Five Consumer Trends Shaping the Future of US Retail Grocery and Foodservice Industries

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Sluggish restaurant traffic growth and stalled sales in the center aisles at grocery stores are evidence that eating behaviors are continuing to evolve among consumers in the United States. The growing influence of Hispanics, Millennials going through life stages, aging baby boomers, smaller households, and the rising appeal of non-processed foods are among factors driving the shift in what and how consumers eat, reports the NPD Group.

The Chicago-based global information company, which has been continually tracking trends in how consumers eat at home away from home for over three decades, finds that some of the changes in demographics and behaviors driving the evolution in eating behaviors are as follows:

Hispanic Numbers Rise
The US Hispanic population is growing exponentially compared to non-Hispanics. In 2014 Hispanics in the United States increased their visits to restaurants, while visits of the rest of the population declined. At home consumption patterns of the Hispanic population, combined with its adherence to dining traditions, is beginning to influence national eating patterns. Fresh and from scratch are the most common food forms in Hispanic meal preparation. Stovetop cooking dominates Hispanic meals, more than non-Hispanic meals due to the types of dishes being prepared.

Millennials Drive Changes
In 2015 the Millennial Generation (people born between the early 1980s and mid-1990s, also referred to as Generation Y) is projected to surpass the Baby Boom Generation as the nation’s largest age group, according to the US Census Bureau population projections. Based on its sheer size, as Millennials go so go the food and foodservice industries. Millennials are driving changes in this country’s eating behaviors with their approach to food choices and preparation. They typically like so-called fresh, less processed food. This has played out in their preference for fast casual restaurants that offer freshly prepared foods, and shopping the perimeter of grocery stores where non-packaged foods can be found.

This generation is in a life stage when it would, historically, visit restaurants more often than is the case among other age groups. However, in recent years Millennials have cut back to the point where 50+ year-olds go out more often than they do. In addition, 65% of US Hispanics, a growing population base, are classified as Millennials or younger.

Aging Boomers
The Baby Boom Generation is aging, considering retirement, becoming empty nesters, and developing health ailments – all of which are typically associated with major changes in the way one approaches food and beverage consumption. While shrinking in size, this demographic is still too large to ignore – especially given its expected lifestyle changes.

This group will be less driven by the latest fads and more influenced by what they need to sustain health and lifestyles. Healthful foods, such as those high in whole grains, protein, and calcium, or low in saturated fat, cholesterol, and sodium, will be of most interest to Boomers. Their restaurant visits have surpassed those of younger adults, who have cut back on visits over the past several years.

Smaller Households
Current consumption behaviors in the United States have become less household-oriented and more individualized than in previous generations. Indeed, today over 50% of food and beverage consumption occasions happen when people are alone. Contributing to solo dining is the fact that 27% of all households now consist of just one person – the highest level in American history, according to the US Census Bureau. The number of solo eating and drinking occasions has wide-ranging implications for food and beverage marketers and foodservice operators in terms of new product development, packaging and positioning, restaurant seating design, menu development and more.

Fresh Preference
From 2003-13, consumption of foods perceived to be fresh (fruits, vegetables, meat, poultry, fish and eggs) grew by 20% to over 100 billion eating occasions – and it’s the youngest generations, Generation Z and Millennials, that are driving the trend. In addition to eating more foods regarded as fresh, Generation Z and Millennial consumers are also interested in eating more organic foods. In terms of foodservice visits, Millennials prefer fresh ingredients and freshly prepared items – key differentiators among many fast casual vs. traditional quick service restaurant formats. An aspect of freshly prepared that suits Millennials are menu components that are made to order or that can be customized.

“Visits to US restaurants are forecast to grow less than one percent a year over the next decade, slower than the 1.1% a year growth in the country’s population,” said Bonnie Riggs, NPD restaurant industry analyst. “A greater share of visits will source to those 50 years and older in 2019, but as consumers age they become less frequent restaurant users. This means the restaurant industry will have heavier dependence on lighter buyers.”