Why Foodservice Matters in Every Industry

Where does foodservice fit in?

When discussing where foodservice fits into a premiumisation strategy, it is worth first looking at the most important components of premiumisation, as defined by Euromonitor International.  Experience is a clear example – foodservice above all represents a controlled, curated experience, one where consumers are giving an operator their undivided attention, sometimes for hours at a time.  This is hugely valuable, and most discussions of foodservice and premiumisation begin and end there.

Yet potentially even more important are the connections foodservice offers. Consumers generally walk into a foodservice environment looking to indulge, looking to try new things, and (perhaps most importantly) looking to be guided. Service is a massively important component of premiumisation in our time-starved, data-saturated age, and an understanding of how foodservice works, why it works, can benefit any brand looking to define what premiumisation means for them. Furthermore, as the next pages will show, an understanding of why foodservice is so valuable can help every player to better understand the changes currently impacting every consumer, in virtually any industry.

Why foodservice takes centre stage in a changing world

Why foodservice matters in every industry

Source: Euromonitor International

Mass brands face growing headwinds globally

The age of the smartphone and e-commerce has severely disrupted the business model that propelled mass brands in the 20th century. While mass advertising (above all on television) and mass distribution (to stores large and small) still matter a great deal, cracks are appearing in what were once unassailable competitive advantages.  Securing shelf space is less relevant in an era of digital commerce, while social media has created opportunities for brands to grow via word of mouth on an entirely new scale. While mass brands still matter, the defining characteristics of the 20th century – scale and resources – have become less decisive.  Instead, value is accruing to those brands and those companies which own consumer attention, while offering assistance in navigating a world with more choices than ever. Google, Facebook, Amazon, Netflix – all of these brands, to some degree, traffic in attention and discovery.

This new order favours aggregators – brands such as Amazon, Netflix, Airbnb, Just Eat and others that mediate this process of choosing and finding. It creates a much larger potential market for certain niche brands, while simultaneously blunting the historic advantages of the very largest brands.  Finally, and most ominously for the largest global brands, retailers of all types (Amazon above all) continue to relentlessly drive costs from their systems, driving the commoditisation of whole categories (bottled water, paper products, cleaning supplies) in order to drive traffic and attention to their storefronts.  For any product manufacturer, then, the issue becomes one of driving attention and connection. Service plays a major role in this – if simply providing and marketing a product is no longer sufficient, the value add moves towards the services and connections that come along with it.

Battle for attention in foodservice to intensify

Many of the same forces playing out through retail are present in foodservice. With its vast transactions streams, foodservice is a primary target for well-funded e-commerce players such as Amazon, Uber, as well as foodservice specialists such as Just Eat or Grubhub.  For every one of these players, there is a goal of becoming the first point of contact for finding and ordering delivery meals, with the value and branding accruing as much to the aggregator as to any individual restaurant.

Just as in retail, it is inevitable that a vast number of global foodservice transactions will migrate online, certainly within the next five years. Almost all of these transactions will be quick-service/fast food transactions, putting maximum pressure on the largest global fast food chains. The new and growing relevance of foodservice as a tool of branding and connection will bring new players into the field, while – also – driving further innovation into what foodservice can be.