3rd EDITION. Acosta, Inc. All rights reserved.

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1 3rd EDITION There s no doubt the restaurant and foodservice industry has seen tremendous growth and diversification over the past two decades, growing roughly 9 percent since 2014, and now totaling more than $500 billion in sales annually. With new avenues for diners to explore, and the foodservice world at their fingertips via digital tools, restaurants have seen a leveling off of in-house diners as they branch out and find new ways to eat outside the home. In the 3rd edition of The Why? Behind The Dine, Acosta and Technomic explore the demographics driving these trends, what is motivating these groups and how the digital world is reshaping how foodservice brands and operators interact with their customers. Acosta, Inc. All rights reserved.

2 Dining Out Is In Driven by convenience and an interest in exploring new meal options, consumer spending in the foodservice channel has been rising steadily since That growth is continuing, with diners indicating spending significantly more on food prepared outside the home in 2016, compared to The Why? Behind The Dine data over the last two years. In particular, Millennial diners and diners with kids are most likely to hang up their aprons and spend the highest percentage of their monthly budgets on eating out. In an average month, about how much does your household spend on...? () Food prepared outside the home such as restaurant meals, takeout, delivery, etc. $ $ $ Groceries (excluding restaurant meals, takeout, delivery, etc.) $ $ $ Indicates significantly higher than in 2015 and 2014 at a 95% confidence level. In an average month, about how much does your household spend on...? Food prepared outside the home Groceries $ $ $ (18-15) $ $ $ Gen X Diners (36-51) $ $ $ Boomer Diners (52-70) $87.80 $ $ Silent Diners (71+) $87.20 $ $ $ $ $ Over the next year, 58 percent of diners with kids and 53 percent of Millennial diners plan to eat more meals outside the home and they re not alone. 47 percent of male diners and 43 percent of diners with household incomes of $45,000+ also expect to eat out more frequently than last year, and they have plenty of options when it comes to doing so. 2

3 A Full Menu of Off-Premise Dining Options Just as consumer spending on foodservice is growing, so are the avenues for dining out. While eating in a restaurant s dining area continues to hold steady as the most popular format for eating out, year-over-year data shows the rate of this behavior also remains steady, with the same percentage of diners eating-in at restaurants in 2016 as in In lieu of requesting a table for two (or more) more often, diners are exploring a variety of other off-premise restaurant dining methods. In fact, compared to 2015, more diners report using carry-out, delivery and drive-thru options for getting their restaurant food. Off-premise restaurant dining is particularly popular among Millennial and Gen X diners, who reported higher rates of these practices in the past three months than Boomer and Silent diners. Over the past three months, please let us know if you ve consumed food or beverages by any of these methods? (% of ) Ate-in at the restaurant s dining area Ordered food from a restaurant for pick-up or carry-out Ordered food through a restaurant drive-thru Ordered delivery food from a restaurant Ate food or beverage items at a farmer s market Ate meals purchased from a food truck 22% 17% 22% 16% 50% 42% 70% 63% 67% 63% 82% 82% According to Technomic, 56% of Millennial and Gen X foodservice dollars are being spent off-premise. More Conscious Consumption Just as shoppers are becoming more ingredient-conscious in the grocery aisle, there is growing interest in dining healthier. 41 percent of diners indicated ordering a menu item featuring all natural ingredients. In addition, more U.S. diners agreed they made healthier meal selections when dining out as compared to last year, including eating more salads at restaurants (31% vs. ); eating more restaurant meals with fish ( vs. 18%); and eating more vegetarian meals at restaurants (21% vs. 14%). In the past three months, have you ordered any menu items from a restaurant that specifically mentioned or included the following features? (% U.S. Diners) All natural ingredients Low calorie, reduced calorie Whole grains (including whole wheat) Low fat, reduced fat or fat free Organic ingredients Locally grown or made ingredients Real ingredients (no chemicals, artificial flavors) Sugar free/low in sugar No additives/no preservatives Low cholesterol/cholesterol free 41% 37% 37% 30% 30% 28% 3

