THE TIME IS NOW TO REINVENT CASUAL DINING
Two major reports emerged in the late 1980’s identifying dietary fat as the single largest impediment to improving health and diet. Though the real issue at hand was saturated fat, the idea behind the reports was that people could simply improve their diets by cutting out the fat content. While the science was ultimately proven wrong, it changed the way people ate for many years.
Moving forward to the present day, we are now in the midst of what we refer to as the natural and organic craze. In fact, 2014 is the first year Gallup asked about organic foods in its annual Consumption Habits survey. The results, while not necessarily surprising, were quite affirming: (1) 45% of respondents actively try to include organic foods in their diets (2) Another 38% of respondents “don’t think either way” about including or excluding organic foods in their diets.
Kroger’s CFO, J. Michael Schlotman, had some interesting comments regarding organic on the most recent earnings call when he said: “It appears to us that the natural/organic customer is changing and growing in numbers, and those that shop the grocery store are also crossing over, and the blurring of grocery and natural foods is becoming more and more difficult when you look around the store and you can see organic items on the regular grocery shelf.”
I posit that if an increasing number of consumers are eating natural/organic products at home, it is only natural that a greater number of people will seek this alternative when looking for food to eat away from home. We believe we’ve reached a crossroads in the restaurant industry. The marketplace is shifting and restaurant brands must now evolve to grow their customer base:
(1) While organic is moving more mainstream, the majority of restaurants are not
(2) Organic presents the only avenue of real growth in traditional supermarkets
(3) The number of non-GMO product offerings has surged in the past three years
(4) Well over half of Kroger’s customers would buy something organic
(5) Kroger is seeing double-digit growth in Simple Truth and Simple Truth Organic products
(6) Casual dining traffic has been declining for nine straight years, including the last three at an accelerating rate
(7) Chipotle and small independent chains are the only “healthy” alternatives in the restaurant space, and
(8) Chipotle’s traffic has surged since announcing its commitment to going 100% non-GMO on the 2Q13 earnings call.
Going into Whole Foods or Fresh Market is an exciting shopping experience for a foodie. These chains have successfully created fun, high energy environments for consumers. The abundance of healthful options enables us to be more creative and artistic in our food at home preparation. Most importantly, however, it allows us to feel good about what we are feeding ourselves. This farm-to-table movement and the shift to non-GMO foods are two trends that can’t be ignored by the Casual Dining chains.
