Originally printed in the July 2020 issue of Produce Business.
At the onset of the COVID-19 pandemic in the United States in March 2020, Datassential began conducting ongoing research regarding consumer sentiment and concern around COVID-19, specifically as it related to getting food from restaurants. With that, the company developed custom surveys for consumers and operators, with input from over 200 companies in the foodservice industry, which were conducted during the first few days of May 2020.
During the time of stay-at-home orders, 72% of consumers and operators polled said they have been eating and cooking more “comfort” foods and sticking to more familiar foods. Despite the turn toward comfort during the height of COVID-19 concern, those previously interested in trends like simple ingredients, plant-based meats, and functional foods will still be interested even after the pandemic.
For produce specifically, consumers will be interested in any immunity-boosting properties fruits and vegetables could provide. Citrus fruits, dark leafy greens, superfruits, and broccoli are most associated with immune-boosting properties in consumers’ minds.
Further, many claims that were important before the pandemic will continue to be important, especially those around where the food is sourced—consumers prefer domestic or local—and ensuring that the food hasn’t been touched—like no antibiotics or artificial ingredients. To that end, most consumers are at least somewhat interested in knowing more about their food’s supply chain.
Safety has become paramount when it comes to getting food out of home, particularly as we return to dine-in. While patrons will be forgiving toward restaurants if they have limited seating or a smaller menu, the restaurant must be clean to even be in the consideration set.
Foodservice establishments should focus on a suite of professionally executed safety measures to ensure their customers’ safety. Spaced out tables, staff wearing protective equipment, overt and regular sanitation, extremely clean restrooms, providing sanitizing products to customers, and smaller capacity are likely table stakes for diners.
This has obviously been a difficult time for foodservice operators, and most restaurants and on-site operations have had to reduce staff. Going forward, 48% plan to have less staff, even higher for fine dining restaurants. This staff reduction has many implications — one of the most pressing being that operators will be looking for more convenience-based products that can help simplify prep or accommodate reduced labor.
COVID-19 has also brought operators reduced demand from patrons that has been difficult to forecast. Even as restaurants re-open, they are at partial capacity and can’t be sure how many customers they’ll have in a given day. Additionally, due to their purchase minimums from distributors, operators are often not able to order product as frequently as normal, meaning fresh items (like produce) won’t last a full order cycle.
Because of these factors, operators are turning away from fresh products and turning toward longer-lasting and low-prep items like frozen and shelf-stable. Thinking about produce, operators may want to pivot to frozen or canned to lower their waste.
Even though operators are changing some of the products they purchase, they are not changing the channels they source product from. While initial research in March showed operators having to shift sourcing when shortages were more abundant, they have since reported that they are ordering from the same channels they were pre-pandemic. Most plan to continue with the same suppliers they used prior to COVID-19 closures.
While 35% of operators plan to reduce the number of items on their menus, 18% are using this time to try new things, and 38% are reframing planning around changes caused by COVID-19. Further, operators align with consumers in that they aren’t slowing down on trends—82% think it will be equally or even more important to keep up with trends after the pandemic as it was before the pandemic.
This is an unprecedented time of change in the foodservice industry, and it is a critical time to think about new and craveable menu offerings that entice customers to return for dine-in while keeping them safe and healthy.
Datassential, a Chicago-based food industry research and consulting firm, brings clients real-world information on foodservice and consumer packaged goods in the U.S. and around the world. The company provides trend software, predictive analytics, and consumer insights that help manufacturers, food retailers, and chain restaurants innovate and sell more intelligently.
Restaurant Decline Has Far-reaching Implications
Since the onset of the COVID-19 pandemic, food retailers have found sales booming in almost all departments. Much of this is due to a category shift where consumers, confronted with closed restaurants, or at least closed for seating, diverted their purchases to retail. In other words, they stopped going out to eat, and they dined more at home.
Although many don’t like to cook or aren’t very good at it — and so take-out at restaurants has boomed — this increase is nowhere near enough to compensate for the lack of table service.
A great deal of restaurant dining is a function of location, such as people eating lunch near their workplace or near the theatre they are going to, or on vacation, but with all these activities basically cancelled for many, the motivation for eating out is much smaller than it was.
Then, of course, there are financial considerations. Even if people are getting generous unemployment insurance or haven’t been laid off, many are afraid of what the future might bring. So saving money by eating at home makes sense.
Breaking bread, socializing over a meal, often at a restaurant or with food from a restaurant is a common activity. But, with live socializing posing a risk, this, again, reduces demand for foodservice purchases.
You can make an endless list: fewer airplane passengers, cruise ships shut down, museums, sports stadiums and arenas closed. Even recent re-openings, say at theme parks, are capacity-controlled. So the foodservice business is struggling.
Another key issue is where people are spending money geographically. Even if consumers were to resume eating out, it is likely to be closer to their homes, rather than in traditional urban centers. So if spending at restaurants is down X%, it might be down triple that in urban area restaurants that are not currently being flooded with commuters.
The Datassential piece adds an important and relevant point: If foodservice operators see a decline in business, they still have to meet minimums required for foodservice distributors to drop off at the restaurant. So a restaurant that was getting daily deliveries and is now doing 20% of its business versus last year may have to have deliveries once a week.
This has all kinds of implications for fresh. The restaurant can order its full needs, but the quality served to consumers will decline. There is also likely to be more shrink toward the end of the week causing additional financial losses.
All the problems with fresh produce — the need to buy frequently, the need to cut, slice and cook, the need to discard what isn’t consumed — are now strapped on the consumer.
The restaurant can order less produce from its distributor and pick up additional produce from a warehouse club, terminal market or supermarket. However, these alternatives might cost more and take manpower at a time when the restaurant has probably laid off some nonessential staff.
So, the danger for the produce industry is that restaurants will look to reduce the prevalence of fresh foods on their menus. So instead of using, say, fresh Clementines as an ingredient on a salad, the restaurant will use jarred Clementines.
So we can expect that fresh produce sales through the foodservice channel will be triply hit: First by the decline in sales caused by restaurant closures and reduced purchases by consumers. Second, by the alteration of menus to reduce the reliance on fresh items. Third, by restaurants being more often out of stock due to hesitation to order a supply that will transcend fewer delivery windows.
Of course, there is a bit of double-edged sword here. On one side, the restaurants reduce their fresh offers, yet an important reason why consumers go to restaurants is for fresh food. So then, consumers will be disappointed and less likely to go out as restaurants reopen.
On the other side, we can expect overall fresh consumption to decline at home. People might love a baked potato, but they have gotten out of the habit of scrubbing the potato clean, rubbing it with olive oil, seasoning the potato, pricking it to let steam out, rotating it every 20 minutes or so while baking it for an hour.
They may eat a burger or an egg salad or tuna sandwich — but when they order in a restaurant they will often get lettuce, tomato and onion, with a side of coleslaw made from cabbage and carrots, a pickle and some French Fries. When they eat the same sandwich at home, many won’t bother with the accoutrements.
Think about something like a salad. Lots of people who go out to eat will order a salad — in fact, in many restaurants it comes free with an entrée. At home, though, it is never free and it is another job.
For as long as we have data, for more than 100 years, foodservice has risen as a percentage of where consumers spend their food dollars. Now, that has collapsed. So all the problems with fresh produce — the need to buy frequently, the need to cut, slice and cook, the need to discard what isn’t consumed — are now strapped on the consumer. How the industry will persuade the consumer to commit to fresh produce is very much yet to be determined.