Category Archives: Millennials

Meal Kits-Sellers Having Trouble Retaining Customers

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Meal Kits, where all of a meal’s ingredients are prepacked along with preparation instructions, a topic we first talked about here, got some recent attention from Fast Company (paywall), which reported on a new study from research firm 1010data, which “analyzed consumer-spending data that represents millions of consumers, revealing a significant retention problem for the major meal-kit delivery services – which ship recipes with pre-portioned ingredients to customers on a weekly basis. After the second week, only about 50% of customers stick with Blue Apron, 1010data found. Six months into their subscriptions, only about 10% remain. The firm found a similar pattern for HelloFresh and Plated.”
All the meal kit companies say that the study data is inaccurate and does not reflect their experience.
Fast Company writes that “if a large number of people drop their subscriptions, it is a problem for meal-kit companies because they often spend a lot of money to encourage customers to sign up. Blue Apron, for instance, offers a $30 discount to first-time customers, the equivalent of about three meals. HelloFresh offers a $15 discount to new customers. Plated offers two free meals with the first order. If customers don’t stick with their subscriptions for long, these companies don’t recoup that marketing spend.”
However, the story says, “Despite the retention problem, 1010data found that the meal-kit industry has grown over 500% since 2014. A food-consulting firm estimated that category will account for $3 billion to $5 billion of the online food shopping business in 10 years.”

Growth is almost assured for this market segment, if for no other reason than the Millennial coterie is continuing to advance into independent-living adulthood (except for those who continue, for assorted reasons, to live with their parents), and the next generational group, dubbed Generation Z, is following closely on their heels.

And these are age groups comprising many (many!) who are used to having things done for them, and/or having life simplified for them via ‘apps’ and variations on that theme. And meal kits definitely are a variation on that theme.

Ah, but, as Shakespeare put it, “here’s the rub”: Meal kits actually require users to do something – to actually prepare the meal themselves, albeit from pre-portioned packets of product.

I can hear them from here: “Boo, who wants to actually cook?”

Some who’ll say that no doubt also are disappointed when, upon visiting a zoo, it becomes apparent that one not only sees the animals but also smells them!

Time (and sales figures) will tell how the ‘who wants to actually cook’ crowd’s attitude will impact the future of meal kits.

I’m reminded of the country song where a man is lamenting how, in his divorce, “she got the gold mine, I got the shaft,” and says to himself “why didn’t I just learn how to cook!”

 

 

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Coming Election Cited For Slower Fast Food Sales

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A growing number of restaurant chain executives says consumer uncertainty about the upcoming election is negatively impacting sales in their stores. Some  chains, according to a recent article in Nation’s Restaurant News, have seen sharp sales drops in recent months.

Among the latest executives to blame the election was Greg Creed, Yum! Brands Inc. CEO. Yum owns and operates KFC, Taco Bell, and Pizza Hut stores across the U.S. and, to a lesser degree, abroad.

“It goes without saying that people are trying to decide who to choose and what the impact will be on the economy, and I think people are maybe just hunkering down a little bit,” he said during the company’s third-quarter earnings call last Thursday.

Earlier this summer, The Wendy’s Co. CEO Todd Penegor also cited the uncertainty. “When a consumer is a little uncertain around their future and really trying to figure out what this election cycle really means to them, they’re not as apt to spend as freely as they might have even just a couple of quarters ago,” he said.

In August, Popeyes Louisiana Kitchen Inc. CFO William Matt struck a similar chord. “What we also see is that there is a little more uncertainty with the consumer,” he said. “We’re not too sure what’s causing that, but our speculation would be, we think there is a rather unusual election going on and we think that unusual election is causing some uncertainty.”

Well, we (at FoodTradeTrends.com) know something else that is pulling fast-feeders sales down: The growing shifts, among consumers, for healthier fare, for organic foods, and for more nutritious foods.

We’ve reported on this before – particularly on how Millennials are opting for healthier foods and for eating at home as many as six, seven nights per week – and we will be reporting on it more in coming weeks.

We’ll also be watching restaurant sales, to see if they do go up after the election – regardless of who wins!

 

Meal Kits, Aimed at Busy Home Cooks, Slowly Gain A Following

 

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Meal kits, the food industry’s latest attempt to reinvent itself and in the process hopefully boost profits with a ‘value-added’ product, have, in a few short years, already been tried, sometimes repeatedly, by a slowly growing segment of the U.S. population — some three percent within the past  year, according the NPD Group, a market research firm.

A small step for meal kits, a giant leap for Millennials’ attention-getting ability.

