MRM Research Roundup: Mid-April 2019 Edition
25 Min Read By MRM Staff
This edition of Modern Restaurant Management (MRM) magazine's Research Roundup features optimism in the National Restaurant Association's State of the Industry report, how the economy is affecting restaurant staffing and retention, TouchBistro's report on key operational factors that affect profitability for FSR owners and operators, how Brits steal a lot of tableware and if restaurants are keeping up with "selective eaters."
Restaurateurs Express Optimism
The National Restaurant Association released its 2019 State of the Restaurant Industry Report that examines significant forces impacting and shaping the restaurant industry including the economy, workforce, technology, food and menu trends, as well as developments pertaining to tableservice and limited-service restaurants. The report is an authoritative barometer on the industry, collecting and analyzing data from a variety of nationwide surveys among restaurant owners, operators, chefs and consumers.
Key findings surrounding economic conditions include:
- Restaurant industry sales are forecast to reach $863 billion in 2019;
- Approximately half of restaurant operators rate their business as stronger than two years ago; and
- 1.6 million new restaurant jobs are projected to be added by 2029.
When asked about the economy, restaurant operators are generally optimistic about business conditions. Roughly three in four operators gave ratings of 'excellent' or 'good' when asked to assess business conditions in the overall U.S. restaurant industry. However, operators are also acutely aware of competitive pressures, rising labor costs, a tighter labor market, and a complex regulatory landscape that compounds pressure on business performance and revenue.
"The restaurant industry is on a continued growth trajectory, driven by an expanding U.S. economy and positive consumer sentiment," said Dawn Sweeney, President & Chief Executive Officer, National Restaurant Association. "2019 marks the Association's centennial anniversary, and the comprehensive analysis contained in this report provides a firm foundation for restaurant owners and operators to make decisions about the future of their businesses."
Off-premises and delivery options are a 'must have'
Growing demand among consumers will make off-premises options important drivers across the industry in 2019. Thirty-eight percent of U.S. adults—including 50 percent of millennials—indicate they are more likely to have restaurant food delivered than they were two years ago. Other key takeaways surrounding off-premises and delivery include:
- Nearly four in 10 operators plan to invest more capital in expanding their off-premises business in 2019;
- Six in 10 family-dining, casual-dining and fast-casual operators say their takeout sales are higher than they were two years ago.
- A solid majority of casual-dining (72 percent), family-dining (63 percent) and fast-casual operators (64 percent) say their delivery sales are higher than they were two years ago. Fewer than one in 10 say their delivery sales have declined.
Technology will continue to boost business
More than eight in 10 restaurant operators agree that the use of technology in a restaurant provides a competitive advantage, and many are planning to ramp up their investments in technology in 2019. Specific technologies where operators will devote more investment and resources include:
- Front-of-house, customer servicing technologies such as online or app ordering, mobile payment, delivery management and reservations. Seventy percent of quickservice operators plan to invest on these technologies.
- Back-of-house technologies such as point-of-sale, inventory and table management, customer-facing tech devices such as tablets, iPads, tableside ordering and kiosks.
"Consumer demand for greater convenience and speed will continue to accelerate, and restaurants are responding by adopting and incorporating more sophisticated layers of technology into day-to-day operations," said Hudson Riehle, senior vice president, research and knowledge group, National Restaurant Association. "Operators across all restaurant segments will focus on building their business among millennials and younger consumers in the years ahead. To attract these digital natives we can expect the majority of operators to get creative in offering personalized incentives, deals, loyalty programs and rewards through various digital channels."
Additionally, operators plan to tap into technology to reach diners. A majority of operators in each of the industry's six major segments say they plan to devote more resources to both social-media and electronic marketing in 2019. And a majority of operators plan to devote more resources to customer-facing, service-based technology, such as online or app ordering, reservations, mobile payment, or delivery management.
Job growth in restaurants remains positive
According to Association analysis of data from the U.S. Census Bureau's American Community Survey, restaurants have added jobs with annual incomes between $45,000 and $74,999 at a rate more than three times stronger than the overall economy. Between 2010 and 2017, the number of restaurant jobs in this income range jumped 71 percent. In comparison, the total number of jobs in the economy with incomes in this range rose just 21 percent. More than any other industry in the economy, the existence of multiple restaurants in nearly every community gives employees additional opportunities for upward mobility and career growth.
For more information, click here.
