The National Restaurant Show made its return in May 2022. Our staff was able to make it on the first day of the show, and from our perspective, the show is about 80% back to where it was pre-Covid. What is clear upon entering the exhibits is the diversity of solutions firms are offering, from staffing to compostable packaging to robotics – all meant to help mitigate a second-half of the year that few of us can predict.
The Foodservice Economy is Facing Uncertainty
Depending on the source(s) of your information – whether it be reputable newspapers or other research firms – the one thing we can all agree on is there will be considerable headwinds the remainder of this year. Rising unemployment, higher borrowing costs, supply chain constraints, labor shortages, stock market losses and geo-political uncertainty will all impact the industry. We have pulled a few examples of the responses firms are putting forward from a purely observational (unscientific) perspective.
Responses to Uncertainty Exist
What we saw at the show were several short-term and long-term responses to these uncertainties, from robotics to innovative packaging to enhancements to grab-and-go merchandising systems.
|Firms and Responses
- Unemployment is at its lowest level in decades, but questions persist about how much longer this will last.
- The mass exodus of labor from foodservice has yet to return and may not.
- Automation and AI firms – such as Bear Robotics and Haso – have developed robots to aid with bussing, takeout orders and even hosting with a strong return on ROI.
- Healthcare has a poor reputation for the time it takes from the first interview to hire and these technologies ease the burden.
|Dining Room Closures
- Covid-19. Yes, it is still here and while milder, Americans are getting it in droves.
- Will dining rooms close again?
- Delivery and takeout will remain very strong, even though aggregators have yet to make a profit.
- Firms offering functional, durable and “affordable” disposable packaging accounted for nearly 15% of the South Hall in McCormick.
- Disposable packaging is a strong bet for the foreseeable future.
|The Future of Dispensed Beverages
- The gross margins on dispensed beverages are typically what makes a foodservice outlet turn a profit on a $2 value meal.
- However, packaged beverages are more expensive but are more conducive to delivery.
- Georgia Pacific, among a couple others, have come up with a dispensed-beverage sealer that is simple to use (and is around $2,500 to buy).
- It seals the dispensed beverages and gives operators the ability to sell their highly profitable drinks that promotes portability.
- It is simple to use and could be an excellent fit for c-stores and retailers short-staffed requiring self-serve.
|High Fuel Prices
- With gasoline averaging $4.50 per gallon and upwards of $7.00 on the Coasts, consumers are not likely to stop in for a beverage or foodservice item at a c-store.
- Drivers reach a “threshold” at which going in-store is reduced as fuel prices climb.
- Technology and pay-at-the-pump deals become more necessary than ever. Technology companies were a large part of the North Hall at McCormick and we can easily see why. Pulling gas customers into the store becomes very important and the hold times of products also becomes critical.
- Flex-e-serve systems, among others, developed a highly attractive merchandising system that keeps foods warm, reduces waste and “exceeds customer expectations” in the gas-station space.
|Socially Conscious Foods
- As eating habits evolve and society becomes more aware of our carbon footprint, food “analogues” made from plants will continue to be popular.
- While we saw several of these booths, we questioned the timing of plant-based products especially in light of other more pressing foodservice concerns (outlined prior).
- Should the industry avoid a recession and the next 12-18 months remain strong, look for products – such as Morningstar Farms’ chicken breast – to make strong inroads.
- Operators and consumers will look to these products not as “plant-based” options, but “great-tasting” options that are better-for-you and support animal welfare.
Cursory Observations Only – More to Come in 2022
Our observations are only the tip of the iceberg for a foodservice economy that will be influx moving into the next 18-24 months. While the ride will be bumpy, foodservice has experienced worse uncertainty in its storied past and comes out of it even stronger. We believe this to be one of those cycles.
Tim Powell is a Managing Principal of Foodservice IP. Tim serves as a trusted foodservice adviser to management at several food companies.
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