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Daily news and analysis about the food tech revolution

NPD

NPD: Shipments of Plant-Based Proteins to Restaurants Up 60 Percent Year Over Year

Shipments of plant-based proteins from foodservice distributors to commercial restaurants were up 60 percent year-over-year in April of 2021, according to new data released by NPD Group today. The stat is another data point illustrating the staying power and appeal of plant-based proteins.

NPD writes that plant-based beef nabbed the largest share of those protein shipments, with the number of pounds shipped increasing by 45 percent year-over-year in April. Plant-based chicken grew by 82 percent year-over-year in April, and plant-based fish is up 72 percent year-over-year. Plant-based chicken and fish are more nascent categories compared with plant-based beef, which would explain their relative dramatic jumps.      

“There has been a lot of public discussion about plant-based beef and meat substitutes, and whether or not plant-based is a fad or a trend,” says Tim Fires, president of NPD’s SupplyTrack said in a press announcement. “But the fact of the matter is, chefs and operators see the plant-based protein category as a flexible option for developing recipes and menu offerings that taste good, and their guests enjoy. Plant-based is now a staple in their repertoire.

Though NPD didn’t specify reasons for the increase in shipments, the two big drivers for this growth in plant-based protein are availability and price. Both Impossible Foods and Beyond Meat, the two biggest players in the beef analog space, have dramatically ramped up production in the past couple of years, which has helped bring prices down and closer to parity with animal meat.

But this increase in shipments of plant-based protein to restaurants is just part of an overall increase in interest and sales of plant-based meat. The Good Food Institute’s latest U.S. market research shows that the plant-based meat category grew by more than $430 million in sales from 2019 to 2020 and the category is now worth $1.4 billion.

NPD: QSRs Outpace Full-Service Restaurants in Terms of Transaction Improvements

The restaurant industry closed 2020 by “moving its way out of the steepest declines the industry has experienced since the Great Recession,” according to a new update from The NPD Group. 

Restaurant transactions in December 2020 were down 10 percent compared to the same period one year ago. However, that figure is a 27-point improvement from restaurant transactions in April 2020 — at the height of shelter-in-place mandates in the U.S. — when transactions were down 37 percent from the previous year.

NPD’s numbers suggest some much-needed improvement for the restaurant industry overall, after nearly a year of lockdowns, capacity restrictions, and consumer fears around eating out.

That improvement doesn’t look equal across all sectors in the restaurant biz, though. NPD notes in its recent report that full-service restaurants, which typically did not have much in the way of to-go strategies in place at the start of 2020, “bore the brunt of transaction declines throughout the pandemic.” In April, full-service transactions declined by -70 percent compared to a year ago; they improved to -30 percent in December.

Individual state restrictions also have something to do with the numbers around full-service restaurants. NPD noted that In more restrictive states, full service restaurant chain transactions are down 60 percent to 70 percent. In less restrictive states, “there isn’t as much of a gap between quick service and full service restaurants.” 

Most major QSRs were already better prepared to shift to off-premises operations when the pandemic struck in full force last year. Some, like Chipotle and Starbucks, had existing strategies in place around digital, drive-thru, and express store formats. Others, like McDonald’s, had the deep pockets and technical expertise to pivot quickly — a luxury most smaller chains and independent restaurants cannot afford.

According to NPD, major QSRs’ takeout, drive-thru, and delivery orders “soared” over the last several months, despite restrictions across the overall restaurant industry: “Quick service customer transaction declines bottomed out in April with a decline of -35% versus year ago, but quickly improved as shelter-at-home orders were lifted. In December, quick service restaurant chain customer transaction declines were down -8% versus last year.”

With things like speed of service, simpler menus, and more-efficient kitchens remaining top priorities for restaurants in 2021, improvements to the overall industry is likely to remain divided between the quick-service chains and their full-service counterparts for some time to come.

NPD: Consumers Sought Solace in Snacks During COVID Quartantine

When the pandemic hit the U.S. in full force, the grocery shopping habits in our house immediately changed. Our online grocery carts were suddenly filled with salty, sugary, pre-packaged snacks: bite-sized Snickers, Mac-n-cheese in cups, Wheat Thins for days. All of these “treats” had long shelf-lives, and were easy to grab as we gobbled up our anxieties.

We were definitely not alone with our snacking. According to new data from the NPD Group’s Snack Food Behaviors in Challenging Times study, snack food consumption is up 8 percent during the pandemic. For comparison, during The Great Recession between 2008 and 2010, snack food saw a 1 percent increase.

