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DMA PowerPoint Presentation, November 2009

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  • November 2009Project #13509

    Selected Foodservice IndustryInnovation Forces

    Food Industry. Facts. Insights. Consulting.

    Prepared by:

  • Introduction

  • 3Who We Are Consulting firm dedicated to

    foodservice Tracking industry

    performance for 40+ years Market assessments and

    opportunities for Manufacturers Ingredient suppliers Operators Distributors Associations

    Ron Paul, Founder

  • 4Menu Development Activity

    Note: Non-alcoholic beverages onlySource: Technomic Menu Monitor, First Half 2009

    716

    369

    236 230

    103

    Entrees Appetizers Sandwiches Desserts Beverages

    Most Active Menu Categories At Top 250 Chains in First Half 2009

  • 5Seafood Tops Center of Plate

    Proteins Added by Top 150in First Half 2009

    Source: Technomic Menu Monitor, First Half 2009

    Legal Sea FoodsSpice-Crusted Salmon,

    Grilled Fruit & MushroomQuinoa

    101 104

    63

    18

    50

    Seafood Chicken Beef Pork

    Fish

    Shel

    lfish

  • 6Innovation Forces Are Numerous

  • Communication / TechnologyInnovation

  • 8Technology Enables New Approaches

    Web-basedmeetingplanning

    Touchscreenorderingkiosks

    iPhoneordering

    application

    Sheetz Bros.Coffee truck

  • 9Bottom Line: Social Media Wont Wait

    Number of Years it Took to Reach an Audience of 50 Million

    9Source: Facebook as cited by money.cnn.com, March 11, 2009

  • 10

    Naked Pizza Tweets Success

    Tracks Twitter-driven sales at the register An April 23rd Twitter-exclusive promotion

    accounted for 15% of sales for the day

  • 11

    Tweets to Eats

    VERDE: 6PM-9PM@UCLA -Gayely & Strathmore; 10:00PM-2AM@The Brig - Abbot Kinney

    and Palm in Venice

    ROJA: 12PM-3PM@Hannam Chain -2740 W. Olympic Blvd in K-Town;

    7:30PM-9PM@Santa Fe Springs - next tothe secret warehouse

    KOGI SPECIAL! Korean Burger w Chile SaltedWatermelon! @ ALL LOCATIONS!

    3:06 PM May 13th from txt

    + =

  • 12

    Kogis Korean Short-Rib Tacos

    Sesame-Chili Salsa Roja, Korean Chili-Soy Vinaigrette,Cilantro-Green Onion-Lime Relish, Crushed Sesame Seeds,

    Sea Salt, Radish & Lime

  • 13

    Web 2.0 Upside + Downside:Give Up Some Control Of Your Brand

    This new era will demand more crisismanagement skills

  • Recycling Innovation

  • 15

    Burgers Are the New.Burgers

    Hamburger CheeseburgerSpecialtyBurger

    Menu Items2006 110 143 1652009 100 136 215% change -9% -5% +30%

    FSR Menu PricingAve. Price $ $7.16 $8.18 $8.80% change vs. 06 10% 15% 14%

    LSR Menu PricingAve. Price $ $3.58 $4.04 $4.93% change vs. 06 15% 19% 6%

    Burger Development Trends2006 - 2009

    Source: Technomic Menu Monitor, First Half 2009 Base: Top 250 Chains

  • 16

    Sliders Are HOT

  • 17

    Burger Wars Continue

  • 18

    Beef Still Leads Burger Proteins

    Source: 2009 Burger Consumer Trend Report, Technomic Base: 150 incidences CasualDining Emerging & Independent FSRs, 373 incidences in the Top 250 CDR

    28%

    15%

    7%

    4%

    3%

    2%

    1%

    31%

    19%

    4%

    7%

    2%

    Ground beef

    Angus

    Chicken

    Sirloin

    Turkey

    Fish/Seafood

    Bison

    Top 250 Casual Dining FSRs

    Leading/Independent FSRs

  • 19

    The Pool Is Getting CrowdedBurger chains expanding

    The Counter, 5 Guys,Smashburger, etc.