They, to a large degree, are the target market for the several national and numerous local meal kit-offering  services – they and others who might be prepared to push the cost of a prepared-at-home meal from, say, $4 per person to $10 or more by having all of a meal’s ingredients pre-measured, pre-packed and delivered, with clear cooking instructions included.

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Peach Dish is one of several national meal kit providers.

Those using meal kits, NDP Group says, in a new report entitled Thinking Inside the Box: A Fresh Look at Meal Kit Delivery Services, “are generally satisfied, and two out of three kit users are extremely or very satisfied; But price may be a barrier for continued use and adoption by others.”

Their study says that saving time is the top reason used for using meal kits, and consumers also say that using them “makes dinner easier to prepare”; And many add, the kits provide variety beyond the usual repertoire of someone who’s been working all day, is tired, and wants to simply through together a familiar dish or two, using well-tried recipes.

But the freshness of meal kits’ ingredients appeal a lot to young adults, many of who truly have limited recipe repertoires and limited time and/or patience for venturing further afield, cuisine-wise. And they certainly don’t have either the time or interest to shop often for a specific meal, so their ingredients are bound to be less fresh than the kits’, which are selected, prepped, packed and delivered daily.

But the kits’ cost is a concern of many users, because while they are used to replace a home-created meal, their per-person is closer to that of a restaurant meal.

Oddly, price didn’t come up as an issue in a laudatory Forbes article on meal kits in March of this year.

“Every single meal turned out as expected and given the potential for user-error in my house, that is an impressive statistic,” said author Katie Kelly Bell, who said she “scouts the world for the best experiences in food, wine and travel.”

That reinforces the belief of Darren Seifer, NPD Group’s food and beverage industry analyst.

The cost issue aside, he said, “there are opportunities for continued growth – for meal kit providers to market around the reasons their customers are satisfied, for manufacturers to get in the kit box, and for foodservice operators to leverage their ability to provide on-demand delivery and meal variety.”

 

 

The Automat Restaurant Returns! Bon Chance, Eatsa!

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A story last month (February) in Business Insider described Eatsa, a new restaurant chain. as “unlike any fast-food chain we’ve seen before.”

The reporter, Hayley Peterson, who appears to be, in her photo, in her youngish thirties, clearly was using the ‘royal we’ – speaking as one as if she were, like the queen, somehow greater than the sum of her parts.

But then, no one of her generation ever had an opportunity to see Eatsa’s spiritual and practical predecessor, because Horn & Hardart, shut down its last New York City Automat in 1991 – a fact that Haley later alludes to in her well-done, highly-illustrated article.

Horn & Hardart, which opened its first restaurant in 1902 in Philadelphia, quickly caught the public’s attention for a couple of reasons. Its several walls of shiny glass-door compartments held individual portions of sandwiches, salads, desserts and more. Combinations of nickels (five-cent pieces) would be deposited in a slot by each door featuring a desired item. The door would unlock, and the item became yours!

On one side of the usually-large rooms – some seemed to be nearly the size of Rockefeller Center’s ice rink – there were steam tables where hot dishes were available. Whether you stopped by the hot tables or skipped them, you sat wherever you wanted – beside whomever happened to be there – and tipping was discouraged.

There was, after all, no service: You could enjoy a pretty good ‘fast food’ experience – this was, in fact, the nation’s first true fast-food restaurant chain – without once interacting with a person, with the possible exception of a ‘nickel thrower’: A woman who exchanged your larger coins and/or bills for their value in nickels.

The food was prepared either behind the scenes on the same location or at a central commissary elsewhere in either New York or Philadelphia, the two principal cities where Automats operated. The food was, by standards of the day, healthy and nutritious, and ordinarily pretty tasty, too.

So what happened to the Automats – which, by the way, were based on an earlier automat concept in Germany? A couple of things: The arrival of McDonald’s, Burger King and local variations on the same theme(s) provided a more ‘exciting’ atmosphere and, significantly, drive-thrus. At the same time, in the late- ‘60’s – early ‘70’s, as food costs rose, there weren’t a lot of things that could be offered for a combination of nickels.

Then there was the rent factor: For obvious reasons, Automats tended to located in high-traffic locations. Horn & Hardart at one time operated 40 of their restaurants in New York City, and as the rents rose – as they seem to do with tide-like regularity in ‘The Big Apple,’ their share of overhead, coupled with the higher food costs, made Automats economically unviable.

A company calling itself Bamn! attempted to revive the concept in New York City’s East Village in 2006.  It survived a mere 2.5 years – probably, in part, because the street it was on, St. Mark’s Place, has been ever-more ridiculously pricey real estate since the 1960’s, when it was a popular draw as home to Gerdy’s Folk City, when ‘folk music’ was all the range, then to clubs of more advanced genres, and, for a while, to one of NYC’s hottest jazz clubs – frequently inhabited by Thelonious Monk – and the kid of gift/memento stores tourists flock to.

