The bakery scene in St. Louis is indicative of larger trends sweeping the country, as longtime retailers strive to reinvent their business brand in the face of rising competition from niche bakeries and national chains that are increasingly expanding their food and beverage menus.
At McArthur’s Bakery, a three-store retailer that will celebrate its 60th anniversary next year, there are many changes underway that constitute a “brand refresh” in the words of Ben Abel, who is executive director (food services) of Live to Venture Holdings, which purchased McArthur’s from Randy McArthur last October.
McArthur’s retail locations feature expanded menus with more sandwich options and an enhanced dining experience. The business is moving toward a central kitchen setup to improve efficiencies and lower costs, as well as upgrading the wedding cake showcase rooms to implement a more elegant feel.
“Our big mission is truly to maintain everything that McArthur’s Bakery has done for 60 years, while at the same time, add on to and enhance the overall experience,” says Abel, who previously worked as a senior project manager at Panera Bread. “We’ve tried to open the floodgates. We’re definitely seeing growth already.”
A recent wedding cake from McArthur’s reveals how far the retail bakery industry has come in a decade. The Knot, the nation’s top bridal magazine, recently featured a unique wedding cake by McArthur’s for a multicultural Indian wedding held at the elegant Lumen private event building in St. Louis. The couple enjoyed a three-tier red fondant cake with a gold paisley design. The bride's parents painted gold elephants to use as the cake topper.
Readers of the St. Louis Post Dispatch voted McArthur’s as their favorite bakery in the annual citywide poll for 2015, which was released in late April. Yet the newspaper’s fashion editor gave the nod for best bakery in St. Louis to Whisk: A Sustainable Bakeshop, which opened in 2012 and specializes in local food and natural sweet treats like vegan pumpkin brownies and zucchini spice cupcakes. Whisk’s owner Kaylen Wissinger calls them “Farm Fresh Cupcakes.”
A natural evolution
Natural continues to be a key driver for new product innovation, and bakers and pastry chefs are creating all sorts of sweet and savory bakery products that test the limits of traditions. At Craftsman and Wolves in San Francisco, chef/partner William Werner has devised one of the more amazing products, a savory muffin called the Rebel Within (made with asiago, sausage, green onion and a soft cooked egg inside).
This summer, Panera Bread unveiled a new national advertising platform to express the company’s long-held belief in food that is good and good for you. “The Panera experience starts with great taste, but good food should also be good for you. For us, that means a menu you can trust and understand,” says Chris Hollander, Panera’s head of marketing.
“From becoming the first national restaurant company to voluntarily post calories on menu boards, to offering chicken raised without antibiotics ahead of the industry, to removing artificial trans fats and announcing our clean menu commitment—we’ve been working for several decades to earn the trust and confidence of our guests. While we’ll always be on a journey to improve, Food as it should be brings to life our progress, ideals and vision.”
The “Food as it should be” campaign includes national television spots, billboards, radio advertising and digital and display content. The campaign’s anthem spot will also appear on digital video platforms and in movie theaters this summer. “You’ll notice that people are in the forefront of our campaign creative. It’s a bold move from industry standard product shots, but we believe that people are as integral to the joy of eating as the food,” Hollander says.
Such new messages play strongly to the mega trend of increasing demand for clean label foods. Clean label is a relatively new food industry term, but characteristics within that term may appeal to an older demographic market. Who is the most interested? Older consumers, the 50-plus age group, says Elizabeth Sloan, Ph.D., president of Sloan Trends, Inc., Escondido, Calif., in a July 13 presentation at the Institute of Food Technologists’ annual meeting and food exposition in Chicago.
Baby boomers have time on their hands and a fair amount of money to buy clean label products, agreed John Hallagan, an attorney in Washington who has worked with the Flavor and Extract Manufacturers Association (FEMA). Consumers may have different goals when seeking out clean label products. Older people may want to avoid additives, Sloan says, while younger people may seek organic, all-natural and gluten-free items.
Gallup has investigated clean label product use by attributes and age groups. A 2013 Gallup study asked consumers to give their reasons for avoiding chemical/artificial ingredients. Seventy-six percent of those age 65 and older said “concern about health,” which compared to 75 percent for age 50-64, 62 percent for 35-49 and 58 percent for 18-34.
