Restaurant business is up, but operators remain frugal

Some noticeable trends seem to be emerging as the foodservice sector gears up for the summer dining season.

Consumers are dining out more than they did during the recession, and they seem to be choosing more healthful options. But still, they’re holding onto many of the frugal habits they adopted during the economic downturn, and most foodservice operators have redoubled their efforts to control costs.

The overall health of the restaurant industry remains strong, according to the 24th edition of the “Chain Restaurant Industry Review” published by GE Capital, Fairfield, Conn. But the competitive environment is heating up.

“Dining out certainly seems to have come back,” said Tim York, president of Markon, a Salinas, Calif.-based cooperative of broadline foodservice companies. But some dining patterns have shifted.

“Consumers are looking for interesting menus for things they perceive as healthier,” York said, which is why eateries that create customized meals, like Chipotle Mexican Grill and Panera Bread, are popular.

Spending in restaurants was up last year, and even though consumer traffic declined slightly, it “has certainly rebounded from its low of four or five years ago,” said Bryan Silbermann, chief executive officer of the Produce Marketing Association.

But the fragile economy has foodservice operators continuing to focus on watching costs and squeezing margins, Silbermann said.

Many foodservice operators are trying to keep costs under control by negotiating contracts with suppliers, said Ernst Van Eeghen, director of marketing and product development for Church Bros. LLC, Salinas, Calif.

“Our total contract business is up considerably compared to last year,” he said.

Operators also are looking for one-stop shopping.

“If you can pick up in one location, you can optimize your freight and get cost savings there,” he said.

 

Produce opportunity

With operators and consumers watching their spending, Silbermann said, “Everybody is being challenged to show value.”

That opens an opportunity for the produce industry to step up and help operators address costs by encouraging them to use produce “to show value to the consumer,” he said.

Operators are finding that promoting produce consumption can help reduce overall plate cost.

“They’re especially finding it in light of the greater demand for vegetarian, vegan and overall more healthful food options on menus,” Silbermann said.

Church Bros. has benefited from that demand, Van Eeghen said. The company’s foodservice sales are five times what they were a year ago.

“Our kale sales are going through the roof,” he said, adding that Church Bros. has planted six times more kale this year than last.

And the sales uptick wasn’t limited to kale.

“We’ve seen an incredible growth through all commodities,” Van Eeghen said, including value-added, fresh-cut lettuce, tender leaf items and brussels sprouts.

Spinach also remains a staple for many consumers, prompting Church Bros. to introduce a new item — red heirloom spinach.

 

Cruciferous renaissance

Kale and the whole cruciferous vegetable family, including broccoli, cauliflower, kohlrabi, mustard greens and collard greens, have all “really hit a renaissance,” York said.

“It’s hard to go into a restaurant anymore that doesn’t have a kale salad.”

And comfort foods are attracting renewed interest thanks to new ways of preparing them, he said.

Brussels sprouts or broccoli no longer are “boiled to a mush,” he said. “They’re caramelized on a grill with olive oil and salt and pepper.”

Americans have talked about eating healthy for years, York said. But today, they’re actually eating more healthfully, often because operators are substituting produce for protein in the face of rising protein prices, and because of awareness campaigns, like the U.S. Department of Agriculture’s MyPlate program that calls for produce taking up half the plate.

There also is a growing demand for specialty items at foodservice, Van Eeghen said.

“I have a feeling that the American palate is getting a little bit more adventurous,” he said. That’s opened up an opportunity among foodservice suppliers to “drive different types of products through traditional foodservice channels.”

“Restaurants realize that offering unique items is a great marketing tool,” he said.

When diners write about their eating-out experiences on social media, they’re not writing about “the great mashed potatoes,” he said. “They’re writing about something on the menu that really stood out.”

 

Seeking transparency

Besides looking for value, consumers today often want to know where their food is coming from, how it is being prepared and how it affects their health, Silbermann said.

“All of that is putting demands on restaurant operators to provide more transparency and more information to diners,” he said.

Indeed, locally sourced produce continues to be one of the strongest trends on restaurant menus, said Annika Stensson, senior manager of research communications for the National Restaurant Association.

In fact, she said the trend has gained momentum for the past several years, according to the association’s research.

“Sixty-four percent of consumers actually say they’re more likely to visit a restaurant that offers locally sourced items,” she said.

Other hot menu trends this year include farm-branded ingredients, fruit and vegetables in children’s meals and underused herbs, like chervil and lemon balm, Stensson said.

She also said that nutrition is a key overall consumer trend where produce can play a role. “More than 8 in 10 consumers say they’ve noticed restaurants offering more healthful items now than two years ago, and more than 7 in 10 say they factor the availability of healthful menu items into their restaurant choices,” she said.

 

Board promotions

The healthful-dining trend has prompted a number of commodity boards to promote their products among foodservice operators.

About 30% of California’s fresh avocado volume finds its way into foodservice, said Jan DeLyser, vice president of marketing for the Irvine-based California Avocado Commission.

“For over a decade, the California Avocado Commission foodservice team has been reaching out to chains to promote and expand usage of fresh California avocados with special, limited-time offers during the California season,” she said.

In 2014, fresh California avocados will be featured on 21 chain menus, including Chipotle, Denny’s and Which Wich, DeLyser said.

Fresh avocados topped the “prominent produce” category to capture “2013 Ingredient of the Year” in the Multi-Unit Foodservice Operators Conference “State of the Plate” presentation, she said.

Avocado menu mentions have increased 169% since 2005, according the Avocado Menu Trak survey, she added.

“Foodservice is important to all produce, including mushrooms, because menus drive consumer trends and demand,” said Kathleen Preis, marketing coordinator for the Mushroom Council, based in San Jose, Calif.

“Foodservice has showcased the versatility of mushrooms, as they appear in virtually every cuisine and day part,” she said. “Innovative menuing of mushrooms at foodservice continues to be important for the industry.”

The most successful program for the Mushroom Council has been introducing mushroom “blendability” to foodservice operators — both commercial and non-commercial, Preis said.

Schools, universities, foodservice management companies and chains all have taken on blendability to meet changing consumer behavior, Preis added.

Even if customers are not dining out, they will see foodservice advertisements showcasing mushrooms, thus keeping mushrooms top of mind for the consumer, she said.


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