1 The Rapid Growth of the Hybrid Market-Restaurant. There has been aclear line between the out-of-home meal purchased at a restaurantand the in-home meal prepared from food purchased in a market.Many people over the past decade, including me, have observedthe slow melding of restaurants and supermarkets as preparedmeals became available in places such as Tesco, Migros, and evenAldi. A new trend, the emergence of convenience markets withboth restaurant and supermarket products is a greater challenge forboth traditional food distribution channels.For many years in the United States and Europe, basically low pricedon-the-go items were available at petrol stations and conveniencestores, but they were not truly a threat to the more traditional andclearly defined restaurants or food stores nearby. But that is chang-ing, changing quickly, and it is a trend that will not be reversedsoon. The most visible example globally is the high-end market/restaurant chain, Eataly, with restaurants opened or planned for ma-jor cities worldwide. Restaurants, from quickservice to fine dining,are all going to be effected by this trend as choices for meals andsnacks expand. Supermarkets will be impacted as well, especiallyfor high-end specialty products and low end impulse purchases.Globally, the leading brand in the convenience segment is 7-Eleven,which will soon have more than 50,000 stores around the world,only 10,000 of which are in North America, most serving gourmetcoffees and freshly made meals. The new Marks & Spencer ‘multi-channel + convenience’ concept in Amsterdam has more than 1,400food offerings, both prepared groceries and fresh food. One lead-

Special: Anuga – Industry Outlook 2013+

As operators we all want to be able to‘look around the corner’. We hope to

see what fabulous new thing needs to begrabbed before it passes us by or whathorrible is coming at us that we should

avoid at all costs. We all want just a littleedge, a touch of insight, a whisper tell-

ing us which way the wind will blow. Ofcourse, that is a fool’s errand. No one hasever truly predicted the future, at least not

at the micro-level. What we are able to dois to look at larger long term movements

which suggest what people will do to makesense of their lives.

Prof Christopher C. Muller evaluates five‘mega-trends’ (three of which represent a

paradox of conflicting but complementaryactions) which will have such an impact.

www.bu.edu/hospitality

Why We Need toMove Faster

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ing US company calls their new in-store model a ‘ConvenienceRestaurant’ with meals prepared to order from both fresh and com-missary foods. Pricing at all of these options is very aggressive.In the United States the steady growth of restaurant sales at theexpense of supermarkets, passing 50% of the food dollar by 2006,came to a halt with the economic recession in 2009. Now super-markets are clearly gaining back their lost market share with res-taurants only claiming 47% of the food dollar in 2013. This trendis mirrored in other economies as well. Consumers are attracted tothe price, quality, selection and convenience of finding prepared,hot and ready to eat offerings in the supermarket without having tobe committed to a restaurant service experience.Now though, consumers are just as likely to find all of those attri-butes in quality products at the corner convenience store. Hot, tastymeals, served in clean and comfortable settings at very affordableprices are clearly a recipe for growth.

What this means for foodservice: Competition for the daily consumer-spend on meals has always been intense. Now, a third category ofcompetitor, the hybrid convenience market, offers restaurant qual-ity meals in an attractive setting. This is a challenge which mustbe met, especially for restaurant companies involved in take-out,delivery and hand-held food.Restaurant companies will need to respond to this threat by beinginnovative, whether in creating counter offers, blending their own

Science ❘❙

Special: Anuga – Industry Outlook 2013+

Christopher C.Muller, Ph. D.,Professor of thePractice at BostonUniversity’sSchool of Hospital-ity Administration,is the world’sleading thinkerand teacher in thefield of ‘Success-ful Multi-UnitRestaurantManagement’.He has publishedseveral books onthis subject andgives lecturesthroughout theworld.

food into a market setting, or redesigning existing spaces to matchchanging consumer demand.