Sales Rebound in March
Restaurant sales rebounded solidly during March, proving that February’s stumble was just an anomaly and not a reversal on the industry’s positive sales momentum. Same-store sales growth was 1.2 percent during March, a 1.9 percentage point improvement from last month’s -0.7 percent growth. Excluding February and its extremely bad weather, every month since June of 2018 has posted positive same-store sales. This comes from Black Box Intelligence™ data from TDn2K™, based on weekly sales from over 31,000 locations representing 170+ brands and nearly $72 billion in annual sales. Same-store sales growth was 1.0 percent during the first quarter of the year, the fourth consecutive quarter of positive growth for the industry.
“Chain restaurants have a lot to be optimistic about given these latest results,” said Victor Fernandez, vice president of insights and knowledge for TDn2K. “The sector is going through its longest period of sales expansion for comparable stores since 2015. We have been seeing signs that point toward a longer-term recovery as well. March’s strong sales growth did not come at the expense of a soft comparable month from 2018. Last year March sales grew 0.6 percent. This means same-store sales grew by 1.8 percent when compared with March of 2017. The industry is finally posting consistent positive growth on a two-year basis. Since October, all months have achieved positive two-year sales growth with the exception of February. Before that period, restaurants went through twenty-two consecutive months in which sales were not able to top where they were two years before.”
There are several factors that seem to be impacting this period of expansion. From a macroeconomic standpoint, growth has been encouraging in recent quarters. Tight labor markets have been accelerating wage increases and consumers remain optimistic about their conditions. From an industry perspective, net growth in the number of restaurant locations has slowed in recent years, especially among fast casual and casual dining chains. This has undoubtedly helped mitigate the oversupply problem the industry has experienced for the past decade. In addition, many chains have been embracing and adapting to changing consumer preferences pointing towards off-premise consumption of food as a growing trend and an important source of potential restaurant sales growth. Top performing brands have also recognized there are growth opportunities beyond the traditional lunch and dinner dayparts,” said Fernandez.
Restaurants Still Relying On Larger Checks To Grow Sales, Amid Traffic Decline
As a whole, restaurants have been relying on their guests to spend more than they did a year ago as a key to increasing their same-store sales. Growth in average check was 3.0 percent year over year during March. The pace at which guest checks are growing has also been accelerating year over year. On average, guest checks have grown by 3.0 percent since the fourth quarter of 2018. By comparison, the average was 2.4 percent for the first three quarters of last year. This may be a consequence of accelerating wage growth and a consumer that is relatively more confident and willing to spend.
Average spending per guest is crucial because the number of guests keeps declining for chain restaurants. Same-store traffic was -1.8 percent during March, while traffic growth for the first quarter of 2019 was -2.0 percent.
Limited Service Brands Led Industry in Sales Growth in March, Fine Dining Best in Q1
The strength in restaurant sales was widespread throughout the industry in March. Most industry segments were able to achieve positive same-store sales growth. The best performing segments were those in the limited service category: quick service and fast casual. Both had strong sales growth during the month and the first quarter of the year. Casual dining and upscale casual round up the list of segments with positive sales growth during March.
Only two segments, fine dining and family dining, experienced same-store sales decline in March. However, there may be an explanation for their disappointing results. This year, Easter is in April, and in 2018 the holiday fell on the last week of March. Last year’s results benefited from the jump in sales that Easter brings for these segments, while those incremental sales dollars were not yet accounted for in March of this year. In the case of fine dining, even though the first four weeks of the month had positive sales growth, the downturn due to the holiday shift during the fifth week in March was enough to bring the entire month into negative sales growth. But fine dining concepts shouldn’t worry too much about March’s results; it was the top performing segment based on same-store sales growth during the first quarter of 2019.
Strong Personal Income Growth Expected to Fuel Solid Sales for 2019
The economy continues to expand at a moderate pace and there are indications the deceleration we have experienced over the past year is stabilizing. “Consumer confidence remains high and there was a rebound in vehicle sales, signs that the worst may be behind us,” stated Joel Naroff, president of Naroff Economic Advisors and TDn2K economist. “When it comes to consumption, though, one concern has unexpectedly arisen: wage growth moderated recently. However, the pressures on compensation remain great given the low unemployment rate and the continued solid hiring. Indeed, additional increases in minimum wages have been announced. The likelihood is that the slowdown in income growth was temporary.”
“The outlook is for continued good income growth the rest of the year, which should translate into solid retail sales and restaurant spending. The only risk to this positive outlook is receding world growth. If the trade issues are not resolved soon, the faltering global expansion would restrain U.S. growth. However, the expectation is that an acceptable trade agreement with China will be announced, removing the greatest risk to U.S. growth.”
Favorable Economy Keeps Hurting Restaurant Labor Market
Favorable economic conditions may have translated into growing sales for restaurants, but they have also created a labor market in which it is increasingly difficult to keep those restaurants staffed to support those growing sales. According to People Report™ data from TDn2K published through the Workforce Index, 50 percent of restaurant companies expressed increased difficulty in finding and hiring qualified hourly employees during the first quarter of 2019 compared with the previous quarter. 51 percent of companies reported increased difficulty in finding qualified managers. “It is important to keep in mind these recruiting difficulty numbers are compounding rapidly. The percentage of companies reporting increased challenges hiring employees and managers has been as high as 70 percent in recent quarters. So what most restaurants are really saying is, it’s getting harder to find enough qualified employees today compared with the previous quarter, even though it was pretty hard to find them back then too,” explained Fernandez.
One of the key factors behind these rising staffing difficulties is the industry’s need to constantly replace so many of its employees due to historically high turnover rates. Rolling 12-month turnover rates increased once again for restaurant managers and hourly employees during February, according to People Report’s latest numbers.
Fernandez concluded, “The importance of service cannot be overstated as a key differentiating factor for top performing restaurant brands per ongoing TDn2K analysis. We constantly see a strong pattern in which adequate staffing enables a service experience that translates into improved sales and traffic.”
TouchBistro's State of Full Service Restaurants
A research report published by TouchBistro on “The State of Full Service Restaurants in 2019” highlights benchmarks on key operational factors that affect profitability for FSR restaurant owners in the U.S. The benchmarks cover adoption of online ordering and mobile payments; staffing challenges, how to find and entice new hires, optimum employee qualities; inventory management and controlling food costs; cost of rent by geographical location and as a percent of sales; funding sources for opening a restaurant and unexpected expenses; POS and payment processor choices and utilization; and average profit margins.
While the complete report “The State of Full Service Restaurants in 2019” is available for free download, following are findings of interest:
The report highlights the financial health of FSRs, noting that most have a healthy profit margin of 11 percent.
When it comes to managing costs, 58 percent of restaurateurs have challenges with managing their inventory, and most end up ordering higher quantities than required.
For the majority of restaurants surveyed, rent ranges from five to 10 percent of monthly sales.
Only half of those surveyed use reports from their POS systems to make decisions about employee scheduling, yet 70 percent experience labor shortages.
A significant number of restaurateurs (80 percent) are frustrated with their payment processors, citing a lack of pricing transparency as the primary concern.
FSRs that have implemented online ordering, using services such as Grubhub (41 percent), Uber Eats (39 percent), and DoorDash (32 percent), have seen an impressive increase in sales ranging from 11 to 20 percent.
Restaurants are diversifying the payment methods accepted, increasingly taking mobile payments like Apple Pay, Google Pay, and Samsung Pay, with 18 percent set up to accept all three.
“Restaurant operators today have access to a wide variety of technology solutions designed to enable more efficient service delivery. However, there is complexity in figuring out which technologies to select for marketing, cost analysis, managing staff, or all the other day-to-day operations,” says Alex Barrotti, founder and CEO of TouchBistro. “Some of the best advice restaurateurs receive today comes from other operators that have faced similar challenges. This survey enabled us to capture important feedback from restaurateurs around the U.S. and develop benchmarks that operators can use to make decisions about practices and technologies to implement that bring in more customers, drive loyalty, and increase profitability.”
The study was conducted by research firm Maru Matchbox on behalf of TouchBistro in December 2018. Over 500 FSR owners, managers, and presidents/CEOs from across all US states were interviewed, with a strong focus on six major cities: New York City, Chicago, Los Angeles, Miami, Austin, and San Antonio. Two-thirds of the restaurateurs interviewed have five years or more experience in a senior management role, 95 percent work at restaurants with greater than 20 seats, and 41 percent work at restaurants with 41-80 seats.
Yext Study: 85 percent of Food and Hospitality Brands Say They Have Improvements To Make In Reputation Management
Yext, Inc. published new research on the digital maturity of the food and hospitality sector as part of its Brand Control in the Age of AI study conducted in partnership with Vanson Bourne, an independent research group. Brand Control in the Age of AI surveyed 400 marketing decision-makers from organizations across the United States, including 100 food and hospitality marketers. As customers interact with — and review — brands across a growing number of third-party sites, reputation management is the key area of focus for this group, with 66 percent planning to focus on "collecting customer feedback" and 51 percent planning to enhance their ability to monitor and respond to online reviews.
"Our research shows that an overwhelming majority of food and hospitality brands know they're not doing enough when it comes to managing their brands online," said Marc Ferrentino, Chief Strategy Officer at Yext. "We saw that 85 percent of these brands know they have improvements to make in reputation management, and 89 percent — more than any other industry we looked at — know that improving their listings is crucial to increasing their sales. There's a growing recognition that these touchpoints with customers across search are critical to the bottom line."