    Elite chefs enter the game

    Sodexho introduces TheOriginal Burger Company

  • Survival Innovation

  • 21

    Across Income Groups, ManyConsumers Have Felt a Direct Impact

    No

    30%Yes

    70%

    Has the economy had adirect impact on you?"

    74%

    71%

    70%

    59%

    66%

  • 22

    Price Has Been Increasingly Importantto All Groups

    In 2009, consumers will: Total TQ* Rely more on money-

    saving options 71% 70%

    Seek out special offers 64% 62%

    Order less expensive items 33% 31%

    Visit less expensiverestaurants 29% 30%

    *TQ = Top Quintile household income (median after tax income = $158,388).This group represents 40% of all FAFH spending!

    INSIGHTInsight

  • 23

    Demonstrating Value and Affordability

    Absolute price points Barbell pricingHappy Hour migrating beyond the

    bar Free! offerings

  • 24

    Value menus evident in all segments

    Lower prices on core menus

    Lower Price Points Demonstrate Value

    Small Plates,Small Prices

    Big Eat, Tiny Price Business LunchMenu

    Reductions on 100 Items New Items for $5

  • 25

    Barbell Pricing: Balancing Premiumand Lower-Priced Options

    Discounting common drinks, raisingprices for specialty options

    Premium options in test balanceWhy Pay More? menu

    Wines by the glass in three portionoptions

  • 26

    The Food-Centric New Happy Hour

    $2 snacksin afternoon

    Half-pricesmoothiesfrom 5-6

    Penny perksfor sides orextra entre

    Kids eat freeon familynight

  • 27

    Casualization of Upscale Diningthrough Comfort Foods

    Next evolution after deep discounting?

    Prix-fixe menu; newideas about future offine dining

    New burger menu

    High-end celebritychefs shifting tocasual dining

  • 28

    What is the long term consequence ofdeep discounting?

    Q3-08 Q4-08 Q1-09 Q2-09 Q3-09

    Capital Grille (Darden) -9% -9% -19% -22% -18%

    Flemings (Outback) -10 -20 -20 -22

    Longhorn (Darden) -5 -6 -5 -7 -6

    Morton's Restaurants -8 -12 -24 -26 -17

    Outback Steakhouses -8 -10 -8 -10

    Ruth Chris Steakhouse -7 -19 -19 -23 -24

    Stoney River -8 -18 -17 -20 -17

    Full Service Steak RestaurantsQuarterly Sales Reports

  • Mandated Innovation

  • 30

    Mandated Menu Disclosure

    Gaining momentum andsupport

    NRA supports LEAN Act Overrides various local

    mandates Provides protection from

    lawsuits Jury is out on the real

    impact

  • 31

    NYC Consumers Surprised by CalorieCounts; Higher than Expected

    Have you been surprisedby the calorie counts?

    Base: Have read calorie information = 203Are they

    Base: Surprised by calorie content = 163

    Yes

    80%

    No

    20% 1%

    10%89%

    Higherthan

    expected

    Aboutwhat

    expected

    Lowerthan

    expected

    Source: Technomic Economic Impact Update, August 2009Base: 300 NYC residents

  • 32

    Operators Investing in Health &Nutrition in Myriad Ways

    Specialequipment forfortified tea

    Kids menu:broad-basedoverhaul toenhancenutritional profile

    Emphasizingpure options

    Iced tea withprobiotics

    Mediterraneanoptions

  • Key Takeaways

  • 34

    Key Takeaways Innovation sources are many challenge your

    cross functional teams to get engagedSome sources of innovation are unavoidable;

    get ahead of the wave as early as possible Menu disclosure Technology

    Find ways beyond core menu pricing to showyour value

    How can you stimulate demand in thisenvironment while balancing profitability andcustomer frugality?