A conference cannot thrive for nearly half a century without delivering the goods. In the case of IFMA’s forty-seventh annual Chain Operators EXchange (COEX) just concluded in New Orleans, the goods consisted of an especially content-rich agenda that provided insight into critical issues confronting the contemporary foodservice industry. And since it is created by foodservice operators for their peers, there was a welcome emphasis on practical strategies for successfully navigating a disrupted business environment.
1. The influence dynamic is shifting. In his address on Zconomy and Hidden Food Trends: What Food Executives Need to Know about Gen Z’s Emergence, demographics guru Jason Dorsey discussed the impact of emerging Generation Z, young people born after 1996. He covered key details relative to size, diversity and technological know-how.
Importantly regarding tech, according to Dorsey Gen Z has flipped the script on trends by creating a bubble-up model. Tech savvy and social-media adept, TikTok-ing teenagers are doing today what the preceding generations will be doing tomorrow. This shifting balance of power away from a more traditionally top-down dynamic has implications for how operators develop and execute successful go-to-market strategies. It also suggests that those high-flying Millennial influencers are poised to lose their luster as Gen Z steps into the spotlight.
2. Environmental issues have reached mega-trend status. Foodservice operators and suppliers ignore this at their peril, as Dorsey noted that the environment is the single biggest concern of Gen Z. Personified by Swedish teenager Greta Thunberg, the issue is center stage and shaping politics on the international front all the way down to the local, grass-roots level.
Its importance was seconded by Datassential’s Jack Li, who reported that for the population at large, climate change is the third biggest socio-economic concern behind healthcare and the economy. Li advised the group not simply to address the issue, but to be aggressive in promoting their environmental efforts. Now is not the time for subtlety, he argued.
3. Foodservice executives might want to redeploy their social-media gurus. Or at least broaden their scope of operations beyond what directly relates to the brand. Mai Girton, Director, International Food and Beverage for Inspire Brands, suggested another avenue to gain consumer insight. She told a breakout session that one of the challenges she faces when entering new markets overseas is a dearth of useful consumer research. Her solution is to scour Instagram for clues to the overall behavior and interests of the local population. No, it won’t replace conventional quantitative research, she says, but it can provide useful qualitative insight and direction.
This suggests on opportunity for foodservice operators to look outside their brand’s box and track what’s on the minds of consumers in the broader context to allow them to get a step ahead on changing values and expectations.
4. No script has been more flipped dramatically than the on-premise dining market, which is beset by stagnation even as delivery sales soar. In a session on the economics of delivery, attendees learned that much of the early “conventional wisdom” on the segment may not be so wise after all. Notably, it appears that on a preliminary basis, many operators are less sanguine about the cannibalization factor than earlier reported, with a substantial number now indicating that delivery is replacing dine-in occasions.
The lack of analysis of the impact of third-party delivery and other off-premise options on an operator’s bottom line seriously hobbles decision making, so IFMA is taking a leadership role here by supporting comprehensive research into the segment that will help operators and suppliers sort fact from fiction in a rapidly evolving market.
Speaking of rapid evolution, this session was followed by an eye-opener on the subject of ghost kitchens, centralized commissary operations without storefronts that are supported by digital ordering. Growth is exponential, with segment sales jumping from $16B in 2016 to a projected $123B in 2022. Kitchen United, the leader in this space, is further flipping the script on these formerly delivery-only operations by installing a consumer-facing pick-up center. This allows KU to address customers’ two biggest demands: that food is available precisely when they want it and that it is impeccably fresh.
5. Workforce remains a major challenge to operators in all segments. Low unemployment will continue to exert upward pressure on wages and generate challenges to recruiting and retaining employees. To respond, some operators have unleashed a barrage of nontraditional perks and a smorgasbord of benefit packages, while others look to technology including robotics to keep their stores operating.
In the long term, the race to recruit and retain will be won by innovators like Portillo’s and Chick-fil-A. The former takes an unconventional approach to training that includes pep rallies and scavenger hunts among other tactics to generate team spirit and minimize turnover, and the result is average unit volumes of $8M. The latter has created a purpose-driven, customer-centric culture that is unique to the industry. Its consistent and disciplined focus on “second-mile service,” always putting the patron first, has propelled the organization to $10B in systemwide sales.
COEX planners know that foodservice operators do not live by steak alone. They also like a little sizzle, which was served up in the form of a second line. It’s a quintessential New Orleans tradition, in which parade marshals and a jazz band make up the first line, and revelers, who fall in behind to strut their stuff, make up the second. It worked its magic for conference attendees who bopped their way along Canal Street and through the French Quarter. Surprised diners watched over their oysters and Hurricanes as the best and brightest in the business shot selfies with abandon and let the good times roll.