Three Reasons for Restaurants to Worry

Consumer attitudes about food, dining, and health are shaking up the business climate for restaurants. Three big factors are creating worries, along with a few business opportunities.

1. An unhealthy image is driving many people – especially millennials – away from fast food and fast casual restaurants that have prospered for years. Chipotle, with its faux-healthy “food with integrity” positioning, finds itself struggling after years of climbing past McDonald’s. A multistate E. coli outbreak drove Chipotle sales and stock value into the dumps.
    
   But others aren’t doing much better. Even Panera, touting “clean food as it should be,” has seen its sales projections drop in recent months.
    
2. Cooking at home has the appearance of hot trend right now. The difference between grocery prices and restaurant prices is “the biggest gap we’ve seen in the last ten years,” said the retiring McDonald’s U.S. President Mike Andres in July.
    
   On top of the economics of it, consumers are increasingly finding value in the experience of cooking at home. “We see through secondary research that millennials are cooking more,” says Anna Conroy, planning director for ad agency mcgarrybowen. “It isn’t a chore as much as an ability to create an experience.”
    
3. Competition on many fronts springs from innovators responding to these shifts in consumer preferences. Blue Apron leads the pack of entrepreneurs offering meal kits for healthy home cooking. Their success has set the stage for a rumored IPO soon. Umi Kitchen is experimenting with an innovative service to “bring the joy of home cooking to everyone (minus the work).” You might think of it as a cross between Uber and Blue Apron. A network of home cooks is instantly available on an app with home-cooked meals that come to your door.

 
One thing is clear. Business as usual is not an option for the restaurant industry. The same old business model that fills people up with 2,000-calorie meals has a shrinking customer base.

Whatever replaces it might promote better health or not. But it will certainly be different.

Click here to read more from the New York Times and here to read more from the Christian Science Monitor.

Kitchen Texture, photograph © Aftab Uzzaman / flickr

Subscribe by email to follow the accumulating evidence and observations that shape our view of health, obesity, and policy.

October 2, 2016