When it comes to American eating habits, prepared food is still the top choice among many consumers. According to the research firm Technomic, the 500 largest restaurant chains in the United States posted sales of $288 billion in 2015, a 4.9 percent jump from the prior year. Playing an important role in this increase were fast-casual restaurants, which saw sales jump 11.4 percent last year.
While chains like Chipotle and Panera may garner the headlines of today’s fast-casual foodservice segment, supermarkets and grocery retailers that take a proactive and committed approach to capturing a piece of the foodservice market can position themselves for success and establish their stores as go-to foodservice destinations. We’re already seeing the success of innovative “grocerants” like Mario Batali’s Eataly, where customers can both shop and enjoy gourmet prepared meals.
While most established retailers may not have the infrastructure to support a concept such as Eataly, foodservice can still play a big role in attracting and retaining shoppers looking for a quick breakfast, lunch, or dinner option. And a huge factor in accomplishing this is to have a keen understanding of today’s foodservice consumer and the tastes, flavors, textures, and convenience they’re seeking. Although all demographics should be considered when developing a retail foodservice strategy, there is one in particular that retailers should focus on: millennials.
Millennials are driving foodservice growth, innovation
Given their sheer numbers (almost 80 million) and spending power (estimated at $1.3 trillion), millennials are a demographic that every facet of the US retail landscape is trying to connect with. The food industry is no exception, with retailers and manufacturers alike focused on developing new products and offerings they hope will attract the attention of this generation of consumers. In doing so, an understanding of the shopping habits of millennials becomes vital, especially given their affinity for prepared foods: 42 percent of them regularly purchase prepared food, compared to 33 percent of baby boomers and just 21 percent of Gen Xers.
While all generations differ in some ways when it comes to their buying behaviors, millennials in particular exhibit certain traits that retailers can capitalize on. These demographical characteristics were examined by the International Dairy-Deli-Bakery Association in a recent original research report, “Culinary Concierge: Engaging Millennials through Meals.” The mindset and beliefs that millennials have in their overall shopping behaviors can be transcended down to purchases they make at in-store fresh foodservice departments. An understanding of these shopping behaviors can help retailers develop and sell the specific types of items they are searching for.
What millennial shoppers are seeking in fresh foodservice options
Millennials are at a stage of their lives where they are proactively crafting their futures and making distinct choices about how they want to live. The food they consume is an important component of this lifestyle, so it comes as no surprise that the following considerations play a role in most—if not all—shopping decisions.
A variety of flavor, taste, and texture options: As the most diverse generation in US history next to Gen Z, millennials are no strangers to exploring new and traditional ethnic cuisine and ingredients. Colin Stewart, senior vice president of business intelligence at Acosta Sales & Marketing, told IDDBA that almost 50 percent of millennials are multicultural. As a group, they routinely seek out new experiences and innovations in the foods they purchase and consume. In many instances, millennials are so accustomed to eating certain types of ethnic food that they simply refer to the specific food item, rather than the category of food. For example, they may go out for tacos instead of Mexican food or pho rather than Vietnamese food.
Fresh, local, and healthy: Millennials place a priority on freshly prepared, healthy food that comes from a local source. The term “Farm-to-Table” resonates with them, as it not only means local and healthy, but also supports local farms and has a story to tell. Millennial shoppers not only seek out local food options, they’re also willing to pay more for it. According to research firm Nielsen, 40 percent say they prefer to shop local even if the prices are higher.
Transparency and authenticity: As referenced above in “Farm-to-Table” products, knowing the story behind the food and its authenticity is an important attribute to this generation. According to the Natural Marketing Institute, 70 percent of millennials are more likely to purchase from companies that support the same causes they do, while 65 percent recognize the Fair Trade Certified label. While all generations want information, millennials are more likely to take a big-picture view when making a purchase, and they love a good story behind a product that allows them to personally connect with it. Millennials are making more conscious eating choices, are driven less by their whims, and are creating their own definitions of quality. They’re skeptical of claims and don’t accept things at face value; growing up in the age of social media, they don’t have to — they can find out for themselves. They want proof and a clear understanding of the sources of their food. For them, it’s not simply about making a food purchase. It’s about making a decision that may have an impact on their society, the environment, and the world.
Convenience: How important is convenience to millennial shoppers? More so than price, even to the most budget-minded individual. Most view meal planning as a stressful necessity of their already busy lives. “What I want, when I want it, and how I want it” is the overall definition of convenience in the minds of these consumers. Food options that are quick and easy, require little to no thought, and are made their way get their attention. Perhaps most importantly, this option makes a busy, exhausting day a little bit easier to handle.
Tremendous opportunity, if done right
We’ve looked at product characteristics that resonate with millennials. Now, let’s take a look at examples of how retailers can personalize their foodservice program with them in mind.
An inspiring in-store chef: Millennials surveyed in our study sought the recipe suggestions of in-store chefs more than any other in-store associates, including nutritionists. Seeing fresh food prepared by a chef gives an air of flair, care, and quality ingredients. Plus, the food options — freshly prepared and healthy — are important considerations for them.
A “homemade” experience: Homemade dishes make people think of the comfort foods they loved and enjoyed from childhood. It can be a great meal choice for Millennial shoppers that long for home-cooked meals, but lack the time and experience to make them. Keep in mind, however, that what’s considered homemade in one part of the country may be different in another. Consider offering a rotating menu with favorites from around the US and the world based on local demographics. This approach also appeals to the expanding palate of millennial consumers.
Hot and easy, grab-and-go: A recognizable favorite in today’s retail stores, hot grab-and-go products are a quick, easy, and convenient option on busy weeknights, for both individual shoppers and those with families. It also is preferable to time-pressed Millennials looking to avoid waiting in line at the deli counter. Given their desire for more variety and healthier options, offer a variety of flavorful and eye-catching choices. Additionally, be sure to label these items with the date and time they were prepared, to help ease fears around freshness and food safety.
Customized online ordering: As listed above, convenience is an important consideration for millennial shoppers. So is a customized meal made to their specifications, as health, dietary needs, and personal flavor preferences can be explored. An easy in-and-out way of picking up their meal is an attractive option that can be implemented fairly easily by a fresh foodservice department. Additionally, retailers can offer complete meal packages, which include appetizers and dessert items.
Quick-serve and fast-food restaurants aren’t the only players in the foodservice space anymore. Having an innovative and creative foodservice program is an ideal way for retailers to connect with consumers looking for easy meal options, convenience, and new flavors and tastes. And an understanding of the eating habits of shoppers is the surefire way to develop the food items they’re looking for.