1 The Rapid Growth of the Hybrid Market-Restaurant.

There has been a

clear line between the out-of-home meal purchased at a restaurant
and the in-home meal prepared from food purchased in a market.
Many people over the past decade, including me, have observed
the slow melding of restaurants and supermarkets as prepared
meals became available in places such as Tesco, Migros, and even
Aldi. A new trend, the emergence of convenience markets with
both restaurant and supermarket products is a greater challenge for
both traditional food distribution channels.
For manyyears inthe UnitedStates andEurope, basicallylowpriced
on-the-go items were available at petrol stations and convenience
stores, but they were not truly a threat to the more traditional and
clearly dened restaurants or food stores nearby. But that is chang-
ing, changing quickly, and it is a trend that will not be reversed
soon. The most visible example globally is the high-end market/
restaurant chain, Eataly, with restaurants opened or planned for ma-
jor cities worldwide. Restaurants, from quickservice to ne dining,
are all going to be effected by this trend as choices for meals and
snacks expand. Supermarkets will be impacted as well, especially
for high-end specialty products and low end impulse purchases.
Globally, the leading brand in the convenience segment is 7-Eleven,
which will soon have more than 50,000 stores around the world,
only 10,000 of which are in North America, most serving gourmet
coffees and freshly made meals. The new Marks & Spencer multi-
channel +convenience concept in Amsterdamhas more than 1,400
food offerings, both prepared groceries and fresh food. One lead-
Special: Anuga Industry Outlook 2013+
As operators we all want to be able to
look around the corner. We hope to
see what fabulous new thing needs to be
grabbed before it passes us by or what
horrible is coming at us that we should
avoid at all costs. We all want just a little
edge, a touch of insight, a whisper tell-
ing us which way the wind will blow. Of
course, that is a fools errand. No one has
ever truly predicted the future, at least not
at the micro-level. What we are able to do
is to look at larger long term movements
which suggest what people will do to make
sense of their lives.
Prof Christopher C. Muller evaluates ve
mega-trends (three of which represent a
paradox of conicting but complementary
actions) which will have such an impact.
www.bu.edu/hospitality
Why We Need to
Move Faster
A 6 !" FOODSERVICE EUROPE & MIDDLE EAST 3/13

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ing US company calls their new in-store model a Convenience
Restaurant with meals prepared to order from both fