A Roundup of Noteworthy Foodservice Findings for the Week of Dec. 7, 2020 ECONOMIC IMPACT NAVIGATOR

Industry Insights A roundup of noteworthy foodservice findings for the week of Dec. 7, 2020 ECONOMIC IMPACT NAVIGATOR

WHEN CONSUMERS WILL FEEL COMFORTABLE Comfort With Dine-in DINING ON-PREMISE

3% 1 to 4 weeks Service Will Remain 10% 1% 1 to 2 months Low 3% 7% The majority of consumers (54%) This time line to return to on-premise 3 to 4 months indicate that they won’t feel comfortable dining is extending, and uncertainty is 8% dining indoors for at least six months, increasing overall compared to August, and a quarter (24%) are unsure when when only an average of 20% 11% 4 to 6 months they will feel comfortable. expressed uncertainty around returning 10% to on-premise dining. However, with a The comfort level of dining indoors is vaccine on the horizon, we may see surely tied to the explosion of COVID- 26% expectations solidify, but that is unlikely 6 months to 1 year 19 cases and associated risks with 21% to shrink the time frame significantly. spending time indoors, while comfort with outdoor dining may also factor in 28% More than a year cooler weather and a distaste for the 17% outdoor dining experience, which is reflected in a higher level of uncertainty 24% around returning to outdoor dining I don’t know compared to indoor dining. 29%

Indoors Outdoors

Base: 505 (indoors) and 543 (outdoor) consumers who aren’t currently dining on-premise Source: Technomic Economic Impact Navigator Program, survey from Nov. 4-7, 2020

TOTAL U.S. FOODSERVICE INDUSTRY Industry Sales ANNUAL NOMINAL SALES CHANGE (%) Forecasted to Fall 3.7% 3.9% Over 26% in 2020 Due to the severe and prolonged Additional forecasting and segment- impact of the COVID-19 pandemic, U.S. level performance insights for 2020 and foodservice industry sales are projected beyond can be found in the recently to decline by 26.4% in 2020, according released November 2020 edition of to Technomic’s latest industry forecast. Technomic’s U.S. Foodservice Industry The 2020 outlook for restaurants and Wallchart. bars—the foodservice industry’s largest segment—is modestly less severe with total sales projected to fall by 20.3%. On a dollar basis, cumulative 2020 -26.4% sales for the foodservice industry are expected to shrink by nearly $269 2018 2019 2020 Projection billion. In 2019, industry sales increased by over $35 billion, growing 3.9% on an annual basis.

Sources: Technomic Ignite company date featuring the Technomic November 2002 U.S. Foodservice Industry Wallchart

© 2020 Technomic, Inc. 3 IGNITE MENU Lab-Grown Chicken Gets World’s First Regulatory Approval On Dec. 2, San Francisco-based center-of-the-plate protein, according to startup Eat Just was the first company Technomic’s 2019 Center of the Plate: to win government approval for the sale Poultry Consumer Trend Report. of its lab-grown meat. Singapore’s Food Humane animal treatment is becoming Agency approved the company’s an increasing concern though, as many cultured chicken—which is made from consumers want more transparency real meat cells—for sale as chicken about how their poultry is raised or nuggets, which will initially be available farmed. in a single Singapore restaurant. Yet still, concerns exist for meat Similar to plant-based products, this modifications. Some 59% of consumers lab-grown product aims to provide meat say they’d be hesitant to eat genetically in a sustainable and ethically produced modified beef or pork, for example, per way. The company hopes Singapore’s Technomic’s 2019 Center of the Plate: decision to approve the product would Beef & Pork Consumer Trend Report. spur U.S. and Western Europe Americans may need time to get used regulators to authorize lab-grown meat. to lab-grown products like this but touting their eco-friendliness will be key Chicken is a staple protein of American to attracting the similar group who finds diets, with consumers reporting higher plant-based fare appealing. consumption of chicken than any other Eat Just’s lab-grown chicken nuggets Source: Technomic Ignite menu data Image Source: The Guardian

WHEN YOU VISIT ___, ARE YOU MORE LIKELY TO VISIT A CHAIN OR INDEPENDENT? Priorities Shifting

Among FSR Diners 37% 35% 37% Not more likely to visit one type over The events of 2020 have undoubtedly force behind the increasing number of the other impacted how consumers behave, FSR users who say they prefer to visit causing changes in the restaurant independents over chains as selection process. consumers may be looking to support 28% 1 31% 2 More likely to visit their local communities. 34% 3 an independent For instance, an increasing number of traditional casual-dining restaurant users cite social responsibility as very important when visiting these More likely to visit restaurants. This increase comes as a a chain growing number of chains introduce 36% 34% plans to address social issues like 29% systemic racism and climate change. Further, the economic effects of the pandemic have hit small businesses Family style Traditional CDR Upscale CDR especially hard. This may be the driving

1. Up from 23% in 2018 2. Up from 21% in 2018 Base: 450 consumers ages 18+ per segment 3. Up from 28% in 2018 Source: Technomic Ignite consumer data featuring Technomic’s 2020 Future of FSR: Family-Style and Casual Dining Consumer Trend Report

Celebrating Solidarity

As the crisis persists and forces new KFC is supporting smaller brands restrictions in some countries, brands looking to build buzz during the ongoing are taking leadership roles by challenges in Indonesia. The chicken promoting solidary to protect and chain encouraged its Instagram strengthen the overall industry—from followers to select smaller restaurants suppliers to operators to consumers. they enjoy engaging with. KFC will Many of these initiatives build on similar promote the top 20 vote-getters to its efforts we saw during spring. Here are a large Instagram following by calling few recent examples. them out in social posts. Burger King earned praise for its recent And in the Philippines, rivals Jollibee Order from McDonald’s campaign, in and McDonald’s joined several other which the burger giant presented brands to launch the Ingat Angat consumers with a call to visit Tayong Lahat campaign encouraging competitors to keep the industry consumers in the hard-hit market to afloat—even if it meant sending remain vigilant and support the national business to its nemesis. Burger King economy by promoting safety and called out other chains as well, both security so that consumers can shop global and local, and presented its plea confidently and businesses can weather in numerous countries. the storm. Jollibee, McDonald’s and several other brands have banded together to promote consumer safety and the national economy Source: Technomic Global Foodservice Navigator Program Image Source: Jollibee Philippines Facebook

MOST-IMPROVED CHAINS ON COUPON REDEMPTION Q2 VS. Q3 2020

Chain Name Q3 2020 Change Over Q2

Red Lobster 20.8% 14.8% Most-improved chains on coupon redemption California Pizza Kitchen 23.9% 12.6% are split between quick- Jimmy John's Gourmet Sandwiches 16.4% 11.3% service and full-service restaurants Cold Stone Creamery 20.6% 10.9% Chains such as Red Lobster, California Boston Market 34.3% 10.8% Pizza Kitchen and Jimmy John’s increased coupon redemption the most through print coupons, restaurant apps Krispy Kreme 19.3% 10.6% or partnerships with third-party delivery services. Firehouse Subs 15.8% 10.5%

Bahama Breeze Island Grille 54.2% 10.3%

Red Robin Gourmet Burgers 23.5% 8.3%

Waffle House 20.4% 7.2%

Source: Technomic Consumer Visit Tracker

COVID-19 Disruption Index is Change Versus Previous Week and COVID-19 PERCENT PERCENT TOP 5 MOST-DISRUPTED MARKETS powered by Shortest Track, utilizing AI, Month DISRUPTION INDEX CHANGE CHANGE BY INDEX POINT CHANGE machine learning and disparate sets of Change versus previous week/month (MAX: 1.00, HIGH VERSUS VERSUS (VERSUS PREVIOUS WEEK) data resources to quantify the potential allows users to see if the market is DISRUPTION) LAST WEEK LAST MONTH risks that U.S. businesses face from the becoming more or less disrupted over spread of the COVID-19 virus at the time. Changes that are positive (+) market level. show a move toward becoming increasingly more impacted by COVID- 1 Albuquerque, N.M. 0.876 26.08% 21.96% The highest index possible is 1.00, 19 (not good). Changes that are which is not good and reflects markets negative (-) show a trend toward being 2 Santa Fe, N.M. 0.835 26.57% 22.05% that are extremely disrupted. The index less impacted by COVID-19 (good). is updated on a weekly basis. Ignite Subscribers: Download full 3 El Paso, Texas 0.697 23.10% 17.83% The COVID-19 Disruption Risk Index market report shares weekly updates through a 4 Lawrence, Kan. 0.761 19.01% 5.89% business lens, rather than a health lens, and incorporates more than 20 different data signals to measure disruption and 5 Las Cruces, N.M. 0.713 20.27% 16.95% predict future impact. These signals include infection rates, deaths, state- level restrictions and social distancing requirements, population densities and mobility, group size limitations and lifestyle risk factors contributing to spread. More information is available HERE.

Notes: Data updated Nov. 30, 2020 Source: Shortest Track

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