Satisfying America's Changing Appetite
Journal article by Michael Farello, Robbin Mitchell, Kari Alldredge; The McKinsey Quarterly, No. 4, 1996
Journal Article Excerpt
Satisfying America's changing appetite by Michael Farello , Robbin Mitchell , Kari Alldredge America's appetite is changing. Traditionally, food has either been bought at the grocery store and consumed at home, or served up by restaurants and institutional operators and eaten on the premises. Today, however, restaurants are increasingly providing food that is eaten at home or on the go, and the grocery store is selling more ready-prepared food that is eaten at home, on the premises, or on the move. The key issue is not so much where the food is consumed, but where and how it is prepared. Clearly, Americans want to get out of the kitchen. By the year 2005, many Americans will have never cooked a meal from basic ingredients. Virtually all of the $100 billion in incremental annual food sales expected in the next decade will come from foodservice, including ready-prepared meals consumed at home. To take advantage of this dramatic shift in eating habits, restaurant operators, packaged food manufacturers, and the entire US food distribution system will have to make significant changes. Those who play their cards right - by delivering high-quality prepared foods at reasonable prices - have much to gain. The others may find it difficult to grow or even to survive. Robust foodservice growth Largely due to population growth, Americans consumed 40 billion more meals and snacks in 1995 than they did ten years earlier, and 30 billion of these were eaten out of the home [ILLUSTRATION FOR EXHIBIT 1 OMITTED]. During this period, the food industry grew modestly from $630 billion to $685 billion in real terms, growth that was captured entirely by commercial foodservice operators at the expense of grocery stores and other retail outlets. The next ten years will be equally bright for foodservice operators. The food industry is projected to grow faster than in recent years, approaching $800 billion by 2005, with the commercial foodservice segment both the catalyst and the beneficiary of that growth. Indeed, it could capture all of the $100 billion in incremental sales. Newer concepts such as kiosks, broad menu fast food chains, and prepared food at supermarkets will be the fastest growing segments. Traditional grocery stores are among the most vulnerable [ILLUSTRATION FOR EXHIBIT 2 OMITTED]. A lifestyle thing The growth in foodservice spending will derive from new demands. Consumers' expectations have risen, and views about convenience, fun, family-friendliness, variety, health, and value are all changing. Americans feel life is becoming increasingly hectic, stressful, and complicated, and are more often demanding convenience foods as a means of lightening the load. But today's consumers eschew the processed, low-quality foods that were once synonymous with convenience. Instead, they are demanding convenience and quality. In response, foodservice operators are opening kiosks in retail stores and delivering food from local restaurants. In the future, convenience will mean freshly prepared food delivered when and where consumers want it. Besides convenience with quality, consumers also want fun. So when it comes to eating out, restaurants that offer more than just a meal will be those that satisfy American tastes. At the Motown Cafe in New York City, for example, customers eat home-cooked meals, groove to live music, browse through authentic Motown memorabilia, and buy souvenirs in the retail shop. Eating out here is an entire experience. Consumers coping with hectic schedules are also looking to eat at restaurants that welcome the entire family, a demand that has already led to the popularity of children's menus, play areas and other family-focused promotions. In addition, consumers are changing what they eat in response to shifting concerns about health. In the past, health meant "taking the bad out" - less salt, less fat, and fewer calories. But over the next decade, consumers will focus more on nutrition management, demanding the likes of "pharmafoodicals" (foods supplemented with increased nutrition, such as calcium fortified orange juice) and "neutraceuticals" (which bring good taste to foods consumed for nutritional purposes). Consumers may even be able to specify their own requirements (no more than 10 percent fat, extra calcium, or specified protein levels, for example). Consumers will also demand more variety. American consumers are becoming more adventurous (sales of Asian foods grew by 25 percent last year alone), and foodservice operators will offer an ever-widening array of cultures. "No boundaries, no borders" will be the theme, with all sorts of ethnic food served under one roof.Finally, while consumers will demand greater convenience, higher quality, more fun and more variety, they will also demand a better ... |
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