Can your NPD drive growth in Foodservice?
On our recent webinar, Circana’s Gareth Nash presented market data that outlined the ongoing upturn in food service, as it continues to recover from lockdown.
While inflation still generates most of the price growth (+9.8% 2023 vs 2022), Visits were up +3%, driven by Frequency +4.8%.
NOTE: for context, the category is still well below pre-covid levels, with Visits – 19.4%, Frequency -19.8% and Penetration -2.6pp
However, growth is growth and it represents an opportunity for food & drink manufacturers clever enough to capitalise on the upturn. And by clever enough we mean using the right blend of market data and consumer insight to get the biggest ROI on new product development in this area.
NPD in food service runs the same risk as in retail – getting it wrong can be expensive and especially damaging in these days of reduced profit margins.
So….how to get NPD right?
As always, the devil is in the detail…not all of food service is in growth. Full Service Restaurants are flatlining (-0.3% v ‘22, -13% v ‘19) while QSR is marginal (+2%, -16%). Growth is coming from Workplace (+8%) and Travel & Leisure (+7%).
Similarly, time of day also makes a difference, with Dinner down (-2%) in contrast to Afternoon and Evening Snacks (both +8%).
The last metrics to be aware of (or wary of) are the groups driving the growth. Families are down -2% and 16-24s are flat, whereas 25-34s are +12%.
All of this matters when developing new products. Can your NPD drive growth in any of these flat or declining areas? Or is your safer bet one of these growth segments?
“Restaurant-goers are becoming smarter and adapting their spending habits. The fact remains that the cost of eating & drinking out is a lot higher than in the past and the most successful operators and suppliers are those who best understand their consumers and their changing needs and behaviours.”
Gareth Nash, Commercial Lead, Circana
What vs Why…
As always, we advocate using a blend of market data (WHAT consumers are doing) and consumer insight (WHY they’re doing it).
It’s one thing knowing that evening snacking is in growth – but what matters most in this area….guilty pleasure? Sharing? Health? What products are winning, who buys them and why? Also, for NPD especially….what are the gaps in the markets, the unmet needs of consumers?
All of these factors matter to your NPD thoughts, and they can only be answered by bringing bespoke insight into your decision making early in the process.
Additionally, risk of failure can be reduced further by getting direct feedback from your target consumer – with TRKR IDI that usually means 1,000 category shoppers, although 250 or 500 can still give you confidence to continue, and actions to fine-tune your product prior to launch.