MENU DEVELOPMENT INSIGHTS Make Small Changes with Big Impact

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1 MENU DEVELOPMENT INSIGHTS Make Small Changes with Big Impact

2 INTRODUCTION A Menu to Suit All Customers Increase customer satisfaction with quick menu changes. In 06, 50% of restaurant operators reported they kept the menu the same as the previous year; but now, consumer trends influence the menu mix in every segment of the foodservice industry and inspire menu creativity. Even without a major overhaul, a menu refresh increases competitive advantage. Trend-driven menu changes are turning up in non-traditional ways too. Convenience stores (C-Stores) are providing more healthful snacks, senior living facilities are branching out to specialty coffee offerings, and Fast Casual operators are offering veggie alternatives to French fries such as carrot and green bean fries. In short, menu changes represent opportunity, particularly when it comes to adding innovative items throughout the year rather than the standard seasonal menu adjustment. Operational considerations such as food cost and food waste reduction affect menu development, as do cultural shifts, such as attitudes toward sustainability. This report not only highlights consumer trends, but also presents opportunities for menu enhancement and ideas that can be applied across foodservice segments. Datassential, PULSE Changing Menu Sizes, December 06 NESTLEPROFESSIONAL.COM

3 TABLE OF CONTENTS Chapter Chapter Chapter 3 Limited-Time Offers for Repeat Business Appeal to Your Market with LTOs Encourage Experimentation Tweak the Traditional Make Snack-Time Anytime Address Lifestyle Trends Drinks are a Bevy of Opportunity Make Healthier Menu Options Portable Capture Their Attention with Technology Promote Family-Friendly Foods Appeal to Tiny Diners Consider Sustainability Source Sustainably Provide Ethically-Sourced Premium Ingredients Communicate Initiatives Help Customers Spread the Word Datassential, PULSE Changing Menu Sizes, December 06 NESTLEPROFESSIONAL.COM

4 CHAPTER LIMITED-TIME OFFERS FOR REPEAT BUSINESS

5 CHAPTER : LIMITED-TIME OFFERS FOR REPEAT BUSINESS For a Limited Time Only Increase foot traffic with innovative twists on traditional dishes. Menu development involves more than analyzing what s maximized and what s under-leveraged on a menu. Menus today are also image-makers that list the array of products offered, highlight value, enthusiastically communicate relevant details about food and drink offerings, and promote limited-time offers (LTOs). It s tempting for operators to expand menus to promote variety, create buzz and, at the same time, avoid alienating customers who return time and again for a favorite dish or drink. To complicate matters, customer behavior varies by segment. For instance, Quick Service Restaurant customers are nearly twice as likely as convenience store customers to read the menu board every time they visit. Generational differences exist too. Millennials are most likely to try new foods or beverages when recommended by friends or family. But foodservice operators can implement LTOs to balance pleasing customers who want their usual order and those drawn to the new and unusual. CONSUMERS PREFER LTOs WITH SPECIFIC ATTRIBUTES. 3 SEASONAL FLAVORS NEW/ UNIQUE FLAVORS PRODUCT IS RARELY AVAILABLE FRESH INGREDIENTS NEW TWIST ON A FAMILIAR DISH Datassential, Menu Boards Keynote, July 05 Datassential, CPP Generations, 05 3 Datassential, CPP LTO Demand, February 07 NESTLEPROFESSIONAL.COM

6 CHAPTER : LIMITED-TIME OFFERS FOR REPEAT BUSINESS APPEAL TO YOUR MARKET WITH LTOs Tempt your customers with attention-getting special offers that shine on your menu board, get shared on social media, and ultimately bring patrons back for more. The most talked-about LTOs are fairly priced and provide new experiences in the form of unique flavors or new spins on old favorites. LTOs are usually available for at least a month but preferably longer. Successful LTOs drive repeat traffic, so longer stints on the menu are advantageous. Wider time windows for LTOs give customers multiple purchasing opportunities and offer stronger tie-ins with seasonality. Patrons often return to order an LTO again (39%); 37% of them bring friends along, and 8% spread the word. Another 8% post details on social media. CONSUMERS ARE INTERESTED IN LTOs ACROSS SEGMENTS. 9% QUICK SERVICE RESTAURANTS 4% FAST CASUAL RESTAURANTS 8% LODGING 6% CONVENIENCE STORES 4% BUSINESS & INDUSTRY ENCOURAGE EXPERIMENTATION Offer on-trend, seasonal LTOs and give customers more reason to experiment. In fact, 64% of customers say LTOs are more intriguing than regular menu items. Seasonality has appeal across the board, but 9% of Gen Y customers and 6% Gen X customers are most likely to be interested in seasonal specials. Provide descriptive details and make food and beverage specials prominent. While 59% of customers look for LTOs or special promotions on the menu board, only 39% say that information is easy to find. LTOs help meet consumer demands for new menu options, yet 30% of operators do not feature promotions on their menu boards. 3 Datassential, CPP LTO Demand, February 07 Datassential, CPP Generations, 05 3 Datassential, Menu Boards Keynote, July 05 NESTLEPROFESSIONAL.COM

