1. Shopper & Customer

Foodservice Retail Discontinuity Continues Driven by Gen Z and Millennial Adoption

 

Notice was first given in 1991 when Foodservice Solutions®,
Grocerant Guru® Steven Johnson, warned foodservice industry professionals about
the shifting consumer mindset at COEX.
Then, in 1996, Johnson coined the term “grocerants” in an Op-Ed
article published in both FoodService
Director
and Nation’s Restaurant News. Fast forward to today,
and the foodservice industry is in the midst of a retail discontinuity driven
by the evolving preferences of Gen Z and Millennial consumers.

Looking Ahead: The Fight for Consumer
Relevance

Globally, restaurants are battling to maintain consumer
relevance as grocery giants like Tesco, Sainsbury’s, and Walmart are losing
market share. Meanwhile, discount chains such as Aldi, Lidl, and WinCo Foods
are capitalizing on this shift by offering fresh prepared food at prices up to
7% lower than traditional grocery stores. These retailers are expanding their
grocerant niche, attracting younger consumers who value both convenience and
affordability.


While restaurant prices continue to climb, as reported by Nation’s Restaurant News, the paradox of
rising costs is driving consumers away from dining out and back to grocery
stores and convenience stores. A recent Euromonitor report highlights that the
growth in home delivery and takeaway food has outpaced that of restaurants
every year since the financial crisis. From 2009 to 2014, the UK market for
takeaway and delivery grew by 2.7% to £6.5 billion, while the value of food
bought in restaurants fell by 5% to £17.1 billion.

Non-Traditional Locations Gain Ground

Today’s consumers, particularly Gen Z and Millennials, have
discovered that they can find restaurant-quality food in non-traditional
locations such as chain drug stores, grocery store delis, convenience stores,
online meal kits, and even furniture stores like IKEA.
This shift has been extensively documented by the Foodservice Solutions® team,
which continues to report on the migration of consumers toward new avenues of
fresh food distribution.


As legacy grocery stores expand their branded frozen food
courts, one question remains: Will this be enough to slow the migration to
non-traditional fresh food outlets? In the United States, restaurant customer
counts have been either flat or declining for three consecutive months,
signaling a shift in consumer behavior. In the UK, Britain’s two largest
publicly listed restaurant companies by market share, Mitchells & Butlers
and The Restaurant Group, have seen sharp declines in market valuation as investors
lose confidence in traditional high street brands.

The Rise of Digital and Delivery
Platforms

Digital platforms like GrubHub, Amazon Prime Now, and apps
such as Just Eat have revolutionized the way consumers order food, offering
convenience that aligns with the lifestyles of younger generations. However,
the Foodservice Solutions® team argues that simply offering apps, takeout, or
delivery is not enough to sustain long-term growth for chain restaurant brands.


Consumers, particularly Gen Z and Millennials, are
increasingly seeking Ready-2-Eat and Heat-N-Eat fresh prepared food from
non-traditional locations, including furniture stores like IKEA, which is now
generating $2.8 billion annually from its food offerings. This trend
underscores the importance of addressing the ‘stay home’ consumer, who values
both convenience and quality in their dining experiences.

The foodservice industry must adapt to these changing
consumer preferences or risk losing relevance in a market that is rapidly
evolving. The future belongs to those who can innovate and meet the demands of
a new generation of consumers who are redefining the way we eat.

Foodservice Solutions® specializes in
outsourced business development. We can help you identify, quantify and qualify
additional food retail segment opportunities or a new menu product segment and
brand and menu integration strategy.  
Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche
visit us on our social media sites by clicking one of the following links:
Facebook,  LinkedIn, or Twitter

View Original Article
Do you like Grocerant Guru's articles? Follow on social!