Foodservice Operator A&U With Technomic October 2017
Contents Objectives & Methodology Summary & Implications Topline Foodservice Market Performance Report Deep Dive -Sweetener Attributes & Preferences -Honey Formats -Sweetener Usage & Perceptions -Honey Usage Appendix MENU TRACKER 2017 2
Objectives & Methodology MENU TRACKER 2017 3
Objectives Examine general attitudes, usage, preference, and barriers to using honey (relative to other key competing sweeteners). This will be used as a benchmark for future studies to track the change of these attitudes and usage of honey by operators over time. MENU TRACKER 2017 4
Methodology Online quantitative study N=500 foodservice operators (commercial and non-commercial) Operation Type 14% Type of LSR Type of FSR 11% 9% 38% 45% 55% 36% 53% 38% LSRs FSRs Catering Hotel/Lodging/Casino Fast food Fast casual Casual dining establishment Polished/upscale casual dining establishment Fine dining establishment MENU TRACKER 2017 5
About Technomic: For over 50 years, Technomic has been assisting clients with interests in the global food and beverage industries to obtain a better understanding of the marketplace and potential opportunities. Technomic is considered to be the leading research and consulting firm specializing in the foodservice industry As part of Winsight, Technomic is positioned as a leader in multiple facets of the global foodservice industry. Winsight provides customers and audiences access to the most credible source of industry market intelligence with top industry print and digital media assets, world class events, and Technomic s channel-relevant strategic research and insights. Beyond Technomic, Winsight provides global reach and insights through its media (including Restaurant Business, CSP, Foodservice Director and others) and Events (including the Global Restaurant Leadership Conference, FARE, Outlook Leadership, FSTEC and others). MENU TRACKER 2017 6
Summary MENU TRACKER 2017 7
Sugar Leads all Sweeteners Sugar leads in all keys measures, including preference, usage, effectiveness and versatility. Honey is a strong second across these measures, with agave syrup coming in at a distant third. Sugar is seen as delivering best on versatility, and interestingly, the second highest attribute for sugar is wholesome and all natural. MENU TRACKER 2017 8
Honey Wins on All-Natural Honey is most attributed to being natural/unprocessed, having an appealing flavor, and being a nutritious sweetener option. In fact, honey s all-natural attribute resonates strongest with operators as being the most relevant message about honey. MENU TRACKER 2017 9
Price is the Main Barrier Price (47%) and consumer demand (42%) are the top reasons operators avoid using honey. Although, among operators reporting increasing usage, consumer demand is the top reason for doing so. LSRs over index on reasons pertaining to lack of knowledge on how to use and source honey. MENU TRACKER 2017 10
Honey Usage Bulk honey usage is being driven by FSR using honey as a cooking ingredient (75%), baking ingredient (59%), sauces (47%) and dressings (45%). MENU TRACKER 2017 11
Metrics Dashboard Key Tracking Metrics YOY 2017 2018 Honey Preference and Delivery Average Ranking of Honey as Favorite Sweetener 2.0 Effectiveness/Preference (top 3 box: rated 7, 8, or 9) 81% Versatility (top 3 box: rated 7, 8, or 9) 85% Front of House Preference (Consumer Demand) 83% Honey Usage % Using More Honey vs. YA (Net Positive) 20% % Anticipating Using More Honey Over Next Year (net positive) 14% % Currently Using Honey as a Sugar Substitute 77% Honey Barriers Consumer Demand 42% MENU TRACKER 2017 12
Foodservice Market Performance MENU TRACKER 2017 13
