This year’s National Restaurant Association trade show was eye-opening in several ways. Here are three observations that I’m taking away from the event:
1) Coca-Cola is really worried about what restaurant operators may do about the decline in carbonated soft drink consumption.
I attended the education seminar led by Coca-Cola called “The Glass is Half Full, Unlocking the Beverage Opportunity.” There was little of practical use here for restaurateurs. What struck me was Coke’s insistence on reinforcing their positive view on classic carbonated soft drinks (CSDs), despite consistent declines in this category.
Their presentation said nothing about how they were broadening their portfolio to capture more consumers. It was all about how important classic CSDs still are. Many of us left the room shaking our heads.
This “head-in-the-sand” approach to the true state of CSDs was mirrored in Coke’s booth at the show, which was basically an advertisement for their Freestyle machine and classic CSDs (mostly). Their booth felt cramped, closed-off, and insular.
By contrast, Pepsi’s booth was open and inviting. And while Pepsi certainly promoted its new Spire technology, it was hard to find a classic CSD anywhere in their booth. Their focus was on emerging, non-CSD beverage categories and new craft sodas.
2) Tea, tea, and more tea.
The breadth and depth of tea offerings this year was stunning. I saw several new suppliers, and deeper offers from old suppliers. Royal Cup and others have invested in innovative ways to merchandise a broad line of flavored teas in a self-serve drink bar.
I think this growth in the tea category is worthy of operators’ notice because this trend could lead to less shelf space for fountain drinks and more space for a variety of tea flavors. This is especially likely considering the fact that operators make a lot more money per drink on tea, a fact that is only compounded by the ever-increasing price of classic CSD fountain syrup.
Perhaps the rise of consumer demand for tea and the increasing availability of more tea options, combined with higher prices and lower demand for carbonated drinks will finally lead to a slowing of the price increase trends on classic CSD fountain syrup.
3) Operators are really concerned about maintaining relevance for millennials, and they believe that re-imagining the restaurant experience is the key.
This issue of how best to appeal to millenials was discussed in two separate panels I attended populated by executives from Quiznos, Red Robin, Saladworks, Corner Bakery and Roark Capital.
All panelists emphasized the importance of designing and delivering a restaurant experience that is inviting and user-friendly for millenials. Practically speaking, this involves everything from opening up the food-making process for all to see to having high-tech, customer-driven interactions that leverage mobile devices and new digital infrastructure.
Getting franchisee buy-in for these kinds of strategies will be important for overall success. How do you do that? You do it by educating the franchisor and then getting them to invest.
Steve Romaniello of Roark Capital hosted an insightful panel discussion about the interplay between and the relative importance of food, restaurant design, and industrial engineering for efficiencies and savings.
The panelists ultimately agreed that you need all three elements to work together seamlessly in order to successfully remodel a concept.
Of course, these are only a few of the many learnings and highlights from the show. We look forward to coming back next year.
