MAY FoodBytes PULSE GET INSIDE THE OPERATOR S HEAD. FIND OUT WHAT THEY REALLY THINK. LET THE PLANNING BEGIN. A TOPICAL TREND REPORT FROM

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1 MAY 2015 PULSE GET INSIDE THE OPERATOR S HEAD. FIND OUT WHAT THEY REALLY THINK. LET THE PLANNING BEGIN A TOPICAL TREND REPORT FROM

2 : MAY 2015 SEGMENT BY SEGMENT DETAIL RESTAURANTS QSR FAST CASUAL MIDSCALE CASUAL FINE DINING ON-SITE B&I LODGING CASINO/GAMING HOSPITAL LTC SENIOR LIVING K-12 C&U RECREATION CATERING RETAIL C-STORE GROCERY/DELI ENDLESS OPERATOR INSIGHTS. Set the stage for your future initiatives. Do you have the data and research necessary to meet operators' needs? Do you know if operators are optimistic about the future, and may be planning capital improvements in the year ahead? Do you know where operators think sales increases will come from in the future? Do you know how to market directly to the demographics you're likely to find in each individual segment -- the segments that are dominated by a particular gender, age, experience level? Do you know what operators want most from their suppliers and what makes them more likely to purchase a new product? Now you do. Datassential's 2015 PULSE report is here un unparalleled look into the minds of 1,500 operators, covering their motivations, challenges, and behaviors. PULSE covers it all restaurants, on-site operators, and retail. PULSE allows you to develop segment-specific strategies, taking into account the sometimes wide variations from one segment to another who makes the decisions, operator needs, the types of services they offer, and their outlook on the year ahead. In this month's we give you a sneak peek into the latest PULSE report and some early insights you'll find inside. But this is just a tiny taste of this truly comprehensive planning tool nearly 400 data-rich pages covering 17 segments and we analyze every question in detail to determine statistically significant differences between each segment, to show you what truly makes a given segment stand apart. This year we have also added defining characteristics for each segment, leading chains, and key economic indicators for the overall industry. And every PULSE subscription includes access to Datassential's Monthly Operator Sentiment Report, tracking operator traffic and sales optimism for the year ahead, plus key sales drivers, so you always have your finger on the industry's pulse. PLUS your subscription includes both the 2014 and upcoming 2015 PULSE Topical Reports, surveying operators on issues like cash n carry stores, Millennials, speed scratch products, and menu customization. Take a sneak peek into this report in the pages ahead, and then lay the foundation for your planning process by purchasing the full report by calling Brian Darr at or ing brian@datassential.com. 2

3 20% breakfast MAY % 38% 7% 27% 3% am snack lunch pm snack dinner late night WHICH DAYPART ACCOUNTS FOR THE LARGEST SHARE OF OPERATORS SALES? Lunch accounts for 38% of overall sales, followed by dinner (27%) and breakfast (20%). But this breakdown varies by segment breakfast and lunch are key drivers for on-site operators like lodging, B&I, and K- 12, while full-service restaurants generate greater dinner revenue; the daypart accounts for over half of casual dining sales and 64% of fine dining sales. Understanding revenue sources by segment can do more than show you what operators need it gives you benchmarks for comparison and shows you where the opportunities may be. Care about snacking? Morning, afternoon, and latenight snacks accounted for 15% of sales. WHERE DO OPERATORS NEED THE MOST HELP? Operators reported that building traffic and managing costs were both very important to their operation and presented more of a challenge than other business issues. Managing food and labor costs and minimizing waste while attracting both new and repeat business are core areas to target messaging how a product or service will boost patron appeal and/or reduce BOH costs. PULSE helps you understand business goals and needs, and the solutions that suppliers can offer to address them. WHICH MENU PART HAS THE HIGHEST FOOD COSTS? Food costs are the highest for entrees at 41%, which is not surprising considering these are often proteinheavy dishes. But desserts and appetizers follow, with their food costs accounting for 31% and 29% of revenue, respectively, which means operators may be looking for ways to turn over these menu categories more quickly in order to move inventory and minimize costly waste. Menu categories with lower food costs, such as sides, soups, and salads, meanwhile, could be profit boosters for operators. 29% apps 28% drinks 27% soups 41% entrees 27% salads 27% sides 29% desserts 3