Fastest-growing segments Real Nominal Fast casual LSR 7.5% 6.4% 10.1% 9.1% Senior living* Supermarket foodservice 6.5% 6.7% 4.0% 4.2% 8.1% 8.3% 6.5% 6.8% 2017 (F) 2018 (F) Hospitals* 3.0% 3.0% 4.5% 4.6% Inflation assumption: 2.4% for 2017; 2.5% for 2018. *Special inflation rate applied: 1.5% for 2017 & 2018. 2017 Technomic Inc. 14
Above average growth segments Real Nominal Lodging 2.6% 2.3% 5.1% 4.9% Caterers Fine dining FSR 2.5% 2.4% 2.1% 2.2% 5.0% 5.0% 4.6% 4.8% 2017 (F) 2018 (F) College/university* 2.1% 1.9% 3.6% 3.4% Inflation assumption: 2.4% for 2017; 2.5% for 2018. *Special inflation rate applied: 1.5% for 2017 & 2018. 2017 Technomic Inc. 15
Average growth segments Real Nominal Recreation 1.8% 1.8% 4.2% 4.3% Transportation* Long-term care* 1.8% 1.6% 1.6% 1.6% 3.3% 3.1% 3.2% 3.2% 2017 (F) 2018 (F) C-store foodservice 1.3% 1.3% 3.7% 3.8% Inflation assumption: 2.4% for 2017; 2.5% for 2018. *Special inflation rate applied: 1.5% for 2017 & 2018. 2017 Technomic Inc. 16
Below average growth segments Real Nominal B&I* 1.0% 0.5% 2.5% 2.0% Other retailers 0.9% 0.5% 3.3% 3.0% 2017 (F) 2018 (F) Fast food LSR 0.8% 1.0% 3.2% 3.5% Inflation assumption: 2.4% for 2017; 2.5% for 2018. *Special inflation rate applied: 1.5% for 2017 & 2018. 2017 Technomic Inc. 17
Lagging segments Real Nominal K-12 0.2% 0.4% 1.7% 1.9% Casual dining FSR 0.1% 0.2% 2.5% 2.7% Bars/taverns 0.1% 0.2% 2.5% 2.7% 2017 (F) 2018 (F) Midscale - FSR -0.5% -0.3% 1.9% 2.2% Corrections* -2.0% -2.0% -0.5% -0.5% Inflation assumption: 2.4% for 2017; 2.5% for 2018. *Special inflation rate applied: 1.5% for 2017 & 2018. 2017 Technomic Inc. 18
Sweetener Attributes & Preferences MENU TRACKER 2017 19
Top Sweeteners Among Honey Users Sugar the top choice among operators, followed by honey Average Rank All operator segments are largely consistent when it came to ranking Sugar and Honey first and second in terms of sweetener preference. Sugar Honey Agave nectar Maple syrup 1.4 2.0 2.2 2.3 Corn syrup 2.4 Honey Rank Respondent s Rank of Honey Overall LSRs FSRs Catering Hotel/ Lodging/ Casino 1st 28% 28% 26% 23% 33% 2nd 47% 47% 44% 55% 47% 3rd 26% 24% 29% 23% 21% Molasses Non-calorie Among operators ranking honey in their top three, hotel/lodging/casinos is the most likely group to rank honey first, with a third of respondents in that category doing so. 2.5 2.5 Base: Base varies Q:We d like to know more about the sweeteners you use in your operation and which are your favorite. Please rank from the following list, your first, second, and third favorite sweetener. 2017 Technomic Inc. 20
Distribution of Rankings 1st 2nd 3rd Sugar and honey consistently rank first and second respectively in terms of preference. Sugar Honey 9% 23% 28% 26% 47% 68% Non-calorie sweeteners 13% 29% 58% Maple syrup 13% 44% 44% Agave nectar 23% 37% 40% Corn syrup Molasses 19% 19% 19% 16% 61% 65% Base: 535 (All respondents); 443 (Sugar); 497 (Honey); 286 (Non-calorie); 156 (Maple syrup); 84 (Agave nectar); 67 (Corn syrup); 43 (Molasses) Q:We d like to know more about the sweeteners you use in your operation and which are your favorite. Please rank from the following list, your first, second, and third favorite sweetener. 2017 Technomic Inc. 21
Top Honey Attributes Honey valued for its lack of processing and appealing flavor. Natural/unprocessed Appealing flavor 50% 59% Notably, honey did not perform strongly in regards to value, familiarity, and convenience. This may hint that operators are deterred by higher prices and lack proper knowledge on how to use honey effectively. Nutritious sweetener option Versatile Premium 36% 35% 35% Something new 24% A good value 19% Familiar 10% Convenient 10% Base:535 Q:Which of the following attributes do you most associate with honey? (please select up to three) 2017 Technomic Inc. 22