2 Simultaneous Global + Tribal Perspectives. Both the developed andthe developing world economies are now intimately connectedby wireless telecommunications. It is predicted that by 2015 therewill be more smartphones, tablets and other mobile devices thanhuman beings around the globe. The Internet, which became just20 years old on April 30, 2013, now links the entire world togetherthrough a few key strokes. That is the ‘global’ perspective whichis now available to billions of people.Just like you and your customers, every day I send and receiveemails across continents and time zones, send SMS text messageswithout caring where the reader is located, talk on Skype, followTwitter, send Instagram pictures, read news reports and watchYouTube videos from anywhere at any time. We are the WorldWide Web, overnight citizens in a global community. Togetherwe are now experts on cuisines from Bangkok, Addis Ababa, NewOrleans and Marrakesh. If chef Claus Meyer meets his goal, La Pazin Bolivia will be next. Look in your pantry or outside your frontdoor, what kind of meal will you have today: Pad Thai, FettucciniPrimavera, Maki Sushi, Fish and Chips, or a Cheeseburger?

Yet at the same time, we are more tribal and insulated in our think-ing than ever before. The instantaneous communication availableto us means that we now connect more with the people we knowpersonally than with those who are just beyond our reach. Counterto predictions of a global village, the ‘us-them’ barriers of personalprotection are thicker, the need to trust our truly intimate friendsstronger today than 20 years ago when the Internet entered ourlives. We create friends on Facebook, followers on Twitter, con-nections on LinkedIn, and contacts on our iPads. We have an ex-panded group of people in our new interlocking families and tribeswho we connect with often, but we spend less time interactingdirectly with people who are not in our tightening socio-economicworld. We live in isolated neighborhoods with people who shareour income, education, racial, age and political characteristics. Weattend business conferences with others who share similar pro-files (and we read the same periodicals and books). We watch tele-vision programs targeted to our particular demographic cohort.And as Bob O’Brien of NPD has pointed out, no matter where wecome from or now live, on a daily basis we prefer to eat the food ofour native culture. This is the ‘tribal’ perspective we are cloakingourselves in.

The meaning for foodservice: The paradox is summed up by thisphrase: “Now I know people from everywhere, but I only trustthose who are like me.” This means business leaders must be ableto offer expanding experience-based menus that combine theexotic with the everyday, the new with the old, while offering asafe global view from the comfort of the local table. Success in

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Five Complex Trends1 Rise of Hybrid Market-Restaurants2 Global + Tribal Perspectives3 Cashless Is Cool/Cash Is King4 The End of Trade Secrets5 Urbanism, Aging and the Single

Household

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❚ “We are the World Wide Web, overnightcitizens in a global community.”

the future will come from enhancing guest inclusion in a brandedrestaurant’s self-defined tribe. “I go there because it is really cut-ting edge, and all my friends go there, too.”

3 Cashless is Cool/Cash is King. Just as consumers want to be global intheir perspective and tribal in their viewpoint, many are beginningto feel both liberated and lost in a digital economic system that isbecoming instantaneous and ubiquitous but also impersonal andintrusive. The technology which offers us the convenience to godigital with our banking and payment options is being embracedaround the world (as our smartphone is fast becoming our wallet).The ability to electronically manage everything with a swipe ofour iPhone, from our airline boarding passes to the chewing gum atthe airport kiosk, is no longer unusual; in many cases it is expected.At the same time this new system of exchange is expanding we arealso voluntarily surrendering more and more personal informationabout our purchase behaviors, collectively what is now called ‘BigData.’ We all know that Google and Amazon have extensive al-gorithms tracking even our simple product inquiries, let alone theactual purchases we make. The same is true of our credit and bankdebit cards or our PayPal and other secure on-line transactions.

