Foodservice Differentiation

Originally printed in the July 2021 issue of Produce Business.

With the pandemic receding, the restaurant industry is recuperating, and some degree of normalcy is returning. Many foodservice distributors found new strengths in being able to serve retail clients, and many foodservice operators became adept at preparing food for delivery. Still we would expect a lot of rebounding back to the norm.

We’ve noticed restaurants, such as Houston’s, reverting to their pre-pandemic norm where — explaining that the quality doesn’t hold up — they simply won’t prepare certain dishes for takeout. My sons are big fans of its Spinach Artichoke Dip, but Houston’s would never sell it for takeout. During the pandemic they sold the appetizer for takeout, but now they don’t.

The delivery services are scrambling. Restaurants are unhappy with the fees the third-party services charge, and consumers are unhappy with the fees charged on their end. These services are looking to add dry cleaning and a hundred other things to deliver, but that so-called last-mile delivery is very expensive and, with people no longer stuck in the house, not so valuable. Many people will now find it both less expensive and more convenient to pick up their takeout on the way home from work.

Even if working from home becomes more common, we don’t know if this will mean people will eat out more or less. One could imagine a decline in people eating out for breakfast and lunch, but there might be a big increase in eating out for dinner, which might cost much more than the breakfast/lunch they ate when at the office. One could also imagine more frequent and elaborate vacations if people are working at home all the time; again, these meals at hotels, resorts, in big cities… all can mean higher expenditures.

We’ve hypothesized that major retailers might purchase the rights to particular varieties as a way of drawing consumers who value that apple or grape. We would think that there might be similar opportunities in foodservice.

Still the shake out from the pandemic makes clear the industry has some big challenges to confront as the foodservice sector revives:

The first is the longtime challenge of how to diversify the products used in the foodservice sector. The popular claim is that 80% of all produce used in foodservice is the famous PLOT assortment – Potatoes, Lettuce, Onions and Tomatoes. Our estimate is that 80% is an overstatement, but not that far off. The industry just can’t fully prosper if we don’t find a way to get a broader assortment of produce to move through the foodservice channel, and that means new recipes, new concepts and more.

The second challenge is even more crucial — innovation. The future prosperity of the produce industry depends heavily on such things as breeding to develop the best flavor as we have seen in the grape and apple industries; flavors added to products such as beets; and proteins and other foods mixed with produce in bowls and whatnot to create unique flavor profiles.

The problem though is that most operators, even if looking to sell more produce, are resistant to tying themselves down to certain brands or varieties. This is a combination of genuine concern that consumers would not want to pay more for product and a different fear that by publicizing a variety or brand on their menus, they set up a situation of dependence where consumers appreciate a flavor profile or a product — more than the restaurant.

We’ve hypothesized that major retailers might purchase the rights to particular varieties as a way of drawing consumers who value that apple or grape. We would think that there might be similar opportunities in foodservice.

There are two main opportunities: The proprietors of the variety or brand can promote their product’s unique flavor and quality so that consumers will seek out these items and restaurants will think they cannot fail to offer this highly sought-after product. The alternative is that restaurants can secure their own exclusive rights to particular produce items, and then the restaurant chain can promote its unique flavor profile. Just as consumers might select a particular restaurant because the chef prepares a dish like nowhere else, so might they select a chain because its menu includes unique ingredients that consumers value for their taste, texture or other attribute.

When we’ve lectured and attended events at the Culinary Institute of America, we’ve seen produce companies trying to promote their products, but the CIA programs are heavily skewed toward boards and commissions. Most notably, Bart Minor of the Mushroom Council has worked tirelessly to persuade chefs of the desirability of using mushrooms with ground beef to create great flavor while improving the health profile or a burger or meatloaf. Yet proprietary produce lines in grapes, apples, etc., are pointing the industry in a new direction. It is not just a question of better, but also different, that might drive produce consumption.

In any case, as we look beyond the pandemic to a revitalized foodservice sector, the challenge for the industry is clear: How to broaden the product line used in foodservice and how do we get the foodservice sector to not just seek low prices, but seek out the unique varieties and high flavor profiles that will lead consumers to both eat more fresh produce and be happy to pay a premium to get the best stuff.