4 SEGMENT BY SEGMENT Only 12% of QSRs said their business decisions were cuisine driven. MAY 2015 WHAT MOTIVATES BUSINESS DECISIONS? CUSTOMERS? MARGINS? CUISINE? Business motivations vary widely from segment to segment 45% of QSR operators reported that they "just want to give customers what they really want," and these operators may need help identifying and prioritizing trends to meet those customer needs. Casual and fine dining operators, meanwhile, were more likely to focus on cuisine and offering "great tasting, authentic food" to customers, necessitating more culinary information and ideas. PERCENT OF ORDERS PLACED BY METHOD OVER THE PHONE (with customer support) OVER THE PHONE (with rep) 14% IN-PERSON (with rep) 7% FAX 5% 20% OTHER 3% 2% ONLINE 50% HOW DO OPERATORS ORDER? Operators reported placing half of their orders through their primary distributor online, which was also operators preferred ordering method: 49% said they prefer to order online, while 58% preferred to order without a sales rep, though this depended on an operator's individual situation and whether a sales representative was available to them. PULSE helps you understand where and how operators buy, from sourcing behavior by segment to ordering method appeal to the reasons behind the decisions. WHICH PRODUCTS ARE OPERATORS MOST LIKELY TO MAKE FROM SCRATCH? PRE-MADE? Eighty-one percent of operators typically prepare entrees partially or completely from scratch, while vegetables and soups are also typically scratch prepared. But scratch and pre-made product usage varies dramatically by segment. PULSE tells you the product formats and equipment that operators work with, by segment, and why they make those decisions, so you can always target them effectively. SEGMENT BY SEGMENT 17% of grocery/deli operators report that their offerings are completely scratch-made, and 26% report that they are partially scratch-made. 4

5 SEGMENT BY SEGMENT Over half 51% of c-store operators said their last new product purchase was motivated by a free sample. MAY 2015 WHAT IS MOST LIKELY TO MOTIVATE AN OPERATOR TO PURCHASE A NEW PRODUCT? An effective, free sampling program is critical to activating new product purchases 45% of operators said a free sample was the reason they had purchased new products recently. PULSE dives deep into what motivates purchasing sourcing selection criteria (overall, by segment, and by the decision-maker s title), desired supplier support, current supplier usage, and more. WHICH SEGMENTS ARE MOST LIKELY TO OFFER ONLINE ORDERING? Twenty-eight percent of fast casual operators offer online ordering, a full ten points more than QSRs and well beyond fine dining. Meanwhile, 18% of C&U operators reported offering online ordering. Understanding which services an operation provides can help you understand the right product mix which segments are most likely to offer catering? Open kitchens? Buffet-style service? 24-hour service? 10% of all operators offer online ordering capabilities WHICH SEGMENTS ARE DOMINATED BY FEMALE DECISION MAKERS? Though decision makers as a whole tend to be male, a majority of healthcare and K-12 decision makers are women. Keep in mind that it's ultimately a person making a decision understanding those people and how demographics (age, background, industry experience, titles, etc.) can vary dramatically from one segment to the next is essential to creating a segment-specific plan. FAST CASUAL SENIOR LIVING K-12 71% 29% 47% 53% 18% 82% 5

6 SEGMENT BY SEGMENT CASUAL DINING BRAND IMPORTANCE SOFT DRINKS 68% MAY 2015 COLD BEVERAGES 58% CONDIMENTS 49% HOT BEVERAGES SALAD DRESSINGS MEAT / PROTEINS PREPARED DESSERTS PREPARED ENTRÉES DELI MEATS SEAFOOD PREPARED APPETIZERS SOUPS SAUCES / GRAVIES GRAINS BAKED GOODS PRODUCE 37% 35% 32% 30% 25% 24% 24% 23% 23% 23% 20% 18% 15% DO BRANDS MATTER TO OPERATORS? Distributor brands are gaining on national brands not only do distributor brands continue to rate highly on value, but they also did much better on quality compared to the previous year (42% versus 21%) and reliability (44% versus 24%), putting pressure on brandname manufacturers to up their game and differentiate their products. PULSE covers brand importance by segment and product category, plus the factors that matter most to operators in regard to suppliers what supplier attributes make an operator more likely to purchase from a supplier. WHAT DO OPERATORS FORESEE IN THE YEAR AHEAD? Food and labor costs have already been increasing for operators 80% of operators reported an increase in food costs last year (and 15% reported that food costs had increased "a lot") and 54% reported an increase in labor costs. And they expect those rising costs to continue 78% of operators said they anticipated food costs to increase next year, and 57% said the same for labor costs. Increasing costs will be a factor for operators in The PULSE report breaks it all down, from year-long optimism indexes to show you overall trends and fluctuations to cost concerns by segment, sales drivers and sources of past increases and predictions for the future. last year next year FOOD COST CHANGES 15% 65% 16% 4% increased a lot increased stayed the same decreased 9% 69% 19% 3% will increase a lot will increase stay the same will decrease 6

7 Which segments are most likely to add a loyalty program in the year ahead? MAY 2015 Which factors motivate operators to choose pre-made and scratch-made products? Which segment anticipates the largest growth in sales in the next year? What is the top concern for operators? Which factors motivate operators to choose pre-made and scratch-made products? Which factors make an operator more likely to purchase from a supplier? Which segments worry most about food costs? What is the most important piece of information operators want from suppliers? Where are non-alcoholic beverages expected to drive future sales? GET THE FULL PULSE REPORT Get all of your questions answered and begin planning your segmentspecific strategy today. Call Brian Darr at or brian@datassential.com Which segments are most likely to use broadliners? Specialty distributors? Directmanufacturer purchasing? Club stores? 7