Top Sugar Attributes Sugar prized for its versatility and all-natural properties. Versatile Wholesome, all natural 60% 58% LSRs more strongly associate sugar with all-natural than other groups, with 66% of respondents stating that they associate the sweetener with wholesome and all-natural. Appealing flavor Premium A good value 45% 44% 40% Something new 14% Nutritious sweetener option 0% Other 0% Base:444 (Respondents ranking sugar in top 3) Q:Which of the following attributes do you most associate with the following sweeteners? Select up to three per column 2017 Technomic Inc. 23
Top Agave Nectar Attributes Agave nectar strongly associated with premium and new. Premium Something new 54% 53% Wholesome, all natural 52% Appealing flavor 48% Versatile 45% A good value 31% Nutritious sweetener option 0% Other 1% Base:85 (Respondents ranking agave nectar in top 3) Q:Which of the following attributes do you most associate with the following sweeteners? Select up to three per column 2017 Technomic Inc. 24
Top Maple Syrup Attributes Maple syrup usage driven by its appealing flavor. Appealing flavor Wholesome, all natural 45% 63% Premium 43% A good value 39% Something new 39% Versatile 35% Nutritious sweetener option 0% Other 0% Base:157 (Respondents ranking maple syrup in top 3) Q:Which of the following attributes do you most associate with the following sweeteners? Select up to three per column 2017 Technomic Inc. 25
Top Corn Syrup Attributes Corn syrup is prized for its value and versatility A good value Versatile 54% 53% Appealing flavor 46% Premium 43% Something new 40% Wholesome, all natural 25% Nutritious sweetener option 0% Other 1% Base:68 (Respondents ranking corn syrup in top 3) Q:Which of the following attributes do you most associate with the following sweeteners? Select up to three per column 2017 Technomic Inc. 26
Top Molasses Attributes Flavor and value are key attributes among molasses acceptors Appealing flavor A good value 55% 52% Something new 39% Versatile 39% Premium 36% Wholesome, all natural 34% Nutritious sweetener option 0% Other 0% Base:44 (Respondents ranking molasses in top 3) Q:Which of the following attributes do you most associate with the following sweeteners? Select up to three per column 2017 Technomic Inc. 27
Top Non-Calorie Sweetener Attributes Value, flavor and newness are key attributes for non-calorie acceptors A good value Appealing flavor 55% 55% Something new 54% Versatile 32% Premium 25% Wholesome, all natural 18% Nutritious sweetener option 0% Base:287 (Respondents ranking non-calorie sweeteners in top 3) Q:Which of the following attributes do you most associate with the following sweeteners? Select up to three per column 2017 Technomic Inc. 28 Other 2%
Sweetener Comparison This summary of all sweeteners highlights strengths of various sweetener options. Honey Agave Nectar Maple Syrup Sugar Corn Syrup Molasses Non-Calorie Sweetener Average Natural, unprocessed 59% 52% 45% 58% 25% 34% 18% 42% Appealing flavor 50% 48% 63% 45% 46% 55% 55% 52% Nutritious sweetener option 36% 0% 0% 0% 0% 0% 0% 5% Premium 35% 54% 43% 44% 43% 36% 25% 40% Versatile 35% 45% 35% 60% 53% 39% 32% 43% Something new 24% 53% 39% 14% 40% 39% 54% 38% A good value 19% 31% 39% 40% 54% 52% 55% 41% 2017 Technomic Inc. 29
Honey Formats MENU TRACKER 2017 30
Formats of Honey Purchased Bulk and individual bottles are the most frequent purchases Overall 11% 62% 63% 47% Although popular in both segments tabletop is more likely to be the format of choice among LSR operators in comparison to FSRs. Conversely, FSRs are more likely to favor honey in a bulk format. Single-serve honey sees a fair amount of usage across all operations, but is most popular among catering and hotel/lodging/casinos. This is likely due to the wider variety of venue styles that these operations must accommodate. LSRs FSRs Catering Hotel/Lodging/Casino 4% 18% 12% 9% 49% 62% 38% 76% 59% 48% 64% 78% 58% 61% 68% 61% Gallons/bulk honey Single serve/portion control honey Tabletop honey Dehydrated/powder honey Base: 535 (All respondents); 205 (LSRs); 205 (FSRs); 50 Catering; 75 (Hotel/lodging/casino) Q:You indicated that you purchase honey. What types of honey do you purchase for your operation? 2017 Technomic Inc. 31
Top Ten Bulk Uses Bulk honey widely used in back-ofhouse applications Cooking ingredient Baking ingredient 59% 75% With use as an ingredient in general cooking, baking, sauces and dressings, bulk honey appears to be used mostly in more complex dishes that require some level of preparation. Barbecue or wing sauce Salad dressing Drizzle topping ingredient Ingredient for sauces, spreads or glazes Marinade/brine 47% 45% 44% 44% 42% Meat or seafood glaze 42% Ingredient in bakery items 34% Base: 333 (Bulk honey users) Q:In what applications do you use each honey type in your operation? Please select all that apply. Compound butter / honey butter 29% 2017 Technomic Inc. 32
Top Ten Tabletop Uses Tabletop honey primarily used as beverage sweetener or a topping Beverage sweeter for non-alcoholic beverages Drizzle topping ingredient 32% 50% This is likely driven by the ease-of-use of this format, and its suitability towards being used as a self-serve sweetener for beverages. Beverage sweetener for alcoholic beverages Baking ingredient Cooking ingredient 31% 30% 25% Ingredient for sauces, spreads or glazes 24% Salad dressing 24% Single ingredient dipping sauce/spread 23% Meat or seafood glaze 22% Barbecue or wing sauce 22% Base: 339 (Tabletop honey users) Q:In what applications do you use each honey type in your operation? Please select all that apply. 2017 Technomic Inc. 33
Top Ten Single Serve Uses Single serve primarily used for nonalcoholic beverages Beverage sweeter for nonalcoholic beverages Beverage sweetener for alcoholic beverages 36% 62% As with the tabletop honey, this preference is possibly being driven by this formats ability to be used as a self-serve sweetener in the front-of-house. Single ingredient dipping sauce/spread Drizzle topping ingredient Dessert 36% 27% 18% Appetizer 16% Ingredient for sauces, spreads or glazes 15% Salad dressing 15% Ingredient in bakery items 15% Base: 250 (Single-serve honey users) Q:In what applications do you use each honey type in your operation? Please select all that apply. Barbecue or wing sauce 14% 2017 Technomic Inc. 34
Top Ten Powder Uses Powder used in a wide variety of settings Among operators using powdered honey, no single application dominates in terms of usage. Beverage sweetener for alcoholic beverages Baking ingredient Beverage sweeter for nonalcoholic beverages Cooking ingredient Ingredient for sauces, spreads or glazes Barbecue or wing sauce Single ingredient dipping sauce/spread Ingredient in pizza dough or flatbreads Baked good 32% 31% 31% 29% 29% 29% 25% 25% 24% Meat or seafood glaze 22% Base: 59 (Dehydrated/powder honey users) Q:In what applications do you use each honey type in your operation? Please select all that apply. 2017 Technomic Inc. 35
Sweetener Usage & Perceptions MENU TRACKER 2017 36
Effectiveness and Versatility Effectiveness/Preference (Top Three Box) Versatility (Top Three Box) Sugar and honey highly rated in both attributes Sugar 92% Sugar 91% Honey 81% Honey 85% Non-calorie sweetener 60% Non-calorie sweetener 60% Maple syrup 46% Maple syrup 47% Agave nectar 39% Agave nectar 41% Corn syrup 35% Corn syrup 35% Molasses 35% Molasses 33% Base: 535 (All respondents) Q:On a scale of 1 (not preferred) to 9 (highly preferred), how do you rate the following sweeteners in terms of effectiveness as a sweetener in recipes? Q:On a scale of 1 (not versatile) to 9 (highly versatile), how do you rate the following sweeteners in terms of versatility for use in recipes? 2017 Technomic Inc. 37