"As the ways consumers look for places to eat and stay change, so are the strategies that businesses need to use to reach and engage with these potential customers," said Lee Zucker, Head of Industry, Food Services & Hospitality at Yext. "Food and hospitality businesses are ahead of the curve in recognizing this, with 74 percent of those who see the need to improve their marketing strategy saying that enhancing the way they manage their brand online will increase customer loyalty."
Reputation management strategies will increase revenue and customer satisfaction
Brand reputation depends on delivering a great customer experience in every interaction a consumer has with a brand. But in today's digital world, these interactions are occurring across dozens of touchpoints and channels, making reputation management a greater challenge — and a greater opportunity — than ever before. Additionally, in the food and hospitality sector in particular, diverse review sites (Google, TripAdvisor, Yelp, and many more) impact discoverability and online bookings. The study indicates that hospitality marketers are aware of this, and are prioritizing strategies for streamlining the customer experience and monitoring reviews across sites.
- 85 percent of respondents believe that they need to make improvements in local reputation management. This will help them to better understand feedback and craft a better customer experience across touchpoints.
- 37 percent report that the improvements needed are "significant."
- 66 percent of respondents plan to focus on "collecting customer feedback," and 51 percent plan to enhance their ability to monitor and respond to online reviews.
- Overall, 74 percent of respondents who believe that there are areas of their organization's marketing strategy that need to be improved report that they would see an increase in customer loyalty as a result. Furthermore, many cite benefits such as increased sales/revenues (64 percent) and increased customer satisfaction (59 percent).
Improving web listings set to increase online sales
- With consumers finding and interacting with retailers across third-party sites like Google, Yelp, and more, listings management is key to facilitating discovery. Many hospitality marketers cite improving efficiency in this area as a key concern.
- Almost nine in ten (89 percent) hospitality respondents, the largest proportion of any sector, agree that improving their web listings is crucial for their organization if they are to increase sales
- Around half (49 percent) report that their organization is focusing on claiming and managing online listings on search engines, maps, apps, and directories as part of their brand management strategy
Local landing pages see progress — but can still use improvement
Consumers expect the answers they see in search results to be relevant to their context and location, and it's essential for brands to ensure that the public facts about their business are available in local search results. The study indicates that hospitality marketers may be ahead of other verticals here: When it comes to making physical locations stand out in local search, hospitality respondents are the most likely (10 percent) of any to report that their organization uses the most mature approach.
But 10 percent isn't a high figure, and respondents agree that there is room for improvement when it comes to optimizing local landing pages to rank in local search results at key moments of intent.
- 83 percent of respondents agree that local landing pages are an important part of attracting new customers, and this appreciation is further demonstrated through such sizeable proportions focusing on landing page related areas as part of their brand management strategy.
- 40 percent of respondents report that their organization is focusing on promoting local and corporate events online, while 34 percent cite building landing pages for their locations and/or professionals as a focus area in 2019 and beyond.
Food Industry Distrust
Almost half of consumers who regularly buy food for their households don’t trust the food industry to do the right thing, and nearly one-fourth actively distrust it, according to researchers who have studied consumer trust in food since 2012.
While this level of distrust among food consumers is disconcerting, the food industry has made progress in building trust and there are opportunities to keep that momentum, according to FoodThink from Signal Theory, a Kansas City-based brand development, marketing and design firm. Signal Theory released “Creating Trust in an Era of Skepticism,” a white paper showing that consumer trust continues to be a vital issue in the food industry.
Slightly more than half (52 percent) of consumers say they trust the overall food industry to do the right thing, and less than half of consumers say they trust seven of 10 food categories. Signal Theory regularly gauges and monitors Americans’ food industry knowledge, trust and attitudes, and publishes findings in FoodThink blogs and white papers.
The new research gauges the trustworthiness of food companies and institutions, various grocery categories and sources of food information. It uses the data to identify areas of opportunity and suggests ways for food marketers to build trust. Topics include factors that build or erode trust and consumer trends that drive trust issues.
“To build trust and resulting customer loyalty, food marketers need to understand consumer perceptions of food producers, brands and information sources, and how to improve those perceptions,” says Signal Theory Brand Strategy Director Erika Chance. “The good news is consumers’ growing hunger for information about the food they eat presents opportunities to build trust.”
To determine useful building blocks of trust, Signal Theory researchers analyzed attributes that make brands trustworthy and patterns among these attributes. Purpose, Authenticity, Competency and Transparency (PACT) emerged as the foundational elements for building trust. The PACT model is grounded in social and cultural theory and is evident across all of Signal Theory’s previous trust-in-food research.
