Chaos, Comedy and Combat Threats and Opportunities in the Foodservice Arena

Transcription

1 Chaos, Comedy and Combat Threats and Opportunities in the Foodservice Arena Prepared by: FS Insights September 21, 2009

2 What We Want to Provide Economic Overview Implications to the Restaurant Industry Assessment of Fresh Mushrooms and Operator Perceptions in Foodservice Channels: Technomic Research Implications for the Mushroom Industry: Operating in this New Environment

3 Economic Overview and Implications for the Restaurant Industry

4 Chains Represent Majority Share of Restaurant Sales 2008 Restaurant Sales = $366B All Other* $167B 46% Chains # $107B 29% Top 10 Chains $92B 25% Insight Industry is concentrated. Successes with major chains can result in significant volume increases. *Independents and smaller chains Source: 2009 Technomic Top 500 Report

5 Industry Has Been On A Downward Path 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% (F) = Forecast Source: Technomic % Change vs. Previous Year Annual Growth (F) Insight Recent slump is due to economy. But longer term trend points to a maturing industry. Fast Food Pizza Full Service Industry

6 Jan 05 Mar May Jul Sep Nov Jan 06 Mar May Jul Sep Nov Jan 07 Mar May Jul Sep Nov Jan 08 Mar May July Sep Nov Jan 09 Mar Monthly Restaurant Sales Falling Restaurant Sales Real Growth 12-Month Moving Average Dec % Dec % Mar % Source: Technomic Inc.

7 Whirlwind of Converging Forces Higher Food Costs Cost of Commodities Transportation Costs Packaging Costs Health and Nutrition Legislation Calories Low Sodium Organic Natural Fresh Social Responsibility Corporate Ethics Special Interest Groups Local Sourcing Going Green Sustainability Slowing Growth Competition From Supermarkets Unemployment Rate Customization and Customerization

8 How Are Operators Dealing with the Chaos Reducing costs Supplier/vendor pressures Labor issues/less on-site prep SKU optimization Closing units Value, Value, Value. Deals key to winning back guests especially younger consumers Re-tooling successful LTOs and introducing new ones

9 Adding New Products Is A Key Operator Sales Tactic Tactic % Utilizing To Drive Sales New products 56% Increased advertising 29 Increased price promos 28 More specials 24 Menu bundling 20 Increased menu prices 19 New services 14 Smaller lower prices 15 More LTOs 12 Reduced menu prices 12 Source: Technomic Multi-client Operator Survey, May 2009

10 Focus on Efficiencies Is Primary Food Cost Reaction Top 5 Tactics Address Higher Food Costs (% Operator Using Tactic) Reduce food waste/spoilage 68% Improve yield 58% Raise menu prices 45% Shop more among distributors 39% Switch to lower priced brands 39% Insight Ingredient versatility is a critical means of reducing waste/spoilage and improving yield. Source: Technomic Multi-client Operator Survey, May 2009

11 There Has Been Good News The Top 100 chains have continued their sales growth Top 10 chains realized their greatest sales growth since 1987 The industry added 382,000 jobs this summer Some major chains have had their best years ever Breakfast traffic continues to drive growth PM Snacking even grew traffic 16% of consumers say they are increasing restaurant expenditures, double that in Feb. (RBC Capital Markets)

12 Many Areas Are Out-Performing the Industry Fast Casual Chicken Mexican Sandwich and Deli Burgers chains and fine dining Breakfast Sandwiches Seafood Sandwiches

13 So Where Do Operators Go From Here Traffic will come back but come back slowly unemployment and underemployment Consumers have been trading down will still trade down HHs repairing their balance sheets Right now, consumers say taste outweighs health (Mintel) Eating Out will never go out of style ingrained in America s culture

14 Mushroom Usage and Perceptions Key Research Findings

15 Study Objectives Identify foodservice operator awareness and attitudes towards fresh mushrooms Understand how foodservice operators are using mushroom varieties 500+ interviews with the Top 200 chains in virtually all segments

16 Mushrooms Not Viewed as a Top-of-Mind Vegetable % Listed in Top 5* 1. Lettuce 66% 2. Onions Tomato Carrots Broccoli Bell Pepper Potato 27 Mushrooms 21% Rank: 8 th overall Q: In order of volume, what are the Top 5 vegetables you use in your operation (open ended)? *Not asked in Base: All respondents

17 Mushroom Penetration Has Increased Currently Use Mushrooms (All Formats) Overall 2005 Overall % 81% By Segment LSR Pizza LSR Other FSR Travel & Leisure Healthcare College B&I 59% 77% 97% 95% 89% 88% 93% Q: Do you currently use any mushrooms in your operation? Base: All potential respondents (704)

18 Fresh is the Dominant Mushroom Format and Is Increasing In Penetration % Operators Using Mushroom Formats 95% 96% 100% 98% 71% 84% 75% 73% 69% 63% 35% 10% 29% 2% 38% 2% 37% 1% 16% 2% 13% 4% 5% 31% 8% 20% 0% Overall 2005 Overall 2009 LSR Pizza Other LSR FSR T&L Healthcare C/U B&I Fresh Canned Frozen Insight Trends toward fresh and its role in health perception helping drive fresh mushroom penetration increases. Q. What mushrooms formats are you using? Base: Mushroom users

19 Mushroom Variety Usage on the Rise % Operators Using Fresh Varieties 70% 67% 64% 39% 36% 33% 21% 16% 11% 11% 9% 5% 6% 3% 3% N/A Portabella White Shiitake Crimini Oyster Enoki Woodear Maitake* Q. What varieties of fresh mushrooms do you use in your operations? *Not asked in 2005

20 Fewer Use Mushrooms on a Seasonal Basis Only % Indicating Volume Varies by Time of Year Mushroom Types White 29% 15% Portabella Shiitake Crimini Oyster* Enoki* Woodear* Maitake* N/A 60 Q. Over the past 2 years, has your volume of mushrooms used varied by time of the year? N/A = Not asked in 2005 *Small base

21 Mushroom Dish Share Is Increasing, but Fewer Feature Mushrooms Share of Menu Items Containing Mushrooms Share of Items Where Mushrooms are Featured* 29% 15% 18% 14% Insight: Heavy competition exists for features. *Base: Among dishes containing mushrooms

22 So Why Is That? Perceived Roadblocks Customer Preference 20% Consumers are concerned about how clean the mushrooms are. College Cost 17% Price, not very cost efficient. Full service restaurant chain Recipe/Menu Constraints 7% We have set menu cycles. - Healthcare Either people like them or not, there is no in between. - Healthcare A majority of clients are not willing to experiment eating a mushroom they are not familiar with... Business & industry Price is high on specialty mushrooms Limited service restaurant independent The cost related to cleaning them. Travel & leisure We operate a number of branded concepts and the brands often dictate the menu. - Limited service restaurant chain. Not every dish needs mushrooms. Limited service restaurant independent Q. What is the biggest roadblock to you using more mushrooms in your operations and why? (Open end)

23 Overall View of Mushrooms Versatility Has Declined Statement Regarding Mushrooms Versatility Are versatile, can be incorporated in numerous applications and recipes 87% 70% Contribute to the flavor of dishes - 67 Easy to incorporate mushrooms into the items we menu - 62 An ingredient in many innovative new menu items - 53 Health Are healthy - 69 From a customer's perspective, presence adds to the perceived freshness of the item Cost % of Operators Who Agree (Top 2 Boxes) - 52 Cost effective ingredients - 50 Adds to a customer's perceived value of a menu item - 47 Q. Using a 1 to 5 scale, where 5 = strongly agree, and 1 = strongly disagree, how well do each of the following statements describe mushrooms. - Indicates not asked in 2005

24 What Helps Them Use More Rationale for Observed Volume Increases Rationale White Portabella Overall growth in business 55% 43% Added new menu items Added mushrooms to existing menu items Greater consumer demand for mushrooms Increased sales of menu items that contain mushrooms Increased promotion of menu items that contain mushrooms Switch from processed (canned or frozen) to fresh Format change (e.g., from whole to pre-cut) 16 6 Q. To what do you attribute your increase volume usage of each fresh mushroom variety? Base: Operators reporting volume increases

25 DSR, Peers are Viewed as Most Preferred Sources Preferred Source for Mushroom Information Distributor Sales Representative My Peers Trade Magazine Articles General Foodservice Internet Sites Consumer Internet Sites/Food Shows Supplier Representatives Consumer Magazine Articles Trade Magazine Ads Mushroom Association Internet Sites Mushroom Supplier Internet Sites Food Manufacturer Web Sites Distributor Web Sites Consumer Magazine Ads 9% 8% 8% 6% 5% 3% 3% 2% 2% 2% 0% 21% Insight DSR is key conduit to operators in virtually all categories. However, it is very difficult to get DSR attention given broad category responsibilities (15,000 + SKUs). Q. Which one source would you say is your most preferred source for recipe and menu items that contain mushrooms? 32%

26 Most Useful Tools Recipes, Ideas and Information Usefulness of Support Tools Top 2 Boxes (1 to 5 Scale) Recipes Healthy Menu Ideas Menu Ideas or Concepts Rebates Seasonality Information Information on Available Varieties Nutritional Information Food Safety Information Menu Trend Information Consumer Trend Information Promotion Ideas Food Costing Tools Marketing/Promotion Support Employee Training Merchandising Materials 38% 35% 34% 68% 68% 63% 61% 55% 55% 54% 54% 53% 52% 51% 50% Q. How useful do you or would you find each of the following tools or support that the mushroom industry could supply? Use a 1 to 5 scale, where 1 = not useful at all, 5 = extremely useful.

27 Organizations Saying They Plan to Use More Mushrooms Next Year % Agreeing (Top 2 Boxes) 23% 30% Insight Operator optimism on increased mushroom usage is a function of perception of increasing customer demand. Q. Using a 1 to 5 scale, where 5 = strongly agree, and 1 = strongly disagree, how much do you agree with this statement?

28 Implications for the Mushroom Industry: Operating in this New Environment FS Insights

29 5 Key Take-Aways for the Mushroom Industry A clear value proposition is imperative Value is driving innovation and new menu development Mushrooms must show how they solve a problem or provide opportunities on an operator s menu Leveraging the versatility of Mushrooms is critical Foodservice is not homogenous. There are winners and losers. Be nimble in driving penetration in growth areas while keeping traditional categories strong Segment blurring and menu blurring is a reality with everyone trying to copy everyone A new definition of health is emerging and it is tied to healthy global diets Develop strategies without preconceived notions. Demonstrate how success in one area can beget success in another Find relevant ways to showcase your healthful positioning and demonstrate your credentials with operators

30 To Succeed in Foodservice Sales Training and Education Health Positioning/Built on Flavor and Umami Rev Up Information on Consumer Acceptance Optimize Promotions with Chains Outreach to Operators Demonstrate Versatility Menu Ideas Drive Home Versatility

31 Thank You Prepared by: FS Insights September 21, 2009