Sloan also pointed to a report this year from the Organic Trade Association, which showed US organic food sales rose 11 percent in 2014 to reach $35.9 billion. “One-third of those people are buying organic because they know, right or wrong, they know they do not contain any GMOs,” Sloan says.
Products labeled as non-GMO are increasing in use among millennials — and among baby boomers, people in Generation X and pretty much all age groups in the United States, according to data from the Natural Marketing Institute.
Data from the NMI show use of food labeled as non-GMO rose to 59 percent of the general US population in 2014, which was up from 53 percent in 2013 and 37 percent in 2012.
Among millennials, the percentage rose to 72 percent in 2014 from 61 percent in 2013 and 45 percent in 2012. For Generation X, the percentage slipped to 58 percent in 2014 from 60 percent in 2013. For baby boomers, the percentages were 49 percent in 2014, 47 percent in 2013 and 29 percent in 2012. For the “mature” generation, the percentages were 44 percent in 2014, 39 percent in 2013 and 28 percent in 2012.
Halfway through 2015, Technomic research experts have taken stock of the market forces and menu trends emerging in the foodservice industry. Overall, consumers are filling restaurant tables at pre-recession levels. However, some dining habits that emerged during that belt-tightening period continue to influence how consumers dine out in 2015 and beyond.
"Midscale dining is doing better but must keep reinventing and innovating to continue this path" says Joe Pawlak, senior vice president at Technomic. "Fine dining has bounced back. Meanwhile, limited-service restaurants, especially fast-casual concepts, continue to bite into the casual-dining market, although there is market improvement in this sector."
Technomic's experts traveled to some of the nation's noted restaurant cities and conducted first-hand research, interviews and surveys among operators, chefs and consumers. They pinpointed six key trends:
Fast Casual Not Slowing Down: This segment continues to outpace all others, growing at 11 percent, compared to 4 percent among quick-service restaurants (QSRs) and 5.6 percent growth in casual dining.
Build-Your-Own Keeps Building: Within the fast-casual segment, concepts built around customization are growing twice as fast as those that are not.
Cult Status: QSRs that are doing well—Chick-fil-A and Culver's, to name a few—have developed clearly defined niches, achieved cult-like followings and garner higher check averages.
Subtracting the Additives: Consumers demand to know the back stories on ingredient sourcing and processing. Operators are responding with increased menu transparency.
Tech Becomes Necessary: Online ordering, mobile apps and table tablets fulfill two needs: appealing to Millennials' high-tech and high-speed preferences and supplementing service in a tight labor markets.
The New Foodie Norm: Food blogs, foodie media and foodservice everywhere mean everyone's a culinary expert; dining needs to be an Instagram-worthy experience.
Franchise opportunities
In line with these culinary trends, the owner of a popular Central Iowa retail bakery and dessert lounge is gearing up to take her brand to the next level. Crème owner Christina Moffatt has partnered with former Jimmy John's CEO Gregg Majewski to scale the concept.
Crème started as a wholesale and custom bakery in July of 2010. Moffatt opened her retail and dessert bar in August of 2012. Moffatt attributes her success to product diversification and ingenuity with the bakery/dessert lounge concept. The brand offers cupcakes, plated desserts and creative cocktails combined with a custom cake and wholesale business.
"I am thrilled to have the opportunity to work with such a fun and exciting new brand in the restaurant world,” Majewski says. “Crème fits an untapped market in the industry by offering award winning baked goods throughout the day and providing high-quality gourmet dessert and cocktails to an after-dinner crowd. When the wholesale opportunities are added to the business model, it becomes a truly unique concept."
Moffatt will serve as the company's CEO. Majewski will become a board member and act as chief of franchise Operations. Crème Franchise, Inc. will be a female-owned business with corporate headquarters in Des Moines, Iowa.
Crème Franchise, Inc. is seeking up to $1.5 million in capital from accredited investors. The $1.5 million will be used for general working capital purposes and to open at least one new company-owned store in a nearby market. Omaha, Nebraska, and Iowa City, Iowa, are among the cities Crème leaders are currently eyeing.
This fall, Crème Franchise, Inc. will begin selling franchised units to established franchise operators and restaurant groups in second tier markets with a goal of growing from the Midwest out. Early target markets include Minneapolis, Kansas City, Madison, Omaha and Chicagoland suburbs.
