Consumer & Restaurant Menu Trends: the Clean Label

CONSUMER & RESTAURANT MENU TRENDS: THE CLEAN LABEL INFLUENCE

Our research ❶

Consumer insights ❷

Operator insights ❸

Menu insights ❹

Key areas of opportunity ❺

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“Include mental and physical health” “Be well-rounded: eat healthy, indulge occasionally and be active” My definition of healthy food items has changed over the past two years “Avoid processed foods” Agree & agree completely DEFINITIONS % Overall 44% 18-34 51% of health ARE 56%

33% CHANGING 35+ 38% 43% “GMO-free and is organic” Male Female

“Be more aware of additives”

“Include feeling good emotionally”

% Overall Preservative-free 72% 75% 77%

Natural 68% 74% Six out of 10 80% No artificial 70% 72% consumers sweeteners 75% Hormone-free 68% 71% feel that 74% Unprocessed 66% 71% CLEAN 76% Organic 65% claims align 74% 70% Antibiotic-free 66% with greater 70% 68% GMO-free 58% healthfulness 69% 64% Clean 59% 59% 59%

Real 48% 66% 57%

mostly focus “The absence of additives” on the absence “All-natural, no artificial flavoring”

of additives “An item that is GMO-free, organic and fresh”

“Clean food is local, sustainable, organic, environmentally safe because of the way it is grown”

“Pesticide- and steroid-free”

“Unprocessed food” “Food that hasn’t been treated with chemicals and is grown sustainably” “Food that is raw and natural with no added ingredients or preservatives and the type of food that nourishes your body” “Washed and free of contamination”

“No extra stuff, organic ingredients, keeping it clean”

Source: Healthy Eating Consumer Trend Report, Technomic © 2017 Technomic Inc. 7 Which of the No artificial ingredients 61% following Preservative-free 58% claims, if any, Fresh 53% do you Hormone-free 51% associate with Unprocessed 50% Antibiotic-free 49%

clean eating? Non-GMO 45% Select all that apply. Gluten-free 26% Vegetarian/vegan 23%

Local 19%

Seasonal 16%

Sustainable 15%

Authentic 14%

The clean label consumer 28% 51% HH Income Female $50K-$100K

33% 54% Millennial Caucasian

Impact on purchase: natural & organic terms I’d be more likely to buy and am willing to pay___ for…

Natural 13% 30% 37% 80%

Unprocessed 11% 28% 34% 72%

Preservative-free 9% 26% 36% 71% Up Organic 11% 33% 26% 70% from 2014 Hormone-free 10% 26% 34% 70%

Clean 12% 28% 29% 69%

Antibiotic-free 11% 26% 31% 68%

GMO-free 10% 26% 30% 67%

No artificial sweeteners 9% 18% 41% 67%

Real 7% 24% 36% 67%

Signficantly more (>5% increase) Slightly more (≤5% increase) No more

Impact on taste: natural & organic terms Food/beverage described as____ is….

Natural 53% (up from 45% in 2014) 42% 5%

Real 49% 46% 5%

No artificial sweeteners 44% 37% 19%

Unprocessed 43% 42% 16%

Clean 42% 52% 6%

Organic 40% (up from 33% in 2014) 46% 14%

Preservative-free 39% 49% 12%

Hormone-free 33% 58% 8%

Antibiotic-free 32% 60% 8%

GMO-free 30% 59% 11%

Slightly/much more tasty No impact on taste Slightly/much less tasty

would like restaurants to be more TRANSPARENT 86% about what’s in their food

Proportion of operators agreeing that the following sustainability factors will have a great or moderate influence on purchase decisions in the future

Health & Buying No chemicals/ Clean wellness local pesticides labels 89% 84% 84% 82%

Sustainably No hormones/ Humane animal produced antibiotics treatment

82% 79% 79%

Clean label claims on the menu Clean label claims, by mealpart

1,419 Entree/main dish 850 1,052 1,191 Appetizer/starter 104 125 Nonalcohol 95 beverage 87