(I often ‘hung’ there when Monk was in residence – selling nonsense poems written on bar napkins to tourists!)

Eatsa is a truly modern-day version of the automat-type restaurant. It’s brightly lit, it’s décor is plain but in tune will Millennials’ tastes.

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It’s computer-based ordering system – for the sole specialty, a bowl of quinoa priced at $6.96 and topped with whatever the customer orders, from a wide range of choices – is recorded and stored so when a customer returns, his/her previous preferences are  displayed and alternates are suggested as part of the approach to encouraging repeat visits.

So far, there are Eatsa locations in Los Angeles and San Francisco. Nation’s Restaurant News has reported that the chain plans to open at least ten more locations this year.

From that, point who knows?

 

Millennials Don’t Shop, Eat Like Earlier Generations, Reports Say

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Photo: Nutraceuticals World

It was, of course, inevitable: Millennials, like generations that preceded them, are having impacts on buying patterns in food stores. A big shift with the age group born between 1982 and 1994 – which is, according to the Urban Dictionary definition of ‘Millennials’, “something special, cause mom and dad and their 5th grade teacher, Mrs. Winotsky, told them so” – is in who’s doing the grocery shopping and what they’re buying.

More often than in the past, says a survey cited recently in Nutraceuticals World magazine, shoppers are male, and their choices are healthier ones.
The 12th iteration of Agosta Inc.’s twice-annual “The Why Behind the Buy” says, “Shoppers are shopping more consciously, and [are] willing to spend slightly more money and time in an effort to make healthy meals. With less stocking of the pantry and greater focus on cooking at home, more shoppers are prioritizing healthy, homemade meals, especially when it comes to feeding their families.”

An estimated 86% of surveyed shoppers reported eating dinner at home four or more days in the past week, with 37% eating dinner at home all seven days in the preceding week. And they’re increasingly opting for natural and organic foods as well as locally sourced products, the survey data showed.

Parents are especially thoughtful about their food choices. For example, 51% agreed with the statement: “We eat healthy foods even though they are more expensive.” Interest in local products across a range of consumer demographics is exemplified by growth in farmers markets across the U.S. According to the USDA, the number of farmers markets grew more than 350% from 1994 to 2014.

However, even as they express a preference for locally-sourced food, a sizable share of surveyed Millennials also take advantage of online shopping opportunities “to help support their busy, mobile lifestyles,” the report says. It notes that 41% of parents with kids use online grocery ordering, either for delivery or pick-up at the retailer, at least once a month, compared to 29% of total U.S. shoppers.

Some of these findings are, of course, dependent on where surveyed individuals live. For example, the small town I live in appears to have a relatively small population of Millennials – judging from my personal observations as I’m out and about and shopping and dining locally. And none of the town’s food stores – there are three: A Walmart, a Food Lion and a locally-owned smaller-than-super market – offer online food shopping opportunities.

I would venture to guess that most comparably-sized towns (pop. roughly 3,500) offer comparable shopping amenities and online food shopping opportunities – which is to say, a fraction of what you’d expect to find in an urban area or city.

That’s not meant to downplay the importance of  Agosta’s study. But it and similar research, such as was reported recently by Mintel, suggests Americans in general are taking healthier approaches to what they eat and how much they exercise. In so doing, they are encouraging both restaurants and supermarkets to focus more on fresher, healthier foods, and more produced within 50 miles or so of where they’re sold.

Local sourcing is stressed by all three of the local food markets, particularly in the produce section. And the locally-owned store is well recognized as the go-to place for top-grade meat offerings.

Citing the Agosta report, Nutraceuticals World said men, especially dads, are shopping more and having more impact on buying patterns than ever before. “Due in part to generational differences and economic factors, more U.S. males are spending time grocery shopping. Men suffered the most job losses during the recession, and data indicates that the number of stay-at-home dads continues to grow. Couple that with Millennials (and their modern perspective on hands-on parenting) now starting families of their own, and the result is dramatic shifts in the number, frequency and attitude of male grocery shoppers. These guys like to food shop.”

Millennial dads in particular, often having waited longer to get married and have children, are approaching fatherhood without the gender role norms of older generations.

“These dads are proactively engaged in child rearing and taking on more household tasks, including grocery shopping,” Acosta said. “In fact, Mintel reports that 80% of millennial dads claim primary or shared grocery shopping responsibility.” Dads typically spend more, particularly on organic products, and shop more frequently. Mintel also noted that dads are doing more of the food shopping these days, and it recommends every possible effort should be made to market to them.