Many of the stories dominating food and beverage industry news coverage during 2017 involved the retail sector. The Amazon acquisition of Whole Foods, Lidl’s entrance into the U.S. market and retailers embracing new business models to engage consumers attracted significant media attention during the year. Perhaps lost in the discussion but also of momentous importance are major trends buffeting the food service category.
The meal solution choices available to consumers have never been greater. In some ways the very definition of food service is changing. Where it was once singularly focused on locations consumers visited to purchase a meal for takeout or sit-down service, it is now expanding to encompass additional options driven by consumer technologies and changing lifestyles. Virtual restaurants, for example, are an emerging trend.
Adding to the complexity of the marketplace are cultural changes affecting consumer behavior. The market research company Nielsen notes the demand for convenience by consumers is intensifying rapidly. Several trends, including more women entering the workforce and the expansion of meal delivery services are driving the demand for more convenient products.
Those convenient meal solutions are more often being eaten at home. Nielsen attributes this shift to the changing workforce, online shopping and the ability of consumers to stream a wide variety of entertainment-oriented content in their homes.
Industry observers, including this publication, tend to draw a bright line between the retail and food service categories. What is becoming clear is the consumer no longer sees such a line.
As they always have, consumers expect the food they purchase to meet their expectations for quality, convenience and price. Yet today they express little to no concern about how they acquire food.
This insight is driving significant change throughout the food and beverage industry. Businesses such as Blue Apron, Hello Fresh and the Purple Carrot are driving the nascent meal kit delivery market. Food companies like Tyson Foods also are experimenting with their own meal kit concepts.
Restaurant delivery, traditionally dominated by pizza chains and local restaurants, is now being embraced by the likes of McDonald’s Corp. and The Wendy’s Co. In mid-December, Target Corp. entered into an agreement to acquire Shipt, Inc., an online same-day delivery platform. Target’s move further illustrates how the interests of retailers and food service operators are converging to always be able to reach consumers.
The virtual restaurant trend may further redefine food service. These are food service businesses only accessible through services like GrubHub, Postmates or similar busineses. These entities have no consumer-facing identities other than marketing programs and a menu on the web or on an app. They are opportunities for restaurateurs to experiment with menu concepts without the capital outlay necessary to operate a traditional sit-down restaurant.
As food and beverage industry executives look back on 2017 they may mostly remember the dramatic changes taking place at retail. Yet 2017 also featured significant changes in food service and those changes will continue to resonate into 2018 and beyond.