4 66% of total U.S. diners agreed they view mealtime as a valuable time to connect with family or friends 63% of total U.S. diners enjoy the social aspect of dining out at restaurants 63% of total U.S. diners agree that visiting restaurants is a form of entertainment A Culinary Community According to recent trends uncovered by Technomic, dining concepts will increasingly be positioned as places for people and communities to connect, give back, recuperate and foster diversity and inclusivity. 49% of total U.S. diners say it s important for restaurants to support local communities. are eating more restaurant meals with locally sourced ingredients this year Dining Out is an Experience (Not Just a Meal) Food has been bringing people together around the globe for centuries. Today s positive trends in eating out can be attributed, in part, to diners perceptions of mealtime as an activity or event, showing that eating is not just a means of living, but a way of life one that puts greater emphasis on the dining experience as a whole. Diners surveyed agreed that time spent dining out is both valuable and enjoyable, even more so than the year prior, allowing them time to connect and socialize with family and friends. This move toward more experiential dining means restaurants, from independently operated locations to fast casual concepts, can capitalize on being more than just a place to eat. Such is the case with Panera Bread. Not limiting itself to being a place where hungry and hurried diners can get in and get out (though that convenience factor is still an option with order-taking kiosks), the bakery and café chain has taken great care to cultivate the atmosphere of its stores and its customers experiences, recognizing they are just as important. By incorporating elements into their restaurants like local bulletin boards, community meeting space, free guest WiFi, as well as cozy fireplaces, the brand has created welcoming, community environments. Diners are exploring all the restaurant world has to offer, choosing their own culinary adventures based on more than just food. 64 percent of diners say they love trying new restaurants, and there is a lot to explore, with more than one million restaurant locations in the U.S. offering a wide range of concepts and cuisines, according to the National Restaurant Association. 45 percent of diners consider themselves adventurous eaters, with many going online to read menus and restaurant reviews, and to research new foods to order. 4

5 Influential Diners Driving Foodservice and Experiences Last year we introduced a new segmentation model outlining four types of diners Explorers, Connectors, Bargain Seekers and Habituals defined by their foodservice experiences, food shopping behaviors and food preparation activities. Our latest research not only reveals that Explorers and Connectors represent 40% of diners, but that they also spend significantly more on food away from home and align with experiential dining trends more than their counterparts. Explorers and Connectors stand out because of their strong engagement with dining experiences. In the next year, significantly more Explorers, and almost all Connectors, expect to increase the frequency that they eat out. 65% of Explorers and 78% of Connectors view mealtime as a valuable time to connect with family or friends. 73% of Explorers and 84% of Connectors love to try new restaurants. 52% of Explorers and 80% of Connectors consider themselves adventurous eaters. EXPLORERS CONNECTORS BARGAIN SEEKERS HABITUALS Adventurous Eaters Mealtime Means Family Time Hunting for Value Trust What They Know % Diner Respondents 28% 12% 30% 31% Age (average) Gender 51% Male 49% Female 81% Male 19% Female 65% Female 35% Male 60% Female 40% Male Average household size Monthly spending on food outside the home (Indexed to ) Monthly spending on groceries (Indexed to ) Ate a restaurant meal at least once a week (Past 3 months) 55% 83% 38% 32% Meal Kits Help at Home In addition to dining out or purchasing prepared foods, some diners (especially Millennial/Gen X), are turning to meal kits as a way to enhance their eating experiences at home. Those ordering online meal kits indicated their benefits included grocery shopping less frequently and eating out less frequently. Diners told us the following statements best described the benefits of ordering online meal/ingredient kits: I like cooking new dishes I am cooking healthier meals I am cooking at home more frequently I am eating meals at home more frequently I am grocery shopping less frequently I am spending less time preparing meals I am eating out less frequently 34% 29% 24% 20% 5

6 Giving Digital a Seat at the Table Digital, social and mobile usage all of which are growing in the foodservice industry are influencing diner experiences before, during and after their meals. Although more diners are still influenced in their restaurant selection by location, family/friends and habit, the impact of the multitude of digital tools continues to grow. The online influence takes many forms deals that draw diners in; restaurant reviews and menu research before making a reservation; web-based ordering at the restaurant; photo sharing on social media during the meal; and digital checkout, to name a few. Millennial diners, Gen X diners, and diners with kids take the lead in using a variety of digital approaches to help plan their restaurant visits, including searching for coupons/offers/deals online and reading restaurant menus online. Look for coupons/offers online for restaurants Often read restaurant menus online, before I go 49% 46% 51% 59% Gen X Diners 57% Gen X Diners 53% Boomer Diners 44% Boomer Diners 57% 58% Use the internet to find the best restaurant deals Get ideas for new meals to order by researching new foods online 39% 37% 58% 56% Gen X Diners 47% Gen X Diners 45% Boomer Diners Boomer Diners 18% 57% 59% With the expansion of digital platforms, we have seen year-over-year growth in foodservice mobile app use, allowing diners to connect and engage with restaurants. From eateries creating customized apps as a resource to keep diners up-to-date on special events and new menu items, to apps that help with restaurant selection and reservations, these convenient mobile tools help to streamline the dining process. 6

