Driving Growth With Digitally Enabled Convenience
March 2018
Copyright 2018. The NPD Group, Inc. All Rights Reserved. This presentation is proprietary and confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD. THE LAY OF THE LAND WHAT’S GOING ON IN THE MARKETPLACE?
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential Commercial Restaurant Traffic (MM) Progress in the restaurant industry has halted…and is not forecast to grow in the next year.
62.1 62.0 61.8 61.8 61.7 61.7 61.7 61.7 -0.3% 61.2 61.2
2009 2010 2011 2012 2013 2014 2015 2016 2017 F YE Dec'18
Source: The NPD Group/CREST® / Years Ending November and Forecasted data for Year Ending December’18
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 3 Convenience oriented services that consumers have embraced
Convenient More Convenient Dry Groceries Meal Kit Delivery Groceries, Kits, Restaurant Packaged Including Fresh w/Fresh Prepared Foods Delivery Only and Frozen Ingredients Availability expanding via third-party delivery, e.g.
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 4 Regardless of where we source the meal, we increasingly consume it at home
Prepared and Eaten in Home Purchased Away From Home but Eaten in Home Share of Occasions
80% 79% 78% 77% 76% 75% 74% 73% 72% 2011 2011 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017
Source: The NPD Group/National Eating Trends®, Years ending February ’13-’17
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 5 Foodservice marketers seeking to gain more visits and grow the bottom line must decide which convenience enablers are worthy of their investment.
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 6 Let’s talk about “convenience enablers” – getting food on demand
1 Meal Kits – Fad Or Trend Worth Watching
2 Restaurant Industry’s Bright Spot: Delivery
3 Digital Delivery And Third Party Apps
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 7
MEAL KITS A PASSING FAD?
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential Delivered meal kits were designed to help consumers solve the age old problem of “what’s for dinner”, however, trial of these services is low.
3% = 8.3 MM adults 37% Have tried 20% Interested in trying
Not interested in trying
40% Not aware
Percent of Respondents
Source: The NPD Group/A Fresh Look at Meal Kit Delivery Services report, May 2016, DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 9 A Fresh Look at Meal Kit Delivery Services Millennials were the most receptive to initial offerings of Blue Apron, HelloFresh, etc. Experiential eaters at their core % of past-year meal kit users who’ve tried one of these services Introduced to global cuisines, specialty food46% markets, and unique restaurants
35% Food is more than just sustenance
Source: The NPD Group/CultureWaves
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 10 What consumers liked about the initial meal kit offerings Meal kit users extremely/very satisfied
81% 80% 78% 77%
QUALITY OF FRESHNESS ABILITY TO PACKAGING INGREDIENTS OF CREATE MEAL INGREDIENTS BY FOLLOWING RECIPE
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential Source: The NPD Group, A Fresh Look at Meal Kit Delivery Services report11 May 2016 Cost concerns, however, are a barrier to keeping some users engaged 56%
of lost users stated kits were
“too expensive” as the top reason they no longer use them
Source: The NPD Group /A Fresh Look at Meal Kit Delivery Services report, May 2016
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 12 Enter – the game changers
Source: The NPD Group /A Fresh Look at Meal Kit Delivery Services report, May 2016
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 13 RESTAURANT INDUSTRY’S BRIGHT SPOT: DELIVERY
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential Delivery provides the ultimate convenience for diners
Restaurant Traffic Percent Change 2017 vs. 2013 1.8 Billion Visits YE December Delivery 2017 +8%
Source: The NPD Group/CREST®, YE December
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 15 Delivery Traffic (Millions) Delivery traffic is up almost everywhere over the past five years
2013 2017
1,764 1,637
621 618 516 452 478 326 169 208
Total Restaurants Big 3 Pizza QSR Pizza excl. QSR excl. Pizza Total FSR Big 3
+8% NC -12% +47% +23%
Source: The NPD Group/CREST®, YE December’17
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 16 Contribution to Delivery Traffic Growth Independents are able to obtain more than their fair share of delivery traffic with the help of “menu aggregator” TOP GROWING TOP GROWING FOODS/BEVERAGES CONCEPTS TOP GROWI NG CON TRI BU TI ON TO CON CEPTS GROWTH 40% QSR SANDWICH QSR Burger 30%
24% QSR Sandwich 29%
