Menus 2017: Innovation in the Age of Disruption

President

Nancy Kruse

The Kruse Company

Menus 2017: Innovation in the Age of Disruption

Menus 2017: Context

• Industry operating in extraordinary times

• Old rules replaced by new realities

• All food sectors being impacted

4

Consumer Disruption: Perfect Storm

Economy

Technology

World Order

Politics

Demographics

5

Economy: Recession Hangover

“Middle class accounts for less than half the population…”

•Real wage growth stagnation

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•Implosion of housing market

Source: Pew Research Center

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Technology: Employment Effect

“US Steel will permanently shutter blast furnace at Fairfield Works; 1,100 workers will lose jobs”

Source: Atlanta Journal & Constitution; Oct. 19, 2015

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World Order: Growing Instability

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Politics: Outsiders vs. Insiders

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Demographics: Generational Changeover

Millennials

• 80 MM; 18-34 years old

• Diverse, wired, activist

• Brand purpose

Baby Boomers

• 75MM; 52-70 years old

• #1 HH wealth; food spending

• Brand promise

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Insight2Impact: Attitudes, Appetites Disrupted

Menu R&D Disrupted, Too

Ingredients

Diets

Comfort

Dayparts

Ethnic

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Menu R&D Disrupted: 1. Ingredients

Demand for Clean/Free-From Foods Soaring;

52% of Consumers Want More Menu Transparency

% Agreement Perceived as Healthier

78% No artificial sweeteners

73 No antibiotics

60 No GMOs

Source: Technomic, Inc.

12

Panera Issues Manifesto, Announces No-No List

Fast-casual chains

drivers of trend

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Major Chains Jumping on Bandwagon…

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…Supermarkets, CPGs Also Cleaning It Up

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Smaller Chains On Board, Too

Noodles & Company removes artificial ingredients

16

Shoney’s Switches To Cage-Free Eggs

Serves over 50 million

eggs per year

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California Tortilla Offers GMO-Free Super Food Burritos

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Campus Dining Pioneer In Clean-Foods Initiatives

California State University,

Chico

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What’s Next? Watch for Simplicity

March 10, 2016: McDonald’s trademarks “the simpler the better”

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Denny’s Simplifies Pancake Recipe…

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…As Supermarket Brands Embrace Simple Life

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Ingredients Disrupted: Insight2Impact

• No one-size-fits-all solution

• Multiple influences on consumers

• Critical to stay in touch/stay on top

• Expect supply-chain disruption

• Monitor, consider simplification

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Menu R&D Disrupted: 2. Dieting

77% consumers trying to eat more healthfully… …only 19% say they are on diet

Source: Fortune Magazine poll

24

Plants Take Over Plates

By Chloe’s

Quinoa Taco Salad, Pesto Meatballs

New York City, NY

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Superiority Burger’s Plant-Based Sandwiches

• Burgers

• Wraps

• Sloppy Joes

New York City, NY

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Houlihan’s Thai “Noodle” Salad

Noodles made from zucchini

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Taco Bell’s Vegetarian-Certified Menu

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What’s Next? “Better” Sugar

Pepsi’s 1893 Craft Soda Line:

Certified Fair Trade Sugar

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Dieting Disrupted: Insight2Impact

• Emphasis on satisfaction, not deprivation

• Opportunity to romance vegetables

• Target audience: flexitarian diners

• Vegetarian demo remains small

• Behavior will remain inconsistent

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Menu R&D Disrupted: 3. Comfort

73% menus include word “fried”

Source: NRN, Food Genius

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Nashville Hot Burns Up Menus

Hattie B’s Hot Chicken Plate Captain D’s Nashville Hot Fish

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Menus in Midst of Big Fat Revolution

“Millennials have concluded animal fats unfairly demonized”

•Three times more receptive to use than Boomers

•Highest increases in consumption in HH with kids

•Image of minimal processing drives acceptance

Source: IPSOS research

Lardo in Portland,OR fries in fatback

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Burger Battleground: Butter Is Back!

Burger King’s Extra Long Cheeseburger

Jack in the Box’s Classic Buttery Jack

McDonald’s Egg McMuffin with “real butter” 34

Indies Embrace Tallow, Lard, Duck Fat, Schmaltz

Pig & Prince’s

Duck-Fat Grilled Cheese

• Cheese X 3

• Duck Bacon

• Rendered Duck Fat

• Butter

Photo by Chef Michael Carrino

Montclair, NJ

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Baloney Makes Comeback…

Penn Station’s Fried Bologna Sub

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…And It’s Going Uptown

Corner Table’s Bologna “Sandwich”

Minneapolis, MN

Marcel’s Stack Sandwich

Atlanta, GA

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And Pease Porridge Hot All Over Again

Milktooth’s Ancient Grain Porridge

•Coconut Milk •Pomegranate •Pistachios •Hemp Seed

Indianapolis, IN 38

OatMeals’ Sweet, Savory Menu

Pomegranate Pistachio Bacon Pumpkin

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UMass Offers Congee Bar

• Simple to execute

• 600 bowls per day

Source: Dining Services,

University of Massachusetts Amherst

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Comfort Disrupted: Insight2Impact

• Comfort foods deliver cross-gen appeal

• Regional favorites offer sense of place

• Ethnic comfort food ripe for discovery

• “Old-fashioned” fats offer opportunity

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Menu R&D Disrupted: 4. Dayparts

Breakfast Bonanza:

54% Consumers Enjoy at Nontraditional Times

Midmorning Snack 32%

Lunch 45

Afternoon Snack 27

Dinner 59

Evening Snack 26

Late-Night Snack, Meal 26

Source: Technomic, Inc.

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McDonald’s Makes Breakfast “Biggest Food Story of 2015”…

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…Follows Up With Breakfast Bowl Test

• Egg White & Turkey Sausage

with Kale, Spinach

• Scrambled Egg & Chorizo with Cheddar Jack, Pico de Gallo

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QSR Competitors Amp Up Innovation, Tout Availability

White Castle’s Anything, Anytime

Waffle Breakfast Slider

Carl’s Jr./Hardee’s

Breakfast Pretzel Sandwich

Auntie Anne’s Pretzel Bun 45

MSRs Capitalize On Expertise: Shari’s Satisfies Range of Appetites

Breakfast Poutine Bistro Breakfast

46

What’s Next? Cereal Redux Grain’s Nitro Cap’n Crunch Made

with Liquid Nitrogen

Atlanta, GA

Delaware North Sportservice’s Slider Dog with Froot Loops

Cleveland, OH

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Dayparts Disrupted: Insight2Impact

• Breakfast foods strike comfort chord

• Appeals: convenience, indulgence, healthful

• Also offer value, provide fun factor

• Needn’t offer daypart to offer food items

• Strong demographics, margin potential

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Menu R&D Disrupted: 5. Ethnic Experimentation

Why do you eat ethnic foods instead of traditional foods?

Overall Agreement

To look for something different 64%

To discover new flavors 61

Craving a particular ethnic food 55

For spicier flavors 42

For bolder flavors 39

Source: Technomic, Inc. 49

Eastern Mediterranean Influences: Arby’s Roast Beef Gyro

• Roast Beef

• Greek Seasoning

• Tzatziki Sauce

• Red Onions

• Tomatoes

• Lettuce

• Pita

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Chickpeas Turning Up All Over

Umami’s Falafel Burger 1000 Degrees’ Falafel Pizza

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Kennesaw State University’s Hummus Bar

Options:

• Garlic

• Red Pepper

• Black Been

• Curry

• Cilantro >>

Atlanta, GA

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Korean Influences: Noodles & Company’s Gochujang

“Flavorful meatballs tossed with a sweet and spicy Korean- style Gochujang (go-choo-jang) barbeque sauce”

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Gochujang Promoted To Millennial Moms

Source: Good Housekeeping Magazine, Jan., 2016

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Tropical Influences: Chilies, From Moderately Warm….

Zoë’s Kitchen’s Live Med Salad

•Calabrian Pepper Dressing

•Zucchini, Squash Ribbons

•Spinach, Farro

•Lupine Beans

•Cherry Tomatoes

•Parmesan Cheese

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…To Set Your Hair on Fire

Wendy’s Jalapeño Fresco Spicy Chicken Sandwich,

Ghost Pepper Fries

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Memorable Mash Ups 1. Red Robin’s Red Ramen Burger

Teriyaki, Chiu Chow Aioli, Chili-Infused Shredded Cabbage, Fresh Basil 57

Memorable Mash Ups 2. McAlister’s Deli’s West Coast Bahn Mi

• Pulled Pork

• Jalapeños

• Pickled Vegetables

• Sriracha Mayo

• Fresh Cilantro

• Toasted Baguette

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Memorable Mash Ups 3. Tupelo Honey’s NC Country Ham Wontons

Shaved Honeyed Brussels Sprouts Salad

Asheville, NC

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What’s Next? Cuban 2.0

Havana 1957’s

Cuban Combo

Miami, FL

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Ethnic Experimentation Disrupted: Insight2Impact

• Ethnic flavor remains key R&D driver…

• …Slightly eclipsed by clean-foods trend

• Culinary safety nets remain in place

• World affairs have direct influence

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Menus 2017: Key Takeaways

• Consumer-driven disruption is ongoing

• Changing values, priorities, demographics

• Successful restaurateurs must try harder

• Critical to track patron expectations

• Equipment: If you’ve got it, flaunt it

• Environmental, people connections key

• More avenues to surprise, delight

• Throughout entire supply chain 62