How America’s dining habits are reshaping the food and beverage industry
Near the beginning of the 20th century, approximately 95% of our meals were prepared and eaten at home, while just 5% of meals were prepared somewhere other than our own kitchens. Today, the data tell quite a different story: We actually spend more of our money on meals prepared outside the home than we do on home-cooked meals.
This will come as little surprise when you consider our own hectic day-to-day schedules: drive-through on the way into the office; lunch with office colleagues at a nearby restaurant; dinner on-the-go as we shuttle our active school-aged children from sports obligations to performing arts recitals.
And, of course, Millennials have dining habits and preferences that would look entirely foreign to those who grew up sharing meals with family around the kitchen table twice a day. Few of those born into this generation remember a time in which going out to dinner was a rare, special occasion (as we Gen-Xers and Boomers recall as typical). We older Americans can recall a time when even a trip to the fast food restaurant was something of a big deal.
So while today’s current dining habits are easy to recognize, it should come as something of a surprise just how quickly this shifting trend became a stark reality…and how quickly things might change again. To anyone owning, operating or working in the food and beverage industry — retailers, wholesalers, manufacturers, restaurateurs, suppliers, etc. — the time to take stock is now, and to recognize quickly that the future isn’t what it used to be.
An Accelerated Rate of Change
It was as recent as 2010 that the two trend lines converged. For the first time ever, Americans were eating out more than we were eating in. And with each passing year since, that number continues to skew toward food consumed away from home. As with anything in the 21st century, it’s not just that things are changing so drastically, it’s that the rate of change is accelerating.
As a result, not only do companies operating in the food and beverage industry need to keep up with the Joneses (their competitors), they need to work harder, faster and smarter to keep up with the Smiths, Thomases and Dixons as well — their customers!
Virtually every industry has been following Millennial buying and shopping habits and preferences. But now these younger Americans have become not only one of the largest shopping demographics, but one of the most influential as well, as their incomes grow and their buying power increases.
Food retailers, to take just one category, have to totally reassess how they are sourcing, stocking, and merchandising their products. Expanded organic sections popped up almost overnight, as young shoppers (primarily) placed a greater emphasis on how their food is grown, distributed and packaged. Obviously, when retailers add new fresh food offerings, something else needs to go (unless they’ve expanded the store footprint). Those trade-offs can be risky, as retailers don’t want to pull products from shelves to which other shoppers are loyal.
Wholesalers and producers are faced with a similar dilemma: Where to focus? Shift to meet demand, and if so, at the expense of what? What investments need to be made in order to meet changing consumer preferences? Will those investments in capital and resources bring a return quickly enough to justify their pursuit?
Equipment manufacturers and other businesses along the supply chain (distributors, e.g.) aren’t immune either. Suffice it to say, if people are changing the way they’re shopping (and spending less money on groceries relative to dining out), then the ripple effects are felt by every business in that supply chain…right down to the family farm.
Even restaurants face new challenges. One might posit that this shift toward eating out would be a boon for the restaurant industry. And, as a categorical statement, you’d be right. But each individual restaurant operator is faced with far greater competition than ever before. The proliferation of new, innovative chains, that can easily scale their operation, makes it difficult for independents to cut through the clutter, let alone compete with the national chains that seems to pop up on every corner in town. The average lifespan of a new restaurant these days is only a few years. What might be hot today, might not be tomorrow.
So What? Now What?
There does exist an insurance policy of sorts against this rapid rate of change with which the food and beverage industry is tasked with keeping pace. That secret weapon? Data.
Now — more than ever before — it is critical that businesses in all facets of the food and beverage industry stay on top of trend lines and changing consumer preferences. Things are changing faster than ever before, and such changes are no longer minor evolutions, but in some cases, major revolutions!
Nobody in the 1980s and 1990s predicted today’s ubiquitous reality when it comes to Americans’ dining habits. And nobody today is quite certain what to predict 30 years from now. But what we can do is keep a finger on the pulse, an ear to the ground, and an eye on the data that tell us where things are today, and where they are headed tomorrow.
Research is no longer a luxury, but rather an imperative. Because, just as we find ourselves comfortable understanding how Millennials think and shop, along comes Generation Z to potentially change things all over again. This generation knows only a reality in which everything is just a thumbprint away. This generation literally grew up on smartphones. Apps do everything nowadays, including deliver food to your doorstep. Will the next generation’s buying influence benefit restaurants or online convenience services? And how will older generations follow their lead. Just as many Gen-Xers and Boomers have assumed characteristics of the Millennial buying persona in recent years, will Millennials shift and adapt to the buying habits of Gen-Z?
They say “only time will tell.” But data and research can help. Understanding the generational mix of a given shopping demographic can only truly be done via research. Not only is understanding the preferential differences important, but scientifically mapping them so they can become predictors is immensely powerful. Research can reveal all sorts of trends and motivators, such as how consumers budget, how they socialize, what role food plays in the socialization construct of their lives, and so on.
We also can work to understand the emotional connections (or disconnects) people have with food and dining experiences. Harnessing emotional research and customer experience research can help decode the emotional connection people have to food…and food retailers/products/brands. A sophisticated measurement tool like the Martec Emotion Score, for example, allows companies to equate a numerical (quantitative) value to how positive or negative a customer feels (qualitatively) about a given food and beverage brand. For more on that particular mode of study, check out: How Consumer Emotions are Shaping the Future of the Food and Beverage Industry.
Want to chat further about the tools we use to measure consumer behaviors and trends in the food and beverage industry? Contact us.