7 CHAPTER : LIMITED-TIME OFFERS FOR REPEAT BUSINESS TWEAK THE TRADITIONAL To appeal to less adventurous diners who are reluctant to purchase LTOs, tweak foods that are familiar to them. This removes some of the risk for the 4% of customers who avoid LTOs because of the uncertainty of liking the meal. In general, consumers are especially interested in burger and pizza LTOs and are generally more open to ordering these items. LTOs build business by appealing to Gen Xers and younger generations who form the target audience for newer or unknown dishes and drinks. Customers 35 and younger prove to be the most enthusiastic about global flavors. MAKE SNACK-TIME ANYTIME About 6% of consumers say any kind of food can qualify as a snack, 3 and their snack orders prove that menu items can be cross-utilized. Appealing to those all-day snackers can expand the daypart reach of LTOs. Most LTO purchases currently occur at lunch (39%) and dinner (30%). To build traffic across slower dayparts, consider focusing on snack-centric offerings such as breakfast items, sweets, or sides that have the advantage of all-day appeal and cross-utilize ingredients from root-to-stem and nose-to-tail. About half of all snacks eaten away from home are traditional snack foods, 7% of snacks are appetizers or side dishes, and 34% are main meal items. 4 Datassential, CPP LTO Demand, February 07 Datassential, CPP Generations, 05 3 Datassential, Snacking Keynote, March 07 4 Datassential, CPP Motivators & Behavior, 05 NESTLEPROFESSIONAL.COM

8 CHAPTER ADDRESS LIFESTYLE TRENDS

9 CHAPTER : ADDRESS LIFESTYLE TRENDS Staying Power Across Target Markets and Shifting Opinions Develop a menu with foods and beverages consumers routines demand. Appealing to families, children, and customers of different generations is a balancing act. However, one constant is that food trends follow lifestyle trends. In addition to introducing on-trend flavors to the menu, some operators add innovative touches by tapping into lifestyle trends, tweaking their service styles, and making menu changes that appeal to their target audiences. DRINKS ARE A BEVY OF OPPORTUNITY Snacking and beverage-only occasions are most common among Millennials and Gen Z customers. For their away-from-home snacks, 5% choose something other than traditional snacks, such as entrées, desserts, or sides. Beverages can energize menus with creative juice hybrids or added flavorings such as turmeric or ginger. For coffee drinks, specialized milks or seasonal flavorings add boosts of flavor and protein. Alternative milks also appeal to health-conscious customers. Since 0, alternative milks including hazelnut, almond and rice milk have experienced 60% menu growth. 3 MAKE HEALTHIER MENU OPTIONS PORTABLE Gen Y customers (7%) have the most affinity for grab-and-go food and drinks. When it comes to snacks, 5% of customers opt for more healthful away-from-home snack choices and % go for a balance of indulgence and better-for-you offerings. When parents buy a new food, 75% of them are looking for options that work well on the go. 4 Whether it s takeout from a restaurant or a convenience store, better-for-you snacks are an effective way to capture busy customers. Datassential, CPP Generations, 05 Datassential, CPP Motivators & Behavior, 05 3 Datassential, Next Generation Coffee Rituals, August 06 4 Datassential, FoodBytes What Do Kids Want to Eat?, June 06 NESTLEPROFESSIONAL.COM

10 CHAPTER : ADDRESS LIFESTYLE TRENDS CAPTURE THEIR ATTENTION WITH TECHNOLOGY Digital menus make it easy to add menu items, promote specials, and feature images of promotable foods and drinks. In-store and drive-thru consumers express a strong interest in digital screens that confirm their orders. Additionally, up-to-date menu boards, ordering systems, and mobile payment options offer competitive advantages. Operators are considering tech-heavy menus: 46% say they are interested in adding digital screens with changing menu images and information, 4% are interested in apps that send menus to patrons cell phones, and 35% are interested in mobile payment options. 37% of Millennial consumers and 3% of Gen X consumers have used a mobile app to find a place to eat or drink. PROMOTE FAMILY-FRIENDLY FOODS While 80% of operators say families help build repeat business, only 30% of operators actively market to families. Promotable foods include better-for-you breakfast items such as yogurt or juice-based smoothies and vegetable sides with kid appeal. Parents agree that kids menus could use a boost. 3 In fact, 50% of kids enjoy eating adventurous ethnic cuisines as well as mainstream ones. 4 87% of kids who try authentic Mexican cuisine (beyond tacos and quesadillas) enjoy it. 4 Successful children s menus build business from families. Two out of three operators agree that families with children help drive repeat business. 4 Millennial parents are the most conscious of kid-friendliness when making their venue and menu choices. Three out of four consumers eat away from home with their children at least once a week and 93% of parents say they consider their kids preferences on these occasions. 3 Datassential, Menu Boards Keynote, July 05 Datassential, CPP Generations, 05 3 Datassential, Kids Menus Keynote, May 06 4 Datassential, FoodBytes What Do Kids Want to Eat?, June 06 NESTLEPROFESSIONAL.COM

11 CHAPTER : ADDRESS LIFESTYLE TRENDS APPEAL TO TINY DINERS Children s palates are often more sophisticated than operators realize, so they can include more choices for kids while still appealing to their parents. Offer try-before-you-buy samples, which encourage children to try new flavors. While chicken strips appear on 60% of kids menus in foodservice operations, other choices such as angus beef and tuna appeal to children as well. Similarly, ethnic grains have kid appeal. Approximately half the children who have tried bulgur wheat and two-thirds of children who have had couscous enjoyed the experience. Designing new kids menus is not without its challenges for operators, but it is also an area of opportunity that can increase traffic. PARENTS TYPICALLY ENCOURAGE THEIR CHILDREN TO TRY NEW MENU ITEMS. % MY KIDS HAVE TO TRY NEW FOODS 6% I DON T REQUIRE THAT MY KIDS TRY NEW FOODS 7% I STRONGLY ENCOURAGE MY KIDS TO TRY NEW FOODS Datassential, FoodBytes What Do Kids Want to Eat?, June 06 Datassential, Kids Menus Keynote, May 06 NESTLEPROFESSIONAL.COM

12 CHAPTER 3 CONSIDER SUSTAINABILITY

13 CHAPTER 3: CONSIDER SUSTAINABILITY An Increase in Social Consciousness Consumers seek eco-friendly terms and sustainable sourcing. With sustainability evolving as a menu consideration, consumers are becoming more discerning about what they eat. In turn, foodservice operators are making conscious ingredient choices featuring seasonality and communicating their sourcing initiatives to customers. Use of the term sustainable has grown on menus 48% in the past four years. Ethical sourcing and social consciousness are growing. These issues continue to play a greater role in the food decisions of younger generations. 3 Consumers want to feel good about their food and beverage choices. The same shift that has turned consumer interest toward eco-friendly products has also resulted in an increased interest in the origin of those products. 4 SOURCE SUSTAINABLY Overall, 0% of consumers would pay more for items described as sustainable and 50% are more likely to buy items described as sustainable. 4 While 34% of operators say they are highly motivated to improve their sustainability efforts, only 40% are sourcing responsibly. 5 Sustainability in foodservice operations is perceived more as an operational or sourcing initiative than as an ingredient attribute. Across various segments of the industry, operators are gravitating toward sustainable proteins. In fact, 33% of limited service restaurants, 38% of full-service restaurants, and 35% of on-site operators say that buying sustainable protein products is important. 5 Datassential, CPP Motivators & Behavior, 05 Datassential, MenuTrends Penetration Sustainable, 07 3 Datassential, CPP Generations, 05 4 Datassential, The New Healthy Keynote, April 06 5 Datassential, CPP Sustainability, February 07 NESTLEPROFESSIONAL.COM

