The broader tastes of younger consumers is fuelling the expansion of chains focused on ethnic food in the US. David Henkes, vice president at foodservice analysts Technomic, looks at which types of outlet are on the rise and hints at the trends to watch.
Younger consumers are always looking for something unique and different – something buzzworthy to share on social media and with their friends.
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And this adventurous and ethnically diverse consumer segment is also spurring much of the growth of ethnic food-focused foodservice chains and concept development. While many of the data points shared here are from the US, simila trends are true globally, as younger consumers are becoming more sophisticated and dynamic in their behaviour when eating in the foodservice channel.
A recently published report by Technomic on flavours and consumer trends shows half of all US consumers aged 18 to 34 say they are more interested in trying ethnic flavours and cuisines now than they were a year ago. The same proportion of young consumers say they are more interested in trying new flavours now than last year.
When it comes to ethnic cuisines, authenticity is a key purchase driver; 60% of consumers say that if they are ordering food featuring ethnic flavors, they want the food to be authentic. There is a wide definition for authentic, however, and may not always be a requisite for all consumers. As a counter-example, the US chain Panda Express is not considered “authentic” Chinese cuisine, yet it still experiences a great deal of success.
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Recent Technomic data shows the Asian/noodle category had the most year-over-year unit growth over all other limited-service Top 500 menu categories, at 5%. This is largely thanks to Panda Express and Noodles & Company, which both largely feature ethnic and ethnic-fusion menu offerings. Despite Noodles’ recent announcement that it will close 16 locations, it is still a leader in unit growth this year.
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By GlobalDataLooking more closely at how Noodles stays ahead of the competition, the chain launched a line of Buff Bowls featuring Japanese- and Thai-inspired bowls of greens, veggies and proteins this year. Not only do these bowls offer trendy ethnic flavours and sauces, but they also meet the growing demand for high-protein, low-carb fare. Panda Express brought back its Firecracker Chicken Breast early this year, likely in response to demand for more spicy ethnic fare, as well.
Mexican limited-service restaurant chains also experienced above-average unit growth this past year, increasing their stores 2.6%, compared to the average growth seen in the limited-service resaturant channel of about 1.7%.
For full-service restaurants, Italian and pizza chains have increased their unit count by about 1.1% since 2014, above the 0.6% average for the broader full-service restaurant sector. This growth is led by the innovative Mellow Mushroom pizza chain, which recently offered a limited-time lineup of Mexican-inspired items, from the Fully Blazed Chicken Mole Pie to the Smokin’ Shrimp Calzone.
In Technomic’s list of ten trends to watch for 2015, we included “There’s something about Asia.” Indeed, we’ve seen a wave of new Asian concepts emerge and expand these past several months. These concepts tend to be approachable and customizable fast-casual chains, though most of them offer far more than just traditional sushi or orange chicken.
Instead, they showcase less mainstream Asian items, from Korean-style bibimbap to Vietnamese bánh mì sandwiches. Examples include Bibibop Asian Grill, Bibigo, BONMi, Xi’an Famous Foods and Bopngrill.
For the next wave of Asian chains to succeed, establishing authenticity is crucial, but so is creating transparency. Both of these can be accomplished by telling the story – operators should explain their history and cuisine, making sure to point out ties to Asia, (do they use traditional Korean recipes? Are the owners from Vietnam?), as well as include information on sourcing and the quality of their ingredients.
Beyond these East Asian concepts, we’re also seeing new concept growth for fast-casual chains serving Middle Eastern and Mediterranean fare. In April, fast-casual Cava Mezze Grill received $16m investment from existing partner Swan & Legend Venture Partners and other investors for expansion.
Then in June, Roark Capital Group made an undisclosed investment in fast-casual Middle Eastern chain Naf Naf Grill.
Fast-casual ethnic concept development will remain noteworthy in the coming year, though expect upscale and authentic ethnic casual-dining chains to emerge as well. While the performance of our top 500 Asian and Mexican limited-service restaurant categories should continue to perform well, expect new ethnic menu categories, such as Middle Eastern, to emerge and compete.
The full-service segment in general will struggle with growing unit count, but look to fine-dining, family-style and Italian/pizza full-service restaurant chains to come out ahead. Many of these aforementioned full-service chains will set themselves apart by offering ethnic menu innovation.
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