In contrast, historically the restaurant industry has long been con-sidered part of the secret ‘grey economy’ because of the high re-liance on cash transactions at all levels of the industry. While inmany markets this is still the case, more and more customers aremigrating to the convenience of a digital cashless payment pro-tocol. In the United States many restaurants now see greater than90% of transactions being electronic settlements.Now, a paradox is beginning to be observed as two contrarianviews meld into a counter-trend. The first is the change in per-ception, especially among the Millennial Generation, surroundingthe invasiveness of big data into consumers’ personal lives. Thesecond is driven by the continuing stagnant economies in manymarkets, where unemployment is rampant (especially effecting adisplaced, male and middle aged cohort). For both groups, peopleare rediscovering time-honored ways to carve out a loose meansto support themselves, specifically by joining the low barrier-to-entry world of foodservice. These two groups of people, thoseseeking to leave minimal digital footprints and those who havefallen off the economic grid, have come to realize that using cashfor their transactions gives them freedom and control. This ‘cashis king’ mindset also appeals to consumers in the mainstream whoare starting to consider ways to remain anonymous with the use ofcash, and especially to consumers who are seeking to keep a retroor anti-establishment profile.

The meaning for foodservice: As in all paradoxical market situations,this one presents both opportunity and threats. Corporate restaur-ant companies will benefit tremendously from guests who findit more convenient to make purchases without needing to worry

about having cash. The use of electronic funds transfers, on asmartphone or at a restaurant table, will improve sales whetherfor the online ordering for delivery of a pizza or in the postponedpurchase at the highest levels of three-star cuisine.At the same time pop-up restaurants, mobile trucks and street foodconcepts will hurt mainstream bricks and mortar establishments.Large companies can establish credibility with a disenfranchiseddemographic by focusing on the ‘cash is king’ no-credit counter-culture movement. Pubs, gastropubs, entertainment venues andother locally based restaurants can leverage the informality of acash-only environment, even at the loss of consumer convenience.

4 The End of Trade Secrets, Welcome to a Wikileaks World. The informationage has, as noted, been very rapid in reaching the restaurant mar-ket, with many benefits and unanticipated costs. Before the wide-spread use of the Internet, senior managers could expect a reason-able level of control over their intellectual property; what wasoften termed their trade secrets. Each company had its own systemof operating, including proprietary manuals, policies and proce-dures. It would have required a concerted effort by a competitor toacquire this information, whether it was simply making purloinedphotocopies of management forms or as complex as a competitorhiring a senior executive with knowledge of those systems andpolicies.Historically restaurants have had a difficult time protecting theirintellectual property. Stories abound of legendary chefs offering aguest the recipe for Tonight’s Special but leaving a crucial ingre-dient out, or of the chef/patron who banned prep cooks from thekitchen while he was seasoning the Lobster Bisque. Legend saysthat only a limited number of people have ever known the full listin KFC’s ‘eleven herbs and spices’ original batter or the flavorrecipe for Coca-Cola.But in an early restaurant brand valuation legal case, the judgeasked senior managers if employees were given copies of trainingmaterials which they could study at home. When it was admittedthat they were, and that those original copies were not returnedlater, the materials were declared in the public domain and no lon-ger protected. The same held true for any design elements thatwere publicly in view, or recipes that could be replicated by taste.Today, the Internet, firmly in the age of Wikileaks and vast on-

❙❘ Science

❚ “Success in the future will come fromenhancing guest inclusion in a brandedrestaurant’s self-defined tribe.”

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Special: Anuga – Industry Outlook 2013+A 8 ❘❙ FOODSERVICE EUROPE & MIDDLE EAST 3/13

line postings of loadable manuals and proprietary forms, makesit all but impossible to protect a company from the transparencyof email, Facebook or Google. Few people, after a short onlinesearch, cannot find and download most of the world’s top restaur-ant training manuals. Transparency is the word of the day.