14 CHAPTER 3: CONSIDER SUSTAINABILITY PROVIDE ETHICALLY-SOURCED PREMIUM INGREDIENTS Customers are willing to pay more for certain menu items, including premium and in-season products. Premium products include high-quality meats, bakery items, and seasonal ingredients in food and drinks. This also applies to beverage choices like fresh-squeezed juices and hand-prepared drinks. For 34% of foodservice operators, sustainability includes promoting fresh, natural food and beverage products on the menu. Customers value name branding on menu boards, especially for beverages 5% prefer their juice to be branded, 5% prefer that their coffee be branded, and 46% prefer branded condiments. 3 COMMUNICATE INITIATIVES Approximately 5% of operators communicate their sustainability initiatives through in-store signs, and around 8% of operators consider this practice to be the most effective means of communication. Other operators prefer to have servers and staff spread the word. Finally, % of operators use menu mentions to communicate sustainability messages to customers. 4 Customer demographics matter: Millennials, in particular, are engaged with menu boards and frequently check them. 5 Datassential, CPP Value Beyond Price, 05 Datassential, CPP Sustainability, February 07 3 Datassential, CPP Branding the Menu, 05 4 Datassential, MenuTrends Penetration Sustainable, 07 5 Datassential, Menu Boards Keynote, July 05 OPERATORS CURRENTLY PRACTICE AND PRIORITIZE THE FOLLOWING SUSTAINABILITY INITIATIVES. 58% SERVE FRESH/ NATURAL PRODUCTS CONSERVE ENERGY 57% USE RECYCLED PAPER PRODUCTS 55% 40% SOURCE RESPONSIBLY NESTLEPROFESSIONAL.COM

15 CHAPTER 3: CONSIDER SUSTAINABILITY HELP CUSTOMERS SPREAD THE WORD Patrons eat first with their eyes, so add appetizing images of beverages and desserts to build awareness and potentially boost sales. For Gen Z customers especially, restaurant choices are motivated in part by ethical sourcing and social consciousness. These younger customers are most likely to post social media reviews of restaurants, cafeterias, and other venues. Among Millennials, 7% have done so, as have % of Gen X customers, and % of Gen Z customers. Communicate eco-friendly initiatives and add hashtags on your menu board for new items, seasonal menus, and other important events to promote social media sharing. CUSTOMERS PREFER PHOTOS ON THE MENU. 40% COMBO MEALS 4% ENTRÉES 43% PROMOTIONS/LTOS 4% ALL ITEMS ON THE MENU 7% DESSERTS Datassential, CPP Generations, 05 Datassential, Menu Boards Keynote, July 05 NESTLEPROFESSIONAL.COM

16 CONCLUSION Slight Menu Changes for Maximum Profitability Gain a competitive advantage with an evolved menu. Menus present an opportunity to entice customers to try something new, take advantage of specials, or upgrade their usual. Chances are that customers already know what s on the menu when they walk in the door, but menu boards can influence customer decisions. More than half of food service customers look at menu boards to see what specials or promotions are being featured. The menu is a place where adventurous and familiar offerings intersect with variety and value. 7% of customers consider variety to be a valuable menu trait. Menu development practices have changed to suit technology and shifting food perceptions; however, these techniques offer broader opportunities to attract consumers. When operators upgrade their offerings with slight alterations an LTO, an adaptation to fit lifestyle changes, or a commitment to sustainability customers take notice. Menu changes, even in the short term, can lead to more traffic through the door, can increase social media buzz, and can increase profits. Datassential, Menu Boards Keynote, July 05 Datassential, CPP Value Beyond Price, 05 NESTLEPROFESSIONAL.COM

17 ABOUT NESTLÉ PROFESSIONAL Nestlé Professional is dedicated to being an inspiring growth partner that delivers creative, branded food and beverage solutions, enabling foodservice operators to delight their consumers. From Minor s, Stouffer s, Chef-Mate, and Trio on-trend culinary items to innovative beverage systems under Nescafe, Nestlé Vitality, and Coffee-Mate brands, Nestlé Professional meets the needs of foodservice operators while satisfying the tastes of the out-of-home consumer. Nestlé Professional is part of Nestlé S.A. in Vevey, Switzerland the world s largest food company with sales of over $98 billion. For more foodservice product news and information, visit NESTLEPROFESSIONAL.COM

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