Current Trends in Foodservice and How They Affect the Marketing Mix of American Restaurants
by Gillian Folkes and Allen Wysocki
Currently, the restaurant industry accounts for four percent of the U.S. gross domestic product and is the nation's second largest employer next to the Federal government (Dumagan and Hackett, 1995). Seventy-five percent of restaurant customers report a significant increase in the number of restaurants from which they have to choose compared to only two years ago (NRA, 2001). Because of growing competition between restaurants, it is not surprising to see restaurant owners paying more attention to growing trends in Americans' eating habits. Restaurants that follow even the most minute trends could see a change in their market share and survivability. This paper will look at five of the largest food service trends in the United States and how to adapt to a more contemporary marketing mix.
This paper will focus on five eating trends:
- The money spent at food service establishments.
- The role of convenience in consumers' food and restaurant selections.
- The increasing demand for meal variety.
- The importance of food safety in consumers' shopping patterns.
Trend 1: Money Spent at Foodservice Establishments Continues to Grow
During the last 10 years there have been noticeable changes in the eating habits of Americans. These changes have been reflected in increases of money spent at foodservice establishments compared with money spent on in-home meals. However, this does not mean that fewer meals are eaten at home. On the contrary, the number of meals has not changed, just the origin or substance of those meals. The growing availability of take-out meals from restaurants well illustrates this trend. This not only allows the customer to eat at home, but satisfies another of the recent trends in eating: people craving high quality meals with short to no preparation time.
Trend 2: Convenience Is King
The rise in convenience foods over the last 10 years has been illustrated in the steady growth of fast-food chains in the United States. The broad success of the cell phone is symbolic of Americans' greater mobility. This on-the-run mentality has created the need for quick, easy-to-prepare foods. The increase in single parent households, women in the workplace, and the amount of disposable income of teenagers have added to the need for ready-to-eat meals. Convenience foods need to be easy to make for any age group, with easy cleanup and little or no waste. Most meals are eaten on-the-go, so the ability to hold the food item with one hand and the freedom to eat without utensils are important.
Trend 3: Healthy Is "In"
Another trend in U.S. eating habits is the desire for healthy meals. Whether eating at home or out, consumers are starting to demand healthy alternatives to the usual menu fair. This change has been spawned by increased public awareness of heart disease, cancer, and other illnesses. Along with disease awareness has come public education on disease prevention--most of all, by modification of the diet. People now take into account more than ever the amount of calories, fat, and sodium consumed. Other popular concerns include all natural ingredients and use of organic produce.
Trend 4: More Than Just Meat and Potatoes
In addition to healthy foods, consumers are requesting more multicultural meals. With minority populations growing at increasing rates, the mobility of consumers, and the globalization of the marketplace, consumer tastes are broadening to include many different cultures. For example, a decade ago Mexican restaurants were few and far-between but have now joined Italian and Chinese restaurants in the mainstream market (Mills, 2000). With Hispanic and African-American populations on the rise in the United States, additional changes for the restaurant industry are imminent.
Trend 5: Is Our Food Safe?
Lastly, there has been increased public concern about food safety. After outbreaks such as the E. coli O157:h7 in ground beef at Jack-in-the-Box restaurants and the amplified use of genetically modified foods, consumers are looking for assurances that their food is safe and that its safety is maintained throughout the cooking process.
Changing the Marketing Mix
This section will discuss the four parts of the marketing mix and how each can be modified for today's changing marketplace. The four parts are product, promotion, place, and price.Product
Because of the increasing variety sought by consumers, many menus have undergone revisions within the last few years. By changing product lines to include healthy choices such as baked, not fried, and alternative choices such as vegetarian, vegan, and gluten-free, restaurants can target consumers with special diet restrictions or preferences. Also, fun new ways of eating foods are emerging to provide more variety and convenience as well. For example, many menus now include wraps, which are hand-held and can be consumed on-the-go (Hedden, 1997).