What this means for foodservice: We are in a time when the old modelof creating and holding a sustainable competitive advantage byhaving a protectable product or service mark no longer applies.Hackers, trackers, stalkers or anyone with an interest can find allthe competitive items about a restaurant they need after just a shortsearch. The new rules are that a company must find its own uniquebut transitory selling platform, then, by using new communicationtechnology via social media build a strong personal connectionbetween the guest and the restaurant brand.Marketing is a truly a one-on-one activity, all the doors and win-dows into the kitchen and the manager’s office are wide open, soit is time to hide in plain sight. Restaurant leaders need to post nu-tritional information, recipes, guides to healthy eating, vendor andsupplier information, basically anything which used to be consi-dered secret on the website or on a menu because any informationwhich is hidden by choice will be found and used in an unfortunateway. Restaurants have always operated as ‘open systems’ this newtrend should be embraced by management.

5 Urbanism, Aging, and the Single Household. There are three key demo-graphic trends which will impact the foodservice industry for thenext 10-20 years; migration from rural to urban centers, the agingof developed regional populations, and the rise of single personhouseholds. These are all global in nature, but each will have a moreserious effect on the traditional service economies of the NorthernHemisphere, especially Europe, North America and Japan.The global population is growing and it is also moving, but in verydifferent ways by region. It is a fact that in 2013 more than 50% ofthe world’s population now resides in urban areas. But the sevenlargest metropolitan areas in the world are all found in Asia, onlythree of the 20 largest cities are in North America (New York, LosAngeles, Chicago) and only one is in Europe (Moscow). This is instark contrast to the fact that almost 4 out of 5 residents of North andSouth America live in urban centers, closely followed by Europe

Science ❘❙

with more than two-thirds of its populationalready in cities, yet only 45% are urba-nized in Asia. It is hard to believe that theteeming cities of Asia are only beginning toabsorb expanding populations; but by glo-bal standards the region’s urban areas areless than half full. Migration, people mo-ving themselves from rural to urban areas,will continue in all regions of the world andclearly will have an enormous impact onnations and economies in the future.This impact, though, will be felt very dif-ferently in each region of the world. Thepositive potential and the challenge fordeveloping Asian countries will be how

to absorb additional millions of people seeking employment, ad-vancement and housing into their currently large urban centers.The challenge for Europe, on the other hand, is how to maintaincurrent levels of social welfare as the population of city residentsis aging rapidly; without additional young workers these citieswill atrophy. In North America, where this urban migration hasbeen firmly in place for years, the impact will be felt as decades oflow infrastructure investment results in clogged inner cities desi-gned around the automobile which was always more suited to lessdensely populated suburban and rural environments. Infrastruc-ture investment is a problem in Istanbul and Moscow, while anolder, single lifestyle has major consequences in Tokyo, Rome andStockholm. Manhattan Island in New York literally does not haveenough miles of streets to hold all of the cars driving through it onany given day; a single traffic delay has the potential to deadlockthe entire city.

What this means for foodservice: Densely populated urban centers arevery good for the restaurant industry, which can rely heavily onpedestrian footfall. Mass public transit hubs are being renewed tobecome rising commercial centers, as they more and more becomethe ‘Zero Corner’ urban crossroads described by William Whitein the 1960s. Aging populations of single household residents willincrease the use of take-out and delivered meals, especially ascenter-city housing options become increasingly smaller with lesscooking and eating options.

Restaurant companies which built their empires chasing popu-lations out into the extended ex-urban areas will see benefits asthese centers continue to morph into cities themselves in a hub-and-spoke manner around the expanding center city. On the otherhand, companies with extensive real estate invested in suburbanand rural towns may find it hard to sustain these units as popu-lations there collapse leaving behind a new exiled collection ofimpoverished rural communities. ❚

Degree of Urbanization

Europe Worldwide Asia AfricaAustralia,Oceania

Latin Am.,Caribbean

NorthAmerica

71%

51%

66%

45%39%

79% 78%

– percentage of urban population in total population by continent in 2012 –

Source: DSW (Deutsche Stiftung Weltbevölkerung) data report 2012

❚ “Today, the Internet makes it all butimpossible to protect a company from thetransparency of email, Facebook or Google.”

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