Add-on 45 47

Dessert 48 46 299 317 Side/extra 23 31

Kids menu 26 Menu incidence Operators offering 31

2015 2016

Operator penetration By segment (2016)

45.6%

35.2% 32.3%

24.6% 22.0% 19.8% 19.0%

9.0%

Overall Quick Service Fast Casual Midscale Traditional Contemporary Upscale CDR Fine Dining CDR CDR

2015 20.7% 8.0% 22.1% 17.9% 17.0% 30.4% 37.1% 49.3%

Top “clean” keyword mentions on menus

Organic 4,359 Natural 2,642 Local 1,234 Free-range 343 Grass-fed 275 Fastest-growing clean keywords (YOY) Cage-free 213 Sustainably caught +1,100.0% Sustainable 181 Hormone-free 176 No steroids/steroid-free +250.0% Antibiotic-free 134 Humanely raised 117 Humanely raised +159.0% Grade A 79 GMO-free 74 GMO-free +138.7% Fair trade 70 Cage-free +32.3% Grain-fed 53 Naturally raised 41

Source: MenuMonitor, Technomic © 2017 Technomic Inc. 17 Beef-centric dishes featured more clean labeling in 2016 at commercial operations Top items featuring clean labels Fastest-growing items featuring clean labels

103 Rib-eye Steak 300.0% Specialty Burgers 87 49 Filet/Filet Mignon 142.9% Chicken Sandwich/Wrap 38 32 Turkey Sandwich/Wrap 133.3% Cheeseburger 34 29 Strip Steak 120.0% Burrito/Chimichanga 28 25 Coffee/Filter Coffee 22 Salmon 90.9% 25 Bacon Cheeseburger 22 Scrambled Eggs 83.3% 24 Chicken Salad 16 Chicken Strips/Nuggets 75.0% 21 Turkey Sandwich/Wrap 9 Bacon, Egg & Cheese 66.7% 21 Salmon 11 Fish Sandwich/Wrap 57.1% 21 Hamburger 17 Chicken Salad 50.0% 21 Specialty Salad 22 Other Chicken Dish 45.5% Mexican Bowl 18 17 Grilled Chicken 37.5% Filet/Filet Mignon 17 7 Barbecue Burger 37.5% Other Chicken Dish 16 11 Breakfast Platter 14 37.5% Chicken Strips/Nuggets 8 13 Chicken Sandwich/Wrap 29.0% Roasted Chicken 18 12 Chicken 25.0% Rib-eye Steak 3 12 Hamburger 23.5% Caesar Salad 11 12 Specialty Burgers 18.4% Taco/Taquito 12 12 Coffee/Filter Coffee 13.6% Turkey Burger 12 Bacon Cheeseburger 13.6% 2016 2015 Source: MenuMonitor, Technomic © 2017 Technomic Inc. 18 Clean label menu mentions were down overall in 2016 at noncommercial operations

Clean label claims on the menu Clean label claims, by mealpart

229 310 Entree/Main Dish 296 219 40 Appetizer/Starter 37 22 Side/Extra 20 8 Nonalcohol Beverage 8 85 80 3 Kids Menu 6 7 Dessert 5 Menu Incidence Operators Offering 1 Add-on 1

2015 2016

Operator penetration by segment (2016)

66.1%

34.8% 23.8% 20.0% 15.0% 10.0%

Overall College & Hospitals Lodging Recreation Retailers Universities

2015 25.3% 18.0% 10.0% 64.3% 34.8% 24.0%

Local 157 165 Cage-free 77 64 Sustainable 24 LOCAL remains the 20 Grass-fed 17 leading clean label 18 Free-range 15 claim, despite 26 Unprocessed 14 declines in 2016 at 9 Locally sourced 10 noncommercial 14 Fair trade 4 Cage-free claims grew on menus in 2016, referencing 5 egg dishes, along with sustainable and unprocessed Locally farmed 2 claims 2 Sustainably sourced 1 1 Hormone-free N/A 1 Sustainably raised N/A 1

Top items featuring clean labels Fastest-growing items featuring clean labels

13 Breakfast Platter 9 13 Crepes/Blintzes 13 Shrimp 100.0% 12 Quiche/Frittata 10 10 Cheese/Cheese Platter 10 Eggs Benedict/Florentine 60.0% 8 Eggs Benedict/Florentine 5 7 Create-Your-Own Omelet 6 7 Other Omelet 50.0% Eggs Any Style 7 6 Shrimp 3 6 Other Omelet 4 Breakfast Platter 44.4% 6 Roasted Chicken 5 6 Burrito/Chimichanga 6 Other Nonbreaded Protein 25.0% 6 Cheeseburger 8 6 Specialty Burgers 11 5 Quiche/Frittata 20.0% Other Nonbreaded Protein 4 5 Scrambled Eggs 7 4 Specialty Salad 2 Roasted Chicken 20.0% 4 Other Salads 2 4 Steak & Eggs 3 Create-Your-Own Omelet 16.7% 4 Hamburger 5 3 Mixed Vegetables 1

Tuscan Chicken Hand-Breaded, No Antibiotics, Vegetarian-Fed, American Humane $5.69 Sandwich Certified. Combo Meal Includes Regular Fry And Regular Soda.

Whole-Grain Belgian Waffle Topped With Caramelized Apple And Pear Compote, Whipped Greek Yogurt, Pure Maple Syrup. Our 100% Whole- Apple Pear Waffle Grain Waffles Are Made From Scratch Daily Using Cage-Free Eggs $7.50 And Just A Hint Of Turbinado Sugar. All Waffles Are Served With Whipped Butter And Pure Maple Syrup.

Canederli Con Spinaci Free-Range Chicken Broth With Spinach And Canederli Con Ricotta Dumplings Topped With Grana Padano. Starter Option On The $9.50 Spinaci Taste Of Trentino-Alto Adige Menu.

Natural Cage- And Hormone-Free Chicken, Rosemary Parmesan Grilled Chicken BLTA Bacon, Avocado Mash, Tomato, Green Leaf, Sage And Garlic Aioli, $11.99 Honey Wheat Bun.

Spinach And Feta Cooked To A Juicy Medium. Served With Fries. Our Beef Is Humanely $13.00 Burger Raised, All-Natural And Vegetarian-Fed.

Local Illinois Ham Off The Bone And Applewood Smoked Bacon With Midwest Omelet Wisconsin White Cheddar. All Egg Dishes Come With House Potatoes $12.50 And Toast. Gluten-Free.

Served With Your Choice Of Protein Along With Beans, Moe’s Famous Queso, Pico De Gallo, Jalapenos And Black Olives. Protein Options Billy Barou Nachos $8.99 Include Grass-Fed Steak, All-Natural Chicken, Grain-Fed Pulled Pork, 100% Ground Beef Or Organic Tofu.

Best Western Plus Beach Resort Black Forest Ham Black Forest Ham, Cheddar Cheese. Made With Three Cage-Free Eggs $14.00 Monterey—Cafe Omelet Served With Breakfast Potatoes And Choice Of Toast. Beach Restaurant

Lambeau Field—1919 Free-Range Half Black-Eyed Peas, Sweet Corn, Roasted Red Peppers, Buttered Corn $17.00 Kitchen & Tap Chicken Milk.

