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Where the foodservice buyers are

Marketing insights and opportunities from NRN

The business of operating restaurants is tough, and getting tougher. From the economy to food safety, obesity to sustainability, chipotle to panko — restaurant operators today navigate a relentless volume of challenges and opportunities keep customers and stakeholders happy.

Your job is to make theirs easier by providing products, services, ideas and innovations that help foodservice businesses operate more efficiently and grow more profitably.

Nation’s Restaurant News makes your job easier by helping you gain credible and influential access to decision-makers who operate restaurants.

NRN is the #1 source of news, competitive intelligence and professional networking for the $600-billion foodservice industry. In print, online and at events, our media network is your strongest connection to the operators who buy and sell your products.

Because we’re the operators’ first choice, we’re also your best source for insights about how to market to them and build your foodservice business. Here’s what we know that can help you right now.

1. Decision-making is constant
2. Decision-making is complex
3. Lines are blurring
4. The big get bigger
5. Media habits are evolving 

1. Decision-making is constant

Increasingly every quarter, and sometimes every month, restaurants make changes to their menus. And the pace of change is picking up. A recent Mintel study reported that in 2009 restaurants added 460 new breakfast items, more than in the previous two years combined.

Whether it’s an ingredient swap, a new recipe or a complete overhaul, every menu decision has implications for the operation. Likewise, operational changes such as executive moves, unit sizes, pricing strategies and day-part shifts have implications for the menu.

The good news is innovation is driving these changes. As illustrated in the following table, limited-time offers (LTOs) and new menu items are exploding. The Top 250 chains alone added 2,358 LTOs and 1,871 new items between January and June 2010!

The bad news is you can’t always be there when decisions are being made (at least not in person).

2. Decision-making is complex

Companies don’t make decisions, people do. And when it comes to making operational decisions about restaurants, there are a lot of people involved in the process.

If you're a supplier you know how important it is to be connected to restaurant R&D and Purchasing. But are you aware of all the other people who influence decisions about which products and services to buy for their restaurants?

The following chart illustrates the network of influence that determines the outcome of an operator’s product or menu item review.

That’s what it looks like on paper. In practice, add competing projects, time pressure, the ubiquitous budget squeeze and plenty of individual personalities to the mix, and you can be sure it all gets trickier.

Beyond the dotted lines to Purchasing and R&D, how can you become more involved in the process?

Make no mistake — suppliers are important to operators, they just don't have a lot of time to spend with them. According to a 2009 NRN Menu R&D Study, 59% of operators surveyed said suppliers are “more important to product development” than they were two years ago.

Unfortunately, if you’re not already on the team, it’s tough to break in as a rookie. The same survey reported these trends:
• 53% of product development teams experienced personnel change/turnover in the past 24 months
• Product development teams are smaller, and teams see fewer suppliers than they did two years ago
• Core suppliers get attention. Secondary suppliers can’t get appointments

Gaining access to operators and maintaining operator relationships in this environment may be a supplier’s biggest challenge.

3. Lines are blurring

If access is your biggest challenge, this may be your best opportunity.

Once upon a time, operations were predictable. A quick service restaurant served burgers and fries. Fine dining restaurants did not. Casual restaurants were comfortable in between — and the only place you ever saw a food truck was at a construction site.

Today the only rule seems to be, “What rule?” Look who's serving what:

Segments are crossing, menus are morphing, formats are transforming and brands are expanding. Suppliers who are in the right place at the right time with the best solutions will benefit from this culinary chaos.

4. The big get bigger

It sounds obvious, but the math may surprise you.

According to Technomic, the top 500 chains accounted for $230-billion (62.9%) of the total $365-billion in restaurant food and beverage sales (including alcoholic beverages) in 2009. All other restaurants accounted for $135.5-billion.

That’s a pretty high concentration of revenue at the top of the food chain. But wait. It gets even more concentrated than that.

Of the top 500 chains, the top 200 account for 92% of system-wide foodservice sales. That means the next 300 chains — 201-500— account for just 8% of that $230-million ($18-billion) in sales.

Unit share is corresponding. The top 200 operate 212,405 compared to the 21,933 operated by chains 201-500.

It all adds up to this. As illustrated by this chart, in six of the past seven years, major chains gained share of customer traffic (this year they have maintained share).

By contrast, small chains and independents lost or maintained share over the same period.

In the past year, major chains also increased their number of operating units 1%, compared to the rest of the market, which, from midsized chains to independents, did not add units, and in most cases lost between 1% and 2% of their locations.

5. Media habits are evolving

Technology has created new media choices for operators, and while print still dominates foodservice business media, online readership is growing fast, primarily in websites and e-newsletters, and increasingly on mobile devices.

These trends were illuminated by a Media Consumption study of foodservice professionals conducted for NRN by Signet Research in August 2010. The study found foodservice executives use a variety of media sources ranging from foodservice industry magazines (used by 91% of respondents) to foodservice industry blogs (13%) for their industry news and information. And they are spending more time on all of these than they spent a year ago.

The Signet study affirms NRN’s media and marketing value as “The Foodservice Business Network.” The industry’s leading magazine, Nation’s Restaurant News, is the centerpiece of an integrated, multimedia portfolio of print, online/digital, event and custom products and services that serve the broad market interests of foodservice professionals and the more specific business information needs of individual operators and suppliers.

A separate Readex Reader Study of Nation’s Restaurant News versus other foodservice business media affirms the market’s preference for NRN. In print and online, NRN is far and away the most trusted, relevant, experienced and credible source in the industry.

Strategic implications

These trends raise a fundamental question — and point to NRN as the answer — for every supplier, vendor and distributor marketing to restaurants?

Q: If the largest chains tend to outperform the medium and smaller chains in 2009…does that require a re-thinking of your chain targeting strategy?

A: Yes! If half of the marketplace is not growing or has declining sales, it is time to re-think how chains are targeted.

No matter how many buyers you need to reach, in every operational segment and job function, Nation’s Restaurant News will help you connect with more impact and accountability than any other foodservice information choice.

Learn more. Sell more. Call or click your NRN Sales Manager.


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