7 How often does each of the following impact what restaurants you visit, or what menu items you order, when you are planning to dine out? (% U.S. Diners) Menu online/mobile app to plan meal ordering 14% 19% Restaurant recommendations from smartphone app Pre-order menu items online/mobile app for dining/pick-up/carryout Restaurant reservation smartphone app Restaurant finder smartphone app 5% 6% 7% 9% 10% 11% 11% 13% Indicates significantly higher than in 2015 at a 95% confidence level Social media continues to grow in its importance in foodservice, with 61 percent of diners on Facebook following restaurants to learn about new menu items and for coupons/offers. Diners are also checking in on social media, as 28 percent of diners with kids indicate they often tell family and friends about their restaurant experiences on social media, with many including photos of their meals. As with many other foodservice trends, Millennials and diners with kids are the frontrunners who most often used a loyalty card or restaurant s mobile check-out device, and completed a post-dining restaurant survey. The effective use of loyalty cards can help establishments to identify and reward their most valuable diners. Please tell us how often you do the following things, after you ve already arrived at a restaurant, and/or eaten your meal, and left the restaurant? (% of Diners selecting Often ) Use restaurant loyalty card to earn points towards future visits Use restaurant loyalty card to redeem dining discounts 19% 22% 19% Complete the restaurant s customer satisfaction survey on the receipt 17% 24% Review my bill/changes electronically on mobile device/restaurant device 16% 22% Total U.S Diners Pay my bill/charges electronically on mobile device/restaurant device 11% 20% Indicates significantly higher than at a 95% confidence level. Consumer Digital Engagement Drives Sales Success Carryout chain Domino s Pizza has fully embraced technology, going well beyond offering simple online or mobile ordering, and setting the bar for consumer engagement. Empowering customers to interact with their individual locations in a frictionless manner through pizza profiles across 11 different platforms, including their mobile app, social media, texting, smart TVs and more the chain increased in-store sales by a whopping 12 percent in Q

8 Key Takeaways for Restaurant Operators Dining In or Out? Diners not only have more choices in eating outside of the home than ever before, they also have more influences impacting those decisions. For restaurant owners, seek out diner preferences, which may vary from your own, and find out what brings customers in the door to keep them coming back. Beyond dining in, make sure you are equipped to capitalize on the growth in off-premise dining by offering convenient takeout and delivery options, perhaps through third-party platforms. Specials and Promotions Although diners generally expect to pay more per meal to eat out than to buy groceries and cook at home, many diners are looking for promotions and deals, from coupons to special menu offerings. Provide and communicate unique offers to draw in customers. Targeted promotions can go a long way toward giving your establishment a competitive advantage as diners navigate meal options. Experience and Engagement Diners today are both experiential and exploratory. Knowing that visiting restaurants is also a form of entertainment for many, think about how you can deliver on that to make it a true night out for your guests. Consider the environment of your establishment and other offerings such as WiFi, community/meeting space, live music or providing a place to watch sporting events. Community Building Creating a dining community for your customers is important to increasing loyalty. Make sure you are part of the social media community as well, engaging with your customers by responding to reviews, resharing food photos, or posting new menu items and meal promotions. Encourage loyalty card, social media page or sign-ups as avenues to regularly communicate with diners. About the Report The Why? Behind The Dine 3rd edition survey was fielded in December 2016, with a random sample of 1,500 nationally representative U.S. diners, via Acosta s proprietary ShopperF1rst methodology. About Acosta Acosta is the sales and marketing powerhouse behind most of the trusted brands seen in stores every day. The company provides a range of outsourced sales, marketing and retail merchandising services throughout the U.S. and Canada. Acosta Foodservice provides integrated sales and marketing solutions for major food and non-food manufacturers, distributors and operators across all away-from-home meal channels. For more information, visit For more information about this report or other strategic insights research, please thoughtleadership@acosta.com. Generational Definitions: Millennials (18-35 years) Generation X (36 51 years) Boomers (52-70 years) Silents (71+ years) About Technomic, A Winsight Company Only Technomic delivers a 360 view of the food industry. We impact growth and profitability for our clients by providing consumer-grounded vision and channel-relevant strategic insights. We offer a broad product portfolio of proprietary and syndicated studies, online research tools, strategic consulting services and annual reports all served with the promise of the most reliable and actionable data available. The versatility of our product mix allows us to easily execute custom projects to best serve our clients. We add value to our research with truly strategic insights, based on a unique understanding of the entire food industry landscape. With 50 years of leadership in the field, our unparalleled expertise and relentless focus on trends help clients leverage growth opportunities and better serve changing customer or consumer needs. For more information on Technomic, please Jennifer Passmore, Regional Vice President at jpassmore@technomic.com. facebook.com/acostasales linkedin.com/company/acosta-sales-&-marketing twitter.com/acostasales 8