MIDSCALEFull Service 21% 27%
13% ASIAN Fast Casual 15%
The NPD Group/CREST® YE June'17
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 17 Delivery Traffic Share by Generation Younger generations are heavier users of delivery
27% 31% 22% 20% Born 1997-2015 Born 1981-96 Born 1965-80 Before 1965
Gen Z Millennials Gen X Boomers +
Index 121 119 99 69
Index to Total Traffic Share Source: The NPD Group/CREST®, YE June’17
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 18 Top Five Reasons for Choosing to Use DeliveryDelivery is all about convenience; consumers say they don’t want to leave home and it is easier than cooking
Top Reason % of Users
I don't have to leave home 50%
It's easier than cooking 38%
It's quicker than cooking 28%
They are quick to deliver 28%
I don't have to go out in bad weather 28%
Source: The NPD Group /Delivery Custom Survey, June 2016
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 19 Delivery Traffic Forecast – Excludes QSR Pizza
Restaurant Delivered Meals Excluding Pizza
Traffic Forecast 2022 vs. 2016
+20% Source: The NPD Group/CREST®, 2022 vs. 2016
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 20 DIGITAL DELIVERY AND THIRD-PARTY APPS
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential How ordered: NPD definition of digital CREST® survey question: Where was your meal/snack ordered yesterday? 1 Mobile app for 9 From food truck delivery 1 At a walk-up counter 2 Mobile app for pick- 0 up 11 From a table/sit-down 3 Text message for counter
Digital Ordering Ordering Digital delivery 1 From a car or through Text message for 4 2 drive-thru pick-up 1 Telephone for pick-up 5 Internet for delivery 3
6 Internet for pick-up Source: The NPD Group/CREST® 1 Telephone for delivery
DocumentThe classification: NPD7 Group,Cafeteria Internal Inc. | Only Proprietary andline confidential (pay 4 22 per item) 1 Other (specify) 8 Buffet (one set price) 5 Delivery Traffic and Digital Ordering More than half of all delivery is now digitally ordered. Operators pursuing delivery must offer a seamless digital ordering experience.
Restaurant Delivery Traffic 1.8 Billion of delivery was 34%digitally ordered
of delivery was 53%digitally ordered 1.6 Billion
2013 2017
Digital Orders = Internet, Mobile App, Text Message, and Kiosk Mobile App was added in 2013, Kiosk was added in 2017 Source: The NPD Group/CREST®, YE November 2017
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 23 Delivery Traffic by Order Method Third party apps currently account for 13% of all delivery visits
Other Digital Digital From Restaurant
7% 31% Third Party App 13%
49%
Telephone For Delivery
Source: The NPD Group/CREST®, Oct/Nov 2017
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 24 Delivery Site/Mobile App Influence Restaurant’s website/mobile app is the largest influencer across generations, followed by several social media sites
Gen Z Millennials Other Adults
Restaurant website/ Restaurant website/ Restaurant website/ mobile app mobile app mobile app
Facebook Facebook GrubHub
GrubHub GrubHub Email/text from restaurant
Email/text from restaurant Instagram Facebook
Instagram Twitter Yelp
Yelp YouTube Instagram
Source: The NPD Group/CREST®, year ending Dec’16
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 25 Delivery Site/App Influence Type Operators need to keep sites updated and focus promotional info on key customers.
% of Site/App Influenced Visits by Type 50% 40%
30%
20%
10%
0% Menu Details Pre-Order Online Loyalty Program Restaurant Locator
Source: The NPD Group/CREST®, year ending Dec’16
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 26 Key Takeaways
! There is growing demand for convenient meal solutions
! Additional meal kit options are wide and varied addressing the age old question “what’s for dinner” ! Foodservice online delivery is only in its “second inning,” it will continue to grow ! Delivery and digital ordering attract visits from younger generations ! Delivery and digital will drive demand in a market that is showing little to no growth
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 27 Bottom Line
Providing the ability to easily order food “on demand” from restaurants or other venues is no longer a nice to have, it is a need to have.
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 28 Apparel
Appliances
Automotive
Beauty
Books
Consumer Electronics
E-commerce
Entertainment
Fashion Accessories
Food Consumption Thank you Foodservice Footwear
Home
Juvenile Products
Mobile
Office Supplies
Retail
Sports
Technology
Toys
Travel Retail
Video Games
Watches / Jewelry
DocumentThe classification: NPD Group, Internal Inc. | Only Proprietary and confidential 29