University Of California At Davis— Grass Fed Burger Tomato Street Grill—Fresh Grilled. - Tercero Dining Hall Disney's Hollywood Studios At Walt Local Greens Salad Florida Blueberries And Heirloom Apples, Laura Chenel Goat Cheese, Disney World—The With Champagne $11.00 Spiced Candied Pecans. Hollywood Brown Vinaigrette Derby University Of Vermont Medical Cheddar Cheese Plate Variety Of Local Cheddar Cheese, Served With Crackers. - Center

Canadian Bacon, Toasted English Muffin, Hollandaise Sauce, Breakfast New York Palace Eggs Benedict Potatoes. All Eggs Are Cage-Free And Locally Sourced. Served Daily $27.00 Hotel—Room Service From 6:00 A.M. Until 11:30 A.M.

Cornell University— Hot Traditional Station. 100% Trans Fat-Free. 100% Whole-Grain, Robert Purcell Cajun Tofu Lower In Fat, Sugar And Salt, And Made From Unprocessed - Marketplace Eatery Ingredients.

Dickey’s Barbecue McDonald’s Panera finished its Pit rolled out chicken that is removed goal of creating antibiotic- and hormone-free, some artificial a 100% clean vegetarian-fed and humanely preservatives menu raised from its meats and eggs

Pizza Hut removed preservatives BHA and BHT from Papa Murphy’s all meats, antibiotics from chicken Pizza began serving and preservatives from cheese antibiotic-free chicken

Taco Bell announced plans Wendy’s plans to Burger King/Tim to eliminate all antibiotics from source smaller chickens Hortons intends to its chicken at units in the U.S., and will also eliminate eliminate the use of remove most preservatives and the use of antibiotics antibiotics in its poultry other additives from its food at supply in the U.S. by 2017 its U.S. restaurants and use 100% cage-free eggs by 2018 Arby’s plans to serve only antibiotic-free chicken and to remove all artificial flavors and colors from And beyond restaurants… menu items starting in 2017; the chain plans to serve only cage-free eggs by 2020 Sheetz, Compass Group, Sodexo, Six Flags, Blaze Pizza Chick-fil-A plans to Kroger, Publix committed announced the removal serve only antibiotic-free to cage-free eggs by 2025/2026 of artificial additives chicken by 2019 and cage- with its Keepin’ It Real free eggs by the end of initiative (2017) 2026

Some chains like Chipotle’s Tasty Made have gone the opposite direction

Responsibly raised, hormone- and antibiotic-free meat (over $6)  Conventionally raised beef ($4.10)

Chick-fil-A added its first organic kids item, Honest Kids’ Appley Ever After juice, and is evaluating adding other organic items

© 2017 Technomic Inc. 30 Natural Preferred beverage sweeteners sweeteners in % Overall 19% White/granulated sugar 20% beverages 21% 18% Cane sugar 16% Consumers say they would be more 14% likely to purchase beverages that are 15% Honey 14% naturally sweetened (61%), all-natural 14% (59%), free of artificial ingredients 8% Stevia 11% (55%) and free of HFCS (50%). 13% 8% Sucralose 9% 10% 10% Brown Sugar 7% 5% 6% Saccharin 6% 6% 5% Aspartame 6% 6% 6% Agave nectar/syrup 5% 4%

Q: Which types of sweeteners do you prefer for your beverages, either those already included in the beverage or those you add yourself? Select all 18-34 35+ Source: Beverage Consumer Trend Report, Technomic © 2017 Technomic Inc. 31 Natural sweeteners in food

of consumers say that food that has no artificial 72% sweeteners is healthier

OPPORTUNITIES Sugar

Maple Ninety Nine Restaurants’ Agave Roasted Maple Pork Tenderloin

Honey

Real-fruit jam

PDQ 38% of consumers consider some types of fats to be good for them

Popeyes Louisiana Kitchen

Chili’s Grill & Bar unveiled Hand-Crafted Burgers this summer, with an optional grass- fed beef patty raised without hormones or antibiotics

1 Build trust through transparency

2 Packaging matters

3 Keep up on evolving trends

4 Know your customer

LIZZY FREIER Managing Editor [email protected]

AIMEE HARVEY Managing Editor [email protected]

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