From the NPD press announcement:

In April, during the height of the shelter-at-home orders, 37% of consumers told NPD they wanted to make sure they had sufficient snack foods on hand. They were well-stocked on salty snacks and frozen sweets more than other items. Also, in many cases, the more snack food packages in the home, the more frequently the item is consumed, which tends to be especially true of certain types of snack foods. For example, consumers who have five or more packages of crackers or salty snacks consume those foods at higher rates than consumers with fewer packages in their home.

Of course, the fact that people are buying tons of cookies and crackers isn’t necessarily a good thing. Chips and cookies can be cheaper than fruits and vegetables and last a lot longer, making them a much more attractive option for a nation experiencing record job losses. So the more affordable option is not the healthier one, reinforcing certain equity divides.

With the pandemic showing no signs of slowing down, and states halting re-opening plans, we’ll have to see if our snacking stays the same.

NPD: Restaurant Chain Transactions Down From Last Year, Digital Orders Up

New data from NPD Group is a real good news/bad news situation for restaurants. The bad news: for the week ending May 24, total major restaurant chain transactions declined 18 percent compared to the same time period last year. The good news? That’s up 25 percentage points from the biggest decline in transactions during this pandemic (-43 percent for the week ending April 12).

Of course, a big reason for that growth is that more cities and states began re-opening towards the end of May, so more people could once again actually go into a restaurant.

An NPD press release breaks the numbers down further, writing:

  • Major full service chain restaurant transactions declined by -42% versus same time year ago, a +7 point improvement from the prior week’s decline of -49% from year ago.
  • Transactions at quick service restaurant chains were down -17% in week ending May 24 compared to same week year ago, improving from the -20% decline in the prior week.

Another couple of interesting tid-bits from NPD’s recent data is that drive-thru, mostly at QSRs, made up almost half of all restaurant occasions, and that digital orders grew by 106 percent in April compared with last year. NPD says that digital orders now account for 20 percent of all restaurant occasions.

If you’ve been following my colleague Jenn Marston’s writing, this growth in digital orders and off-premises dining shouldn’t come as a surprise. In her excellent weekly restaurant tech newsletter this past Friday, she covered recent Black Box data that showed takeout orders are going back up. As Jenn wrote:

Presumably, people got excited about going back to restaurants instead of ordering takeout, then realized what a pain in the a$$ dine-in service is going to be for a long time to come. Guidelines vary from state to state in the U.S., but almost all of them include reduced capacity, reduced party sizes, no buffets, and in some cases a mask requirement. Add to that the trepidation most of us wear with our masks these days anytime we set foot in public, and it’s not exactly a recipe for a packed house.

As more cities and states ease shelter in place order, and summer gets into full swing, we’ll move from guessing about how consumers will react to restaurants’ re-opening and into hard numbers around what they are actually doing. Data like this from NPD helps chart those movements.

NPD Group: Restaurant Customer Transactions Are Down 42 Percent

Restaurant customer transactions dropped 42 percent during the week ending in March 29 compared to the same time period one year ago, according to new numbers from The NPD Group. 

While dismal, to say the least, those numbers aren’t surprising. With most states now mandating restaurants keep dining rooms closed for the foreseeable future, many businesses have lost their primary sales channel. Full-service and casual dining restaurants (think Olive Garden or your local Mexican restaurant) that still rely on foot traffic for the majority of their sales are having to quickly pivot to off-premises models that offer delivery and takeout orders. Restaurants designed for an in-dining room experience are having trouble making this transition smoothly and quickly.

Reflecting that issue, NPD notes that while QSRs (e.g., Wendy’s) saw a transaction decline of 40 percent, full-service restaurants shouldered the burden of a much larger drop, at 79 percent.

“The transaction declines partially reflect the struggle of on-premise restaurants to pivot to off-premise models,” NPD industry advisor David Portalatin said in a statement. “Many restaurants that are attempting to make the move are doing so with limited menu offerings and without the benefit of drive-thru lanes. Anecdotally, some operators are giving up the cause and closing altogether.”

Some of those closures are temporary; others, sadly not. Recent numbers from The National Restaurant Association show that 3 percent of restaurants have closed permanently and another 11 percent are expected to this month.  

Some restaurant-tech companies, like Allset and Presto, have shifted their focus to providing products and services that could make to-go operations more efficient. Others, like Ordermark and Chowly, are waiving certain fees for restaurants that want to get quickly up and running with delivery. Meanwhile, a number of charities, fundraisers, and other initiatives are working to provide relief to impacted businesses and their workers.

It’s too soon to tell how effective any one of these solutions is in terms of saving more businesses in the long term. Given that major restaurant chains as well as the smaller businesses are now struggling financially, even cautious optimism feels naive right now.

For us average consumers who can afford it, the best course of action right now is to keep ordering takeout from local restaurants and contributing to relief funds, virtual tip jars, and other online initiatives. Soon enough, the numbers will tell us if these moves can make a big enough difference.

NPD: Frozen Food Sales are Up (Thanks, Millennials!)

Just about this time last year we asked the question “Are We Entering a Frozen Food Renaissance?” because a wave of startups were transforming frozen foods from just bags of peas and TV dinners into something more high-end and healthy.

Looks like people are paying attention to this renaissance and ponying up for frozen food. According to a recent study from NPD, frozen foods were a part of “9.8 billion eating occasions in home, up 2 percent from a decade ago.” Two percent may not sound like much over ten years, but as NPD points out, that translates into billions of meals, and we would like to point out that can mean billions of dollars.

And in a welcome turn of events, frozen foods appear to be something millennials are not killing off, but rather, reviving. From the NPD press release:

“Demographic shifts, like Millennials moving into the busiest times of their lives juggling spouses, kids, and a career, are fueling a greater need for the convenience that frozen foods offer,” says David Portalatin, NPD Food Industry Advisor and author of Eating Patterns in America. “Manufacturers are also doing their part in increasing interest in frozen foods by innovating around contemporary food values and emerging flavor trends to provide convenience.”

We’ve seen that innovation in frozen food firsthand from companies like Mealhero, which ships pre-packaged frozen food and connected steam cooker to automatically prepare them. Buttermilk sends pre-made Indian food that can be frozen and reheated in the microwave. Daily Harvest goes after millennials directly with its delivery of frozen smoothies and bowls. And companies like Stouffers are creating entire frozen meal kits.

As NPD also points out, more than 80 percent of meals and eating happens in the home, and U.S. consumers are turning to things like frozen vegetables and chicken for cooking convenience at dinnertime. Breakfast is another growing category, thanks to things like frozen waffles and breakfast sandwiches.

With this growth, it looks like frozen food might be moving from a renaissance into a golden age.

NPD: 93 Million American Adults are Meal Kit Curious

The potential market for meal kits isn’t tapped out, as new research from NPD finds that 93 million adults in the U.S. still haven’t tried meal kits, but want to.

NPD said that the move from mail order to retail is attracting new customers, and the research firm lists three reasons why meal kits present a big opportunity:

  1. Users are highly satisfied with their meal kit purchases both online and in-store.
  2. Users are still experimenting with brands and formats, so their habits aren’t set yet.
  3. Meal kits can be more than just dinner, providing an opportunity for new categories and brands.

NPD also outlined who is buying meal kits:

Meal kit users are more likely to be Millennials, have households with kids, and higher incomes. Online and in-store meal kits appeal to similar demographic groups although in-store kits skew to households with children less than 13 years old and higher income levels.

NPD’s numbers mirror and reinforce a recent Nielsen survey that found that retail outlets have been the main source of growth for the meal kit industry, and that 23 percent of US households would consider purchasing a meal kit in the next six months. Nielsen also found that meal kits were being purchased by more affluent households.

All of this is to say that meal kits are–to paraphrase Monty Python–not dead yet, and in fact have the potential to be very much alive and thrive. The move into retail has been a shot in the arm for the meal kit sector and the shift is just getting underway. Kroger, which owns Home Chef, and Albertsons, which owns Plated, just started the nationwide rollout of meal kits in earnest last year.

With this much headroom to grow, we can expect to see more of a marketing push to parlay shoppers’ store loyalty into meal kit loyalty.

Study: Gen Z is All About Snack Portability, Restaurant Delivery

I’m at an age where I can recognize the things that are for me (khakis), and the things that aren’t (Snapchat, staying out past 10 p.m.). So I always appreciate market research studies that give me insight into what the younger generations are up to. A pair of reports out recently from NPD Group (h/t to The Food Institute Blog) shed some light on how Genz Z (the eldest of which will be 22 this year) are approaching their food choices.

In its “The Future of Snacking” report, NPD found that what Gen Z cares about most is portability. From the NPD press release: “… regardless of the brand, for Generation Z, if they can’t take a snack with them, it’s not really a snack.” NPD also said, “A large percentage of this generational group have been raised to put a greater emphasis on the quality of food, whether it’s clean, fresh, or nutritionally beneficial, as well as its flavor and function.”

With these data points in mind, it’s not hard to envision a growing market opportunity for upstart, upcycled snack companies like ReGrained, Render and Pulp Pantry, as these socially conscious startups tick off a lot of the boxes Gen Z are looking for.

The convenience Gen Z craves extends to their restaurant habits as well. According to NPD, Gen Zs made 14.6 billion restaurant visits in 2018 and now make up 10 percent all foodservice traffic. But they are also a generation raised on the internet and apps, so they are quite keen on ordering delivery from restaurants. In its Delivering Digital Convenience report, NPD found: “In the year ending December 2018, foodservice delivery orders by Gen Zs amounted to 552 million, just a million shy of Millennials’ delivery orders and only a portion of Gen Zs are old enough to order their own delivery.”

That last bit about age is important. Delivery already makes up 30 percent of the restaurant business. As more Gen Zs become old enough to order their own meals (and booze!), the convenience of delivery is only going to grow. This market lying in wait helps explain DoorDash’s $7.1 billion valuation and why we’ll need more robots and drones to help keep up with delivery demand.

Which is fine by me, as long as they don’t make any noise past 10 p.m.

Research Confirms: The Kitchen is Dying. Unless it’s not.

The Spoon was borne out of The Smart Kitchen Summit, our annual conference about the future of the kitchen. But analysts seem unclear as to what exactly the future of the kitchen is. Are millennials and delivery killing off the kitchen? Or is the kitchen staying put and evolving into something different?

These questions kicked off in earnest last month when investment firm UBS came out with a report titled “Is the Kitchen Dead?”, which posited that by the year 2030, delivery could replace most meals cooked at home. The people burying the knife in the back of the kitchen? Millennials (obvi). Well, not just millennials. Robots, delivery apps and virtual kitchens would all play their part in killing off the kitchen.

And if you look around today, it’s not hard to reach that same conclusion. Services like UberEats are growing rapidly. And startups like Kitchen United are launching commercial kitchens so restaurants can meet the demand for delivery.

Bolstering these trends are generational shifts. Millennials spend less on groceries and more on eating out, and they can’t identify a garlic press or roast a chicken. So, once again, millennials are ruining everything.

Or are they? Especially when it comes to the kitchen?

Our own research conducted by The Spoon last year showed that 47 percent of millennials cook at home 5 or more times per week. And a new Datassential report shows that millennials over index when it comes to the types of cooking tools used (juicers, sous vide wands, Instant Pots, etc.). So millennials use the kitchen, they just do so differently than other generations.

And thinking differently about the kitchen is what new research from the NPD Groups suggests we do (hat tip to Food Dive). David Portalatin, Vice President, Industry Advisor at NPD published a blog post yesterday titled “The American Kitchen is Alive and Thriving.” In it, Portalatin says that while restaurant spending was up in the year ending May 2018, actual visits to restaurants (which includes delivery) was flat over the same time period. He also says that restaurant meal prices are going up faster than the cost of a home cooked meal.

Portalatin goes on to write:

“In our daily research of U.S. consumers’ eating behaviors, we consistently show that four out of five meals are prepared at home, and although the relationship of in-home prepared meals versus those sourced away-from-home has been stable for a few years, we still prepare more meals at home than we did a decade ago.”

Portalatin predicts that what will happen is we will blend meals we make at home with ready-to-eat items we buy from outside the home. It’s easy to see how something like grocery-store bought meal kits fits nicely into this scenario. You’re basically buying all the ingredients to make a meal at home, just without so much of the work.

Already, grocery retailers are setting themselves up for such a blended future. Kroger purchased meal kit company Home Chef, and Albertsons owns Plated, while Walmart and Amazon (via Whole Foods) offer their own branded meal kits. This isn’t to say that meal kits will dominate every dinner, but they offer a flexible and convenient option for consumers looking to eat a complete meal at home without having to do a ton of work.

You can even see this on the hardware side as appliances like the June oven, or Tovala or the forthcoming Suvie or Brava ovens look to take over most of the work in making a meal. Right now those devices are expensive, but they will get cheaper, which will cause their own evolutionary pushes in the kitchen.

So in the end, is the kitchen dead, dying, atrophying, or is it just fine, thank you very much? The answer none and all of the above. The kitchen as older generations have known it is dying, but that’s not just because of delivery, it’s also because we have a wave of newer, safer, and more robust cooking tools like Instant Pots and Tovalas that are changing how we cook.

Will it die off completely? Unlikely. Where would people stand during a cocktail party? I kid, but more seriously, until you can teleport 3D printed foods directly into your home, there will always be hungry people in houses looking for reach-in-the-pantry-or-microwave levels of instant gratification. Not to mention people who just plain like to cook.

But the role of the kitchen is something we consider every day here at The Spoon. In fact we are planning the full rundown for our upcoming Smart Kitchen Summit: North America in October. You should get your tickets to see what experts from across the food tech industry will have to say on the subject.