"When I started Crème, I recognized the company's growth and opportunity would be limited if the business relied solely on me. Over the past two years, my staff has proven that it doesn't," she says. "Our team of managers, bakers, sales associates, servers and event coordinators strive to deliver great customer experiences every day. Now culinary entrepreneurs across the globe can offer a similar experience to people in their community with a Crème franchised location."
Future spin
Marketers continue to emphasize the importance of catering to millennials, but the most disruptive group of future food consumers, according to futurist Mike Walsh, was born in 2007. “If you understand how an 8-year-old thinks, you’re a long way toward really understanding a transformative change in consumer behavior,” the chief executive officer of innovation research lab Tomorrow said during a July 13 presentation at the Institute of Food Technologists’ annual meeting in Chicago.
Not only was 2007 the year of the global financial crisis; it was also the year Apple introduced the iPhone. Walsh implored the audience to consider the dramatic changes in everyday life as a result of this technology. “What does this have to do with food?” he asks. “It’s actually essential because when you think about your 8-year-old, how they make judgments about food, about food brands, eating and dining, it’s all connected to that experience of the smartphone.”
Already, Instagram has transformed the dining experience, and food packaging is increasingly joining the connected era with scannable codes and interactive labels. Emerging food printing technologies will lead to the digitization of taste and food memes. Consumers may someday see an appetizing dish on social media and instantly print it at home, he says. “There’s a spectrum of consumers with decision fatigue. They’re sick of thinking about what they want to eat, and if you can take that away by just having a simple substance you can drink, they’re happy to do it.”
Chain reaction
One only need to look at the nation’s top multiunit retail chains to see where the trends are heading, what’s working and what the future may hold for retail foodservice.
Starbucks’ digital initiative that allows customers to use an iPhone app to order ahead is one of several game-changing initiatives the Seattle-based company believes will help it deliver world-class service and convenience.
Starbucks introduced Mobile Order & Pay in 150 of its company-operated stores in the Portland area last December and then quickly expanded it to the full 650-store Pacific Northwest region in March. The success of the launch prompted Starbucks to accelerate the roll-out of the offering, and the company now offers the mobile capability in more than 4,000 of its US company-operated stores. Starbucks is on track to offer Mobile Order & Pay capability across the entire U.S. company-operated store portfolio in time for the upcoming important holiday season, says Howard Schultz, chairman and chief executive officer.
“Mobile Order & Pay is enabling us to serve more customers more quickly and efficiently and to significantly reduce attrition off the line,” Schultz says. “We are already seeing positive impact on operating results, but keep in mind that the roll-out to 4,000 stores occurred only in the last couple of weeks of the third quarter. So the real impact for Mobile Order & Pay and increased convenience remains in the quarters and years to come.
“In those stores where Mobile Order & Pay has been deployed, lines are shorter, service is faster and in-store operations are more efficient. The net result is increased traffic, incrementality that is exceeding expectations, improved throughput and an elevated Starbucks experience for our customers. We will add the Mobile Order & Pay feature to our Android app in the US, as well as introduce Mobile Order & Pay technology into our international markets in the months ahead. Importantly, key features like suggested menu recommendations that will drive increased ticket have not yet been deployed, as we are still in the beta mode.”
Bakery and beverages also play a huge role in the future of the retail industry. Bruegger's Bagels and Jamba Juice, for example, are joining forces to open nine co-branded stores in the Midwest, East Coast and New England.
The partnership will launch in September to bring the best of both brands together with greater convenience. Guests can enjoy Bruegger's Bagels' fresh-baked bagels, Vermont cream cheese, premium coffee, sandwiches, soups and salads along with freshly squeezed juices, signature smoothies and protein bowls from Jamba Juice, all under one roof.
"We tested our unique partnership with Jamba Juice last fall at our first co-branded location in Storrs Center, near the University of Connecticut campus, and it was an immediate hit," says Bruegger's Bagels president Paul Carolan. "It became clear that our brands complement each other very well with our mutual focus on freshness and authenticity, and that this partnership offers a way for both brands to extend their reach."
The first co-branded location is expected to open in September, with six Bruegger's Bagels bakeries and three Jamba Juice stores to begin the rollout.
"Our co-branding initiative with Bruegger's Bagels represents a significant phase of our continued commitment to making our great-tasting, better-for-you products more accessible to consumers," says James White, chairman, president and CEO of Jamba, Inc. "The combination of Bruegger's Bagels and Jamba Juice will create stronger offerings across all day-parts for consumers of both brands."