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10 TOPICS COVERED IN LAST MONTH S TRENDSPOTTING REPORTS MAY 2014 DINE AROUND In the April issue of Dine Around we took you on an immersion tour of Astoria, Queens, one of the most diverse neighborhoods in New York. We took you to the Greek restaurants and bakeries that are ubiquitous throughout Astoria, visited New York s largest beer garden, and checked out a diner that has been open 24/7 since And we covered an enormous range of cuisines, including Welsh, Balkan, Venezuelan, Maltese, and more. UPCOMING: A special National Restaurant Association show edition covering Chicago. ON THE MENU In April s On the Menu we discovered new concepts bringing international flair to the breakfast and dessert menus with chilaquiles and semifreddo, looked at huckleberries and country sausage, checked in on refreshing sparkling wine cocktails, and took a fresh look at the versatile sunflower seed. And in our coverage of new menu items and LTOs at top chains, we see major chains bringing back popular LTOs and experimenting with new flavors. UPCOMING: We cover po boys, pecans, bulgogi, patatas bravas, Thai basil, and more. CREATIVE CONCEPTS In Creative Concepts, we looked at an old concept that s suddenly red hot again food halls. This jam-packed issue covered 31 food halls, including 6 in-depth profiles, all spanning 74 innovative restaurant and retail concepts, PLUS consumer data on food halls and the dishes you ll find at these concepts. Find out if consumers want to try ramen burgers, ginger salami, spicy dill pickle fries, and so much more. UPCOMING: We check out barcades and other social restaurants. WORLD BITES In World Bites we traveled to Basque country, combining a unique heritage with Spanish and French influences. In this issue you ll find small bar bites, or pintxos; unique meats and cheeses, from jambon de Bayonne to smoky Idiazabal; seafood dishes like marmitako ( fisherman s stew ) and txipirones en su tinta ( squid in its own ink ); sauces and flavors, from salsa Vizcaina to piperade; and Basque cider. UPCOMING: Next month we discover the cuisine of Vietnam. INTERNATIONAL CONCEPTS April s issue of International Concepts took you to Japan, an island nation with a rich food culture. In this issue we covered a variety of concepts, from rice burgers at the country s toprated QSR to a burger and pasta chain that recently released a Kit Kat Sandwich LTO. We also covered a number of chains making their way to the U.S. featuring sushi, ramen, curry, and more, and sought out the unusual LTOs you ll find at U.S. chains in Japan. UPCOMING: We check out the restaurant chain culture of Brazil. NEVER MISS OUT ON A TREND! Contact Maeve Webster at or maeve.webster@datassential.com to subscribe. 10

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12 STAY IN-THE-KNOW ON THE LATEST TRENDS WITH REPORTS FROM Datassential s TrendSpotting Reports combine the art of spotting food trends with the science of market research, so you are always up-to-date on the trends that matter to your business, from ideation to marketing to competitive analysis. And, by subscribing to the full TrendSpotting package, you ll put it all into context by understanding the overall trend landscape, from sauces to spices, carriers to proteins, beverages to desserts. ON THE MENU analyzes flavor and ingredient trends from across the trend cycle, from consumer awareness and interest to menu examples that put trends into context. Plus, we gather and examine important LTOs and new menu items from chains across the country. INTERNATIONAL CONCEPTS, our newest TrendSpotting Report, highlights chain activity around the world these are the indemand, up-and-coming flavors, concepts, and trends that are often adapted for the U.S. market. DINE AROUND takes you on a TrendSpotting tour of a city or neighborhood, so you are always inthe-know on local food trends and how they fit into the overall food landscape, all combined with Datassential s industry-leading market research tools, including MenuTrends and Firefly. WORLD BITES brings you authentic dishes and ingredients from around the globe, each one packed with consumer survey data and U.S. menu examples a must for product ideation, menu development, and marketing. CREATIVE CONCEPTS makes it easy to understand how hot flavors, ingredients, and concepts fit into overall industry trends. Each month takes you across the country and into the establishments that are defining the industry. To begin your TrendSpotting subscription, contact Datassential Senior Director Maeve Webster at or maeve@datassential.com. datassential.com

13 : SOMETHING FOR EVERY IDEATION AND MARKETING NEED.

14 A MAJORITY OF CONSUMERS SAY THEIR TASTES ARE SHAPED BY THEIR RESTAURANT EXPERIENCES What s happening on the menu today can be a leading indicator of tomorrow s food trends. Datassential MenuTrends is the industry s largest menu data set with the longest historic trend record, plus the ability to search millions of dishes from over 100,000 menus. Because the database is designed to mirror the US restaurant census by segment, region, and menu type, MenuTrends is the only system that offers true projectable data. All segments and cuisine types are tracked extensively from food trucks to fine dining. MenuTrends INSIDER is also updated every month with Limited Time Offers (LTOs) and other new menu activity, with product photos that bring the listings to life. And with thousands of ready-to-use reports and simple trend detection tools, you can jump right into the database, identifying, measuring, and predicting the food and flavor trends that matter to your business. Call us today to begin using the food industry s authoritative resource for flavor trends. Call Jana Mann at or jana.mann@datassential.com.