different than it was in the 9-5 days of yore. With today’s enabling technology, people can easily work anywhere, anytime, and often are working everywhere, all the time.
As worklife has evolved, so has workplace dining. These days, good food options at work are necessary for recruiting and retention, especially in our competitive, low-unemployment economy. New companies are sprouting up to help, especially to service employers too small to afford a contract management company (like Sodexo), or run their own (like Google).
Byte supplies “a tiny market in your office,” by providing self-serve refrigerators they stock daily with grab and go fresh food options, available to workers 24/7. The tech makes it easy to administer: just swipe your card, open the fridge to access salads, drinks, and more, which show up on your credit card bill. LeanBox offers a similar service.
Eat Club calls itself a “virtual café” that delivers fresh, hot meals to the office, packaged individually so everyone gets to eat what they want. For workplaces that don’t offer food, an employer can outsource restaurant runs to them, with billing that allows the company to subsidize the meals. Or not. All the food arrives at the same time, which makes a communal lunch easy.
ZeroCater offers something similar to third party restaurant delivery, with a focus on corporate customers, not consumers. Their app connects workplaces to local food businesses, and they help coordinate delivery of the food, set up, on-site service, and clean-up. Cater2Me offers something similar.
These services are highly coordinated through a combination of apps, tech, and personalized service, with the idea that employees are more productive, out of the office less, and build a more family-like culture when they eat well, together.
Anyone who has ever visited a quick-serve restaurant (QSR) knows the fate of a delivery French fry order: steaming into mush by the minute, yearning to be free of the paper sleeve, insulated bags, and time that renders them limp and lifeless. Ah, if only someone cared about solving this problem with the #1 side dish order across the restaurant channel. Finally, someone has, and unsurprisingly it’s one of the Big 3 potato companies, McCain. Their new line of SureCrisp® fries were built to deal with the inhospitable conditions that accompany much of the food served today through takeout, drive-through, and, especially, the third party delivery companies who care less about food quality than getting orders from operators’ facilities to the right address in the right amount of time.
Of course the other piece of the puzzle is packaging. Companies are working diligently to solve the problem of fried food beyond even French fries. Anchor Packaging’s Crisp Food Technologies containers utilize a patented “convection cross-flow design that relieves moisture and condensation while maintaining food temperature.” They claim that independent studies by retailers and restaurants show that the temperature and texture of fried foods fare better in their containers during a 30-minute delivery.
Thank goodness, since fried chicken sandwiches are having a moment.
Zume Pizza co-founder Julia Collins spent time at Stanford’s Design School, and knew that the pizza box design was outdated. She worked with a designer and a material scientist to rethink the pizza delivery box from the ground up. The Pizza Pod is made from sustainable sugarcane fiber, with raised ridges inspired by a panini press. Parent Zume, Inc. is now more focused on selling sustainable packaging than opening pizza restaurants. Pizza Hut has tested their Pizza Pod, and they recently acquired the company they partnered with to manufacture the pods.
Predicted growth in the restaurant industry will be driven entirely by off-premise consumption, meaning that these bold supply chain innovations around pizza and fried food are just the beginning of what’s to come in 2020 and beyond.
Innovation used to happen behind closed doors, but recently chain operators and CPG brands are opening it up to their customers.
New York City’s Chobani Café has been a place for the brand to trial new items, like a savory yogurt bowl with hummus, za’atar, lemon juice, and extra virgin olive oil, not to mention introduce guests to the brand.
In 2019, 7-Eleven debuted a “lab store, where customers can try and buy the retailer’s latest innovations” including, “The Cellar, an alcove dedicated to an expanded selection of wines and craft beers, with a nearby growler station...and made-to-order coffee drinks, cold-pressed juices, smoothies and agua frescas.”
Coca-cola has started an Insider’s Club, where consumers can sign up for a subscription box that will ship limited-edition drinks to a tiny group of 1000 consumers, “most before they hit the shelves.”
Domino’s Innovation Garage is a space focused mainly on testing new technologies such as autonomous vehicle delivery, ordering kiosks, and GPS order tracking. I’m guessing, though, that they’ll also be testing new delivery-optimized menu items and packaging, in an effort to deliver better quality pizza, which matters just as much—if not more—than snazzy tech.