Suited for Front-of-House Usage Usefulness in the Front of House (Top Three Box) Sugar and honey are the top choices for FOH sweeteners Sugar Honey 83% 92% Non-calorie sweetener 78% Maple syrup 47% Agave nectar 36% Molasses 32% Corn syrup 28% Base: 535 (All respondents) Q:Thinking about your customers, on a scale of 1 (not preferred) to 9 (highly preferred), how do you rate the following sweeteners in terms of sweeteners used front of house by your patrons? 2017 Technomic Inc. 38
Top Reasons for Honey Rejection Price and consumer demand the top reasons to avoid honey Cost relative to other sweeteners 47% Notably LSRs over indexed on reasons pertaining related to a lack of knowledge on honey and how to source it. For example, 35% of LSRs felt that honey is difficult to source, and 35% of LSRs stated they didn t know how to use honey as an ingredient. My patrons don t demand it Unsure which products to buy Difficulty sourcing Honey is inconvenient to use 29% 28% 28% 42% Inconsistent flavor 26% I don t know how to use honey as an ingredient for baking or cooking 26% It doesn't occur to me to use honey 9% Base:535 (All respondents) Q:Which of the following reasons might you avoid using honey? (please select up to three) Other 2% 2017 Technomic Inc. 39
Most Relevant Sentiment Honey s all-natural attributes resonate strongest with operators An all natural option A good alternative to sweeteners backof-house 16% 35% Many operators agree that has a presence in both front-of-house and back-of-house. A good alternative to sweeteners frontof-house Can be used in a variety of menu applications 13% 13% Customers increasingly prefer it over other sweeteners 8% Can be used as a binder and thickener for sauces, dressings, marinades and 5% Slightly sweeter than sugar, so less can be used to achieve the same sweetness 4% Keeps baked goods moist and extends shelf life 2% There are more than 300 unique varietals in the United States 1% Comes in a variety of forms including comb, liquid, crystallized, and whipped 1% Base:535 (All respondents) Q:Please select the most relevant message about honey as it relates to your usage Easily dissolvable in beverages 1% 2017 Technomic Inc. 40
Honey Usage MENU TRACKER 2017 41
Current Usage Vs. Last Year Majority of operators using the same amount of honey as last year FSRs are the most likely to have used an increase amount of honey over the past year. Conversely, catering operations are the most likely to have decreased their total usage. Overall 24% 4% 71% Among respondents who increased their usage of honey over the past year, the most common reason is an increase in consumer demand. Following that, increasing the number of dishes that use honey and consumers perceptions about the health benefits are top cited reasons for an increase. LSRs FSRs 17% 4% 34% 2% 79% 64% Although few respondents reported a decrease in their honey consumption, price is by far the most cited reason for a decrease. Catering 18% 12% 70% In addition to price, other reasons for decreased usage include the availability of substitutes, particularly when using back of house. Hotel/Lodging/Casino 24% 5% More Less Same 71% Base: 535 (All respondents); 205 (LSRs); 205 (FSRs); 50 Catering; 75 (Hotel/lodging/casino) Q:How does your honey volume usage this year compare with last year? Are you using more, about the same, or less than you were a year ago? Note: 2017 Technomic Inc. 42