One way to incorporate more multicultural foods is to add new flavors to sauces or seasoning packs. This offers an inexpensive way to test market different flavor mixes without an overhaul of the menu. As new flavors become popular, whole entrees can be based around the flavor mixes while still incorporating classical American ingredients and larger portions. This way Americans have greater options without the fear of trying completely new things.
The product component may also be manipulated to be tailored towards some of today's biggest spenders: consumers under the age of eighteen. Offering kid-friendly portions; fun, brightly-colored meals; and incentives such as toys included in the meal, should stimulate more business from younger consumers. Another avenue to pursue may be the "gross-out factor." This would include providing items such as green ketchup and gumballs that look like eyeballs for pint-sized consumers (Gilleran, 1993).
The marketing mix can be updated through promoting and advertising products. Promoting options that add convenience for the customer may gain new customers or repeat business. Offering services such as full-menu take-out from sit-down restaurants or resealable packages for easy clean-up from quick-service establishments may be just enough to persuade a new customer to try a restaurant. Although a restaurant may be gaining business in take-out or drive-through marketing, it may also be increasing future in-house sales, especially in cases of sit-down restaurants with very long wait times.
Alternative menu choices or expanded menus for restricted diets need proper advertising. Advertisements showcasing these options can mean bigger profits and happier customers. Also, restaurant reviews in newspapers and magazines can provide publicity for expanded menus.
Place-and-price in the marketing mix is affected to a lesser degree by changes in American eating habits. Although consumers crave things such as convenience or kid-appropriate meals, the place-and-price of meals does not need to be adjusted if the product (menu) has already been modified. However, many fast food restaurant chains have felt compelled to offer special pricing based on bundling meal solutions together. Today, value meals are an integral part of the fast food marketing mix.
Place-and-price may also vary according to the physical environment of a restaurant. Current statistics show that restaurateurs are spending more each year on interiors of their restaurants. For restaurants ringing up check sizes of less than $20 per person, the cost of interior design per seat is $1,000 on average compared to $3,000 per seat for restaurants ringing up $50 per person. Most improvements fit under general interior design, but the largest increase has been in themed restaurants or restaurants known for their atmospheres or food (NRA). Because of the increasing variety of restaurants from which to choose, great food may not be enough to set one apart from the next. Instead, owners are using atmosphere as an extra bargaining chip. Restaurant owners who rely heavily on themes in their marketing mix face a real challenge in deciding what theme to pursue and how to keep this theme relevant to the fickle restaurant-going public. Planet Hollywood is a good example of how quickly a themed restaurant can become outdated.
This paper focused on several ways to update a restaurant's marketing mix to meet today's eating trends. It is imperative to keep up-to-date in today's foodservice marketplace. With people becoming more mobile and pressed for time, more Americans are eating on-the-run while still being concerned about healthy foods. Modifying product, promotion, place, and price to mirror trends in American eating habits may ensure restaurateurs of a prosperous future. Above all, restaurateurs should remember that variety and convenience are keys to success.
Dumagan, Jesus C. and John W. Hackett. U.S. Trends in Eating Away from Home, 1982-89: A Survey by Eating Occasion, Type of Foodservice Establishment, and Kind of Food. Washington, D.C.: United States Department of Agriculture, Economic Research Service, 1995.
Gilleran, Susan. Kids Dine Out. John Wiley and Sons, New York, 1993.
Hedden, Jenny. Unwrapping the Latest Food Trend. Restaurants USA, January 1997. http://www.restaurant.org/rusa/1997/january/9701p26.htm .
Mills, Susan. A Cultural Melting Pot. Restaurants USA, May 2000. http://www.restaurant.org/rusa/2000/may/fst0005a.html .
National Restaurant Association. 2001 Restaurant Industry Forecast, 2001. http://www.restaurant.org/research/forecast.html .
- This is EDIS document RM 007, a publication of the Department of Food and Resource Economics, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Published October 2001. Please visit the EDIS website at http://edis.ifas.ufl.edu.
- Gillian Folkes, graduate student, Department of Food Science and Human Nutrition, and Allen Wysocki, assistant professor, Department of Food and Resource Economics, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL.