NPD’s 2018 Foodservice Predictions  1/15/2018

U.S. foodservice industry growth may be slow, but there are certain changes taking place that will help to move the industry in a positive direction, says The NPD Group, a leading global information company. NPD forecasts flat to sluggish traffic growth for 2018, but the trajectory could change, according to NPD Restaurant Industry Analyst, Bonnie Riggs. Focusing on what consumers want will help foodservice marketers better align their strategies to maximize their relevance in 2018 and beyond, she says.

“Engaging customers remains the key to every operator's success,” says NPD’s Riggs. “In this challenging environment there are many examples of major chains, micro chains, and independents that thrive because they give consumers a great experience, superior food quality, and excellence in service. In other words, they give people a reason to visit. These fundamentals are necessary for success across every industry segment– today and beyond.”

Following are some of NPD’s predictions on what consumers will want in the coming year, and how foodservice operators will be doing to meet their demands.

In 2018, foodservice consumers will . . .
Be more strapped for time: With growth in the number of women entering the labor force, according to the Bureau of Labor Statistics, the need for convenience will only grow stronger, especially at dinnertime. It is not that consumers don’t want to cook, according to NPD; rather, they are looking for someone else to do the cooking for them or to make it extremely easy for them to do so at home. As a result, delivered meals will be a source of growth, along with other convenient meal solutions.

Order digitally: Foodservice consumers will increasingly place orders via text messages and mobile apps, both of which have posted strong growth in 2017. If you’re a restaurant operator seeking to gain more visits and grow your bottom line, you must decide which convenience-enablers are worthy of your investment. One size does not fit all – it will be imperative to understand your customers’ wants and needs from a technology standpoint. Operating in a digital world is no longer a nice-to-have. It’s now a must-have for most operators to drive traffic in a positive direction in 2018 and beyond.

Eat more at home: Thanks to a changing workforce, the ease of online shopping, and the boom in streaming entertainment, there are fewer reasons than ever to leave the house. The most popular place to eat out this year will be in the home. Nearly 50 percent of dinners purchased from a restaurant are consumed at home, and many in-home meals are a blend of dishes people prepare and ready-to-eat meals purchased at a foodservice establishment. Operators can win by making it easier to get foods and beverages to the home.

Expect excellent customer service: The restaurant industry is known to have an extremely high turnover rate, and this tends to have a negative impact on service levels. Having an employee retention program in place is a must going forward, and it should be one that includes a process for recruiting, hiring, and retaining employees. A satisfied employee is crucial to both employee retention and making customers satisfied with their restaurant experience. Greater attention must be paid to this initiative to hire and retain good employees; otherwise labor costs will escalate at a greater rate and customer satisfaction and revisit intend will decline.

In 2018, foodservice operators will respond by . . .
Offering value: Historically, QSRs have grown their business by offering cheap eats in the form of value menus. Over the past few years, lower priced offerings have not been promoted as frequently. With traffic at a near standstill, some are thinking that now is again the time to focus on the lower end of the price spectrum. The world's largest restaurant chain will launch a new value-priced menu in the first quarter of 2018. The new lineup will offer items for $1, $2, and $3. Expect another round of value wars to begin. There is little doubt that the competition will monitor this value initiative and will likely follow suit with one of their own.

Enticing consumers with limited time offers: In 2018, LTOs will play an even greater role in restaurant operators’ marketing initiatives. These incentives are appealing to both heavy and lighter buyers they will definitely do their job in attracting consumers. Even so, marketers need to focus more on developing strategies to attract lighter buyers; the industry has long underestimated the importance of these consumers. Look for LTOs to play an even greater role in operators’ marketing initiatives as they seek to target lighter buyers – the low-hanging fruit – in 2018.

Encouraging visits with loyalty programs: These programs are high on the list of incentives that would lead consumers to visit restaurants more often. Loyalty programs aren’t new to the restaurant industry, but technology has changed how they are executed. This requires developing programs that meet consumer needs using digital as a primary delivery tool. In 2017, a number of major chains initiated loyalty programs to drive frequency. We expect many more to offer up loyalty programs to remain competitive.

At ECRM's Foodservice Week session, to be held in April 2018, foodservice operators will be able to connect with suppliers offering many products and solutions that can help make 2018 a great year!

Sarah Davidson

SVP of Grocery

Sarah Davidson is ECRM's SVP of Grocery, and can be reached at 440-542-3033

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