Testing new products and technology with consumers is not a groundbreaking technique, but the marketing of it is. What used to happen internally is now being done with an-external, transparency-focused exuberance.
ReFED reports that 52 million tons of food are sent to landfill annually in the US alone, plus another 10 million that’s discarded or left unharvested. Given this enormous waste of valuable resources, restaurants and suppliers are doing everything they can to reduce waste, and repurpose what they can’t.
An enterprising employee on McDonalds’ sustainability team connected the iconic brand to his former employer, Ford, for an all-American solution. Ford will use coffee chaff, a byproduct of coffee bean roasting, to make auto parts. McDonalds is also working on an evolved paper straw, after the backlash that their first attempt drew, in part for not being recyclable.
Technology company Winnow reports that food waste costs the hospitality industry $100 billion annually, with up to 20 percent of food wasted. Their artificial intelligence system allows operators to identify what’s being discarded, giving them data on when and where waste occurs, which is the first step in eliminating it.
With more off-premise consumption comes more plastic packaging. To address this, startup Mobius is working on repurposing spent restaurant fryer oil, turning it into compostable packaging material, such as the plastic bags that hold all that third party delivery food being shuttled around the US from restaurants to homes and offices.
Companies are finding new life in waste by repurposing it into functional ingredients. Renewal Mill sells flour from soymilk processing, Planetarians makes a protein flour from sunflower seed byproduct and Renmatix makes a functional fiber from maple waste. Our vision is that more of these ingredients will come online in 2020 to deliver triple bottom line benefits.
If you’ve ever walked into a restaurant like Starbucks, and walked out because the line was longer than the amount of time you had to spend, you know that hand-crafted foods and beverages take time and slow down the speed of service.
This is compounded further by the number one concern amongst operators these days: labor. In an economy with almost full employment, it’s hard to find and keep good people to make said hand-crafted goods.
A somewhat obvious solution is back of house automation, and chain operators like McDonalds have spent millions developing and implementing solutions like their automated smoothie and McCafe drink machines, in other words, robots. However, they still need a human to push a button and deliver the drink to the guest. The holy grail is Self-Serve 2.0, where the consumer does the hand-crafting.
Botrista Cloud Bar is a Silicon Valley startup “Founded by former Tesla engineers.” Their self-service beverage machine enables any restaurant operator to offer customized drinks (usually the most profitable thing on the menu) to guests. The consumer-facing machine, is operated solely by the consumer, and cleans itself after each beverage it dispenses.
In 7-eleven’s new lab store (see previous #3), there’s a self-serve cold treats bar with frozen yogurt, ice cream and multiple toppings, not unlike a lot of the yogurt chains who have moved service from back of house staff to self-served guest.
Early results from Mattson’s 2020 proprietary research study, show 99% of the population has purchased a grab-and-go food or beverage item within the last week; 95% buy grab-and-go items for themselves, and 86% buy both food and beverage together across a wide variety of segments and operators. With broad behaviors like this, coupled with a labor shortage, we’re only at the beginning of something big for grab-and-go.
App-enabled Amazon Go are cashier-less stores from the world’s biggest retailer, using technology to allow consumers to get in and out with almost zero hassle. The entire Go experience is self-serve, but really low impact at that. For sale are traditional C-store foods, like bars and bottled beverages, but also an extensive collection of well-curated grab-and-go items to eat cold or microwave (yourself… in-store) and meal kits to take home to cook for dinner. It’s no wonder their tagline is, “No lines, no checkout—just grab and go!”
IHOP announced the launch of a new fast casual breakfast concept, Flip’d, offering salads and wraps, which are pre-made and ready to grab-and-go for later. Look for more fast casual chains to start packing things for grab-and-go.
Choice Market is a modern, healthy food-focused convenience store that does 60 percent of its business in grab-and-go meals (made onsite). The concept now offers a “Choice Mini-Mart” vending machine that allows other operators to offer self-serve, grab-and-go foods without hassle.
To hammer home the message that self-serve 2.0 and grab-and-go will soon be replacing employee-crafted food, Farmer’s Fridge, a self-service salad vending machine, is now subject to the same food safety inspections as restaurants. A Health Department spokesman said it best, “Companies like Farmer’s Fridge signal new changes to the NYC food space.”
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