Anticipated Use Over Next Year Operators expect to be consistent in honey usage over the next year FSRs are the most likely to believe they will increase their usage, and catering the most likely to expect a decrease. Overall 16% 2% 82% Top reasons cited for increased usage include: using honey as a substitute for other sweeteners, to add variety, menu item innovation/expansion Top reasons cited for decreased usage include: other sweeteners as an alternative, discontinued menu items or shift in purchasing LSRs FSRs Catering 14% 1% 20% 2% 10% 6% 85% 78% 84% Hotel/Lodging/Casino 13% 4% 83% More Less Same Base: 535 (All respondents); 205 (LSRs); 205 (FSRs); 50 Catering; 75 (Hotel/lodging/casino) Q:In the next 12 months, do you expect your usage of honey will Note: 2017 Technomic Inc. 43
Current Usage as a Sweetener Substitute Honey sees widespread usage as a sweetener substitute in all segments Although all segments are likely to be using honey as a substitute for other sweeteners, FSRs is least likely to be doing so and LSRs the most likely. Overall LSRs 77% 81% 23% 19% FSRs 72% 28% Catering 78% 22% Hotel/Lodging/Casino 80% 20% Yes No Base: 535 (All respondents); 205 (LSRs); 205 (FSRs); 50 Catering; 75 (Hotel/lodging/casino) Q:Do you currently use honey as a substitute for other sweeteners in your recipes? Note: 2017 Technomic Inc. 44
Appendix MENU TRACKER 2017 45
Operation Type 14% 9% 38% 38% LSRs FSRs Catering Hotel/Lodging/Casino Base: Q: Note: 2017 Technomic Inc. 46
Type of LSR 45% 55% Fast food/traditional QSR Fast casual/upscale quick service restaurant Base: 205 (LSRs) Q:Which of the following best describes your store? Note: 2017 Technomic Inc. 47
LSR Menu Type 5% 4% 1% 14% 6% 7% 14% 8% 8% 12% 9% 11% Family Steak Hamburger Cafeteria/Buffet Pizza Mexican Donut Other Sandwich Chicken Coffee & Other Beverage Frozen Desserts Asian Other Base: 205 (LSRs) Q: Which menu type best describes your restaurant? Note: 2017 Technomic Inc. 48
Type of FSR 11% 36% 53% Casual dining establishment Polished/upscale casual dining establishment Fine dining establishment Base: 205 (FSRs) Q:Which of the following best describes your restaurant? Note: 2017 Technomic Inc. 49
FSR Menu Type 5% 2% 1% 8% 8% 9% 59% 9% Varied menu Seafood Steak Italian Mexican Other ethnic Asian Other Base: 205 (LSRs) Q:Which menu type best describes your restaurant? 2017 Technomic Inc. 50
Operator Characteristics Average Number of Guests Served in Day Breakfast Dayparts Open 70% During Week 426 Lunch 95% Dinner 92% During Weekend 595 Late night 40% Chain vs. Independent Number of Units in Chain 26% 1-3 4-10 20% 18% 11-100 36% 74% 101-250 251-500 6% 13% Chain Base:535 (All respondents); 141 (Chains) Q:About how many people do you serve at this location on a typical day? Q:For which dayparts is your operation open? Select all that apply. Independent 500+ 7% Number of Units 2017 Technomic Inc. 51
Operator Characteristics Annual Spend on Food and Non-Alcoholic Beverages Under $50k $50k - $99k $100k - $249k Primary Role 6% 3% 7% 36% 11% Level of Purchasing Influence 16% 42% $250k - $499k $500k - $749k 19% 19% 42% $750 - $1M $1M - $2M $2M - $4M $4M+ General Manager Owner Food and Beverage Director Foodservice Director Purchasing Director Chef Nutrition Director/Dietician Has sole responsibility for purchasing decisions Has significant input into the decision Shares responsibility equally with others Base:535 (All respondents) Q:Approximately how much do you spend each year on food and non-alcoholic beverages? Q:What is your primary role? Q:What is your level of influence over the food, beverages, disposables and supplies you purchase for your foodservice operation? Select one. 2017 Technomic Inc. 52