“We statistically identified four primary constructs consumers use to determine a brand’s trustworthiness,” says Signal Theory Associate Data Insights Director Kelcey Curtis. “Among those four constructs, we gained critical insights into what consumers find important when choosing whether or not to trust a brand.”
Consumer trust begins with competency in delivering products and services that meet customer expectations, the study found. Brands with a clearly articulated purpose beyond profits are more trusted by consumers, and brands that authentically support that purpose in thought, word and deed establish integrity and consumer connections that run deeper than those based solely on transactions. Finally, transparency is a powerful tool in moving a brand from functional trust in its products to emotional trust that the brand truly has its customers’ best interests at heart.
The latest FoodThink study is built on proprietary research conducted in 2018, including responses from more than 2,000 U.S. consumers of census-representative demographic backgrounds. It is the fourth in a series of longitudinal studies that track consumer trust-in-food and related issues.
Download a free copy of the white paper with key implications for food marketers here.
Brits Swipe £186 million Worth of Tableware
It seems England may be a nation of kleptomaniacs as new research has revealed that 17m have stolen tableware – glasses, cups, napkins, cutlery, condiments – in their homes. Catering equipment supplier Nisbets uncovered the staggering results following a survey of Brits, in which they were asked about their attitudes towards stealing such items from bars and restaurants.
Many are only too happy to fill our cupboards and drawers with items picked up from eating and drinking establishments, with 3m of us admitting that every single item of crockery, glassware, cutlery and soft tableware (napkins and tablecloths) in our home is stolen. One in three of us (36 percent) have at least one or two stolen cups/glasses and one in 10 (9.6 percent) have one or two pieces of stolen cutlery.
18-24-year-olds are the biggest offenders with more than a third (34 percent) admitting to having done so and 26 percent have at least one or two stolen items in their home. The 25-35-year olds are not far behind at 31 percent and 45-54s at 28 percent. 54+ are the most likely to steal condiments with 30 percent often swiping sachets and bottles.
When it comes to the frequency of how often people steal, a shocking 4m do so more than once a week. Sheffield is the worst when it comes to how often people steal with 17 percent admitting to pocketing something more than once a week.
90 percent of people in Bristol say they have never stolen tableware. In contrast, every single person surveyed in Belfast admitted they have at least one or two stolen cups/glasses in their home, along with 89 percent of Leeds and 80 percent of Edinburgh.
Biggest tableware thieves by city:
Cardiff – 36 percent
Southampton – 35 percent
London – 33 percent
Liverpool – 32 percent
Newcastle – 27 percent
It’s not only stolen tableware that costs businesses money, broken plates and glasses accounts for around £2,000 in lost revenue per business per year (average 10 glasses and two plates per week)
David Di Gioacchino, Marketing Campaign Manager at Nisbets, said “Giving your customers an unforgettable experience is a double-edged sword – sometimes they’re so impressed, they clearly want to take a bit of that experience home with them. While it’s certainly a compliment, it can quickly leave businesses understocked on the essentials, not to mention out of pocket. That’s why we recommend they stock up on their most popular – and most pilfered! – items in advance. To support local establishments, we’d suggest you don’t assume the cup comes with the coffee."
Clean Cooking Snapshot
The Clean Cooking Alliance released its 2019 Clean Cooking Industry Snapshot, a first-of-its-kind publication that highlights investment and business model innovation in the clean cooking sector. The Snapshot, launched today at the Dutch Ministry of Foreign Affairs’ “Accelerating Toward SDG7” event, gauges progress toward a sustainable and inclusive clean cooking industry, based on investment, operational, and financial performance data provided by more than 40 companies.
“Despite a multi-billion-dollar funding gap that continues to hinder growth, the clean cooking sector has come a long way since the Alliance was founded in 2010,” said Dymphna van der Lans, CEO of the Alliance. “Innovation and private sector investment are driving the industry forward, with a growing number of scalable business models capable of meeting the cooking energy needs of developing markets.”
The Snapshot identifies a number of emerging trends that illuminate progress toward a private sector-led industry that delivers affordable, appropriate, high-quality clean cooking products. Innovative business models, including those that integrate fuel sales and pay-as-you-go solutions, have the potential to meet consumer needs while also producing positive health, climate, environment, and social impacts. Investment in the sector has increased but remains inadequate; this applies both to seed-stage and mature companies, as well as across the spectrum of investment instruments, including debt, equity, concessional funding for technical assistance, and de-risking tools. In 2017, financing for clean cooking companies totaled about one percent of the USD 4 billion required to achieve universal access by 2030 – just one cent for every dollar needed.
“As the Industry Snapshot shows, there is increased momentum toward more coherent and intentional efforts to first prove, then scale, high-impact solutions through high-growth business models. Public-private partnerships that utilize both concessional and commercial capital are critical,” said Peter George, Senior Director for Private Sector & Investment at the Alliance. “As you would expect, we are seeing the majority of impact investment and development finance flowing to businesses with the most experienced management teams and business models that demonstrate the greatest potential for growth and profitability, in addition to impact.”
The Snapshot also notes the importance of government policy in supporting or inhibiting the growth of clean cooking solutions – in particular taxes and tariffs, quality standards and labeling initiatives, and financial incentives including subsidies. Kenya is highlighted as a historical leader in this area, contributing to East Africa’s position as a hub for investment and social enterprise innovation. Thanks in part to earlier enabling policies and conditions, 12 companies headquartered in East Africa attracted more than 50 percent of the total investment tracked in the Snapshot.
Event Tickets Industry Revealed as the Most In-demand E-commerce Sector
Indonesia and Mexico found to be the fastest rising nations for e-commerce growth
Interest in online restaurant deliveries sector growing fastest, but online Alcohol has biggest increase in revenue
More e-commerce startups in Health industry than any other with $4.5 billion average valuation
The realm of e-commerce grows more and more with every passing year, with investors and entrepreneurs around the world cashing in on an array of products and industries. As the market begins to flood, where does opportunity sit in 2019? Which countries and industries are advancing quickest in terms of e-commerce revenue and interest?
Card and merchant account comparison service Merchant Machine have gone in-depth to seek out the nations and industries where e-commerce has become saturated, and where gaps in the market still exist. Some of our key findings include:
Rising E-commerce Nations
Widespread advancements in technology have helped to bring many countries into the online world. We’ve highlighted the top 10 in terms of overall e-commerce growth and the most popular sectors within each nation.
Indonesia – With an online population of over 100 million people, it’s no surprise to see Indonesia feature on the list. Last year they recorded growth of 78 percent with travel and clothing as their dominant sectors for spending.
Mexico – For years Mexico has been seen as a burgeoning powerhouse in the online sphere and with $16.22 billion in e-commerce spending and 59 percent overall growth, it appears they’re only continuing this remarkable growth.
Philippines – The 2nd of 3 Southeast Asian countries in the top 10, the Philippines has also seen significant movements in their e-commerce industries. The consumer electronics and clothes retail sectors have been the biggest contributors to their 51 percent growth. Other notable countries that have found themselves in this year's top 10 are South America’s Colombia, as well as the UAE, Vietnam, Saudi Arabia, Israel, India and China.
As well as being able to determine the sectors that contribute the most to e-commerce economies, we also found the fastest rising industries. From this, we looked at the number of startups and investors on the angel.co database to find the industries worth keeping an eye on.
Money in Medicine – In our research, the number of investors (13,559) were outranked by the startups that exist in the sector (21,072), illustrating a potential gap in the market for investment.
Ticket to the Top – For every ‘Event Ticket’ e-commerce startup there are over 32 investors, making it the most in-demand industry in our research, from the view of the backer
Play the Game – The ‘Video Game’ industry has thrived in recent years, and with over 9 investors for every startup, it ranks as the 2nd highest in terms of demand.
Supply and (Search) Demand
Businesses are often founded solely on their demand, so we’ve compared the growth of internet searches with revenue to measure any correlation.
The Rise of Restaurant Delivery – Out of all those we analysed, the restaurant delivery industry has endured the highest increase in Google searches in the last year. With 95 percent more searches this year, the industry has also enjoyed a revenue increase of 15 percent.
Alcohol Anomaly – The Alcohol e-commerce sector has seen a moderate increase in Google searches this year 22 percent which is outdone by a sizeable spike in revenue (32 percent).To explore how different e-commerce markets such as pets, travel and personal care have behaved in the last year, then you can see the full infographic here.
MBLM's Brand Intimacy
The hospitality & theme parks industry ranked 12th out of the 15 studied in MBLM’s Brand Intimacy 2019 Study, which is the largest study of brands based on emotions, falling two spots since 2018. Disney Parks dominated the industry, followed by Hilton and Universal Theme Parks. The remaining brands in the Top 10 for the hospitality & theme parks industry were: Marriott, Four Seasons, Holiday Inn, Ritz Carlton, Hyatt, Sheraton and Days Inn.
Brand Intimacy is defined as the emotional science that measures the bonds we form with the brands we use and love. Top intimate brands in the U.S. continued to significantly outperform the top brands in the Fortune 500 and S&P indices in both revenue and profit over the past 10 years, according to the Brand Intimacy 2019 Study.
“Beyond theme parks, the industry continues to struggle to build strong emotional connections with consumers,” stated Mario Natarelli, managing partner, MBLM. “Disney Parks is an example of a brand that works to create emotional bonds beyond the commoditized approach many take today, focusing on the experiential, affinity programs and amenities. We firmly believe the industry is underperforming and has an opportunity to leverage strategies and tactics around building stronger bonds with customers to increase its Brand Intimacy.”
Other significant hospitality & theme parks industry findings include:
- The gap between the #1 and #2 brand in the industry was larger than in any other: Disney Parks had a Brand Intimacy Quotient of 58.4, while Hilton’s score was 34.2
- Disney Parks was the #1 brand for both women and men
- Disney Parks was also #1 for millennials, users over 35, and users with incomes both under and over $100,000
In addition to the findings, MBLM released an article examining why Disney Parks performed so well in its study. The piece, “Making Sense of the Magic of Disney Parks,” explores Disney Parks’ tie to the #1 overall brand, Disney, and how Disney Parks is able to appeal across age groups and gender to create strong bonds.
The Brand Intimacy 2019 Study contains the most comprehensive rankings of brands based on emotion, analyzing the responses of 6,200 consumers and 56,000 brand evaluations across 15 industries in the U.S., Mexico and UAE. MBLM’s reports and interactive Data Dashboard, which features a brand ranking tool, showcase the performance of almost 400 brands, revealing the characteristics and intensity of the consumer bonds. To download the full Brand Intimacy 2019 Study or explore the Data Dashboard click here.
Dining Out Habits of Selective Eaters
Caterer.com, the UK’s largest hospitality jobs board, surveyed over 2,000 ‘selective eaters’ in the UK about their dining out habits. Far from being a burden, the new wave of ‘selective eaters’ represents a potential £9bn lucrative boon for UK restaurants.
Far from just being a foodie fad, selective eating trends such as veganism show signs that it’s well and truly here to stay, with nearly half (47 percent) having followed such diets for over ten years. In fact, only 16 percent of selective eaters have picked up their new diet in the past two years.
Selective eaters don’t seem to bother their fellow dining companions either, with only 8 percent of those without dietary restrictions having avoided inviting those with dietary requirements out for dinner.
With as many as 4 in 5 selective eaters dining out at least once a month, and a further 60 percent willing to double down on dining out to restaurants that go the extra mile, the potential financial benefits for savvy restaurateurs are huge.
While many restaurants have been quick to move in the right direction, three in five selective eaters feel there’s plenty that can help them make even safer decisions about where to eat. With just under half (47 percent) of selective diners worrying about a mistake with their meal, it’s clear restaurants need to be able to reassure customers as much as possible.
Having allergen aware staff (49 percent), flexible substitutions (43 percent) and making sure allergens are listed on menus (43 percent) are all suggestions selective eaters think restaurants should be able to have in place to point hungry diners in the right direction.
You can find the full report here.
China's Coffee Market
China’s on-premise coffee sector has experienced strong growth in recent years, and, according to Mintel, consumers’ love of coffee has seen the overall market value reach an estimated RMB64.7 billion in 2018, growing an impressive 7.5 percent from 2017. This compares to a 6 percent growth between 2016-17. While Chinese consumers enjoy their out-of-home coffee, Mintel estimates that the total market value of China’s on-premise coffee sector will grow at a slower CAGR (compound annual growth rate) of 6 percent between 2019-23.
And although sales by value are thriving, Mintel estimates that the number of on-premise coffee house outlets experienced a growth rate of -2 percent from 2017-18 due to the fact that the speed of new store openings is slower than that of stores closing down. However, this gap is narrowing with the decline easing from -4.4 percent in 2016-17. Looking ahead, the market will see positive volume growth in the next two years, growing 0.6 percent between 2018-19, and a further 1.2 percent between 2019-20 to reach an estimated 74,000 coffee houses by 2020.
Belle Wang, Associate Food and Drink Research Analyst at Mintel, said “Like many industries across China, the on-premise coffee market is not immune to the influence of ‘new retail’. The quick expansion of new retail coffee businesses across the country has stimulated more coffee consumption among consumers, resulting in strong sales volume. With the growing momentum of new retail coffee shops, and an increasing number of international and domestic brands entering the market, consumers today have more options when it comes to coffee. As such, the industry will see positive growth rates over the next two years. However, this growth will slow down, largely due to Chinese consumers’ traditional behaviour of drinking tea and the country’s thriving tea shops.”
Convenient stores vs traditional coffee houses
When it comes to choosing where to get their caffeine fix, more consumers today are purchasing coffee from convenience stores than traditional coffee house chains. Indeed, Mintel research reveals that 52 percent of Chinese consumers* buy coffee at convenience stores compared to just 44 percent who purchase it from a traditional coffee house chain. Shining the spotlight on heavy coffee users**, one in ten (10 percent) drink their coffee at convenience stores as compared to 5 percent who do so at traditional chained coffee houses.
Meanwhile, around one quarter (23 percent) of consumers who drink on-premise coffee at least once a month have done so at new retail coffee houses.
“Our research shows that more on-premise coffee users get their coffee from convenience stores than from traditional chain coffee houses. This is perhaps due to Chinese consumers associating convenience stores with a full range of breakfast options. Convenience stores are also viewed as easily accessible and more affordable. Given this upward trend, other coffee vendors could introduce unique features, like providing various food and coffee pairings, in order to compete.”
“While new retail coffee is experiencing a lot of growth at the moment, consumer engagement remains low—partially because they are still relatively new. However, there is an opportunity for new retail coffee houses to catch up in terms of popularity by offering aggressive discounts and delivery service. That being said, big discounts alone will not be sufficient, as discounting is neither the best nor a sustainable strategy for a long-term business plan. There needs to be other merits such as offering healthy mix-and-match meal deals.” Wang continued.
Latte is the top choice for consumers
Finally, Mintel research reveals the nation’s favourite coffee beverages: more than half of on-premise coffee consumers order lattes (54 percent) or cappuccinos (52 percent). These are followed by mocha (45 percent), Americano (38 percent), flavoured coffee (36 percent), espresso (26 percent) and cold brew coffee (23 percent). A relatively new concept in the Chinese coffee scene, just over one in five (22 percent) on-premise coffee consumers say they order coffee mixed with plant protein milk.
“Lattes and cappuccinos are the most popular drinks in coffee houses as they are generally very palatable due to their creamy texture and rich dairy flavour. Furthermore, as they are usually widely available, they are often a first step into coffee appreciation. Once consumers fully appreciate these basic beverages, they are more likely to try non-milk based drinks, like an Americano or cold brew coffee. However, only offering basic coffee selections makes it difficult to stand out in the homogenous coffee marketplace and attract more coffee consumers. As such, coffee houses can take inspiration from tea shop drinks by making their offerings more visually appealing and ‘instagramable’ in order to draw attention and pique consumer interest.” Belle concluded.
Food Service Wage Inflation
Harri released its 2019 Hospitality and Food Service Wage Inflation Survey. These survey results represent a wide range of restaurant operators from approximately 4,000 restaurants and over 112,000 employees across the U.S.
Central to the report is analyzing the impact that new minimum wage legislation, enacted by states across the U.S., is having on the restaurant industry, and how operators responded to these new laws. Of operators that underwent minimum wage hikes:
- 45 percent experienced labor costs rise from three to nine percent;
- Over one-quarter (26 percent) saw labor increase from nine to 15 percent; and
- 12 percent had labor costs increase by more than 15 percent.
“Restaurants and hospitality organizations across the country are facing unprecedented challenges in maintaining the economic integrity of their business. Since nearly 50 percent of states imposed changes to the minimum wage policy on January 1st, 2019, markets like New York have been driven into a recession-like environment,” said Luke Fryer, Founder and CEO, Harri. “These findings reveal an alarming industry snapshot as many operators are forced to make lose-lose decisions, including reducing employee hours and even eliminating jobs altogether. Ironically, the legislation that was intended to improve employee conditions in the hospitality industry is having a direct, adverse effect.”
To combat increased in labor costs, the report found that:
- Almost two-thirds (64 percent) reduced employee hours
- 43 percent eliminated jobs
- Nine percent closed locations
- 71 percent of operators raised menu prices
- Almost half (46 percent) reworked food and beverage offerings to reduce costs
- 87 percent granted wage increase to non-minimum wage employees to maintain the delta between minimum wage-earning employees and the rest of their workforce
- 23 percent did not make any changes
“In a people centric-industry that so heavily relies on its employees to drive sales and customer satisfaction, wage inflation pressures are forcing operators to make harmful, short-sighted decisions to offset rising labor costs,” said Luke Fryer, Founder and CEO, Harri. “Whilst we’re an advocate of a steady and incremental rise in the minimum wage, it needs to be at a velocity that enables operators to take the right approach and adjust strategically. Instead, the unstoppable onslaught of employee-related challenges are only making our mission more critical than ever to deliver operators tangible, comprehensive solutions to discover labor cost-efficiency, fuel profitability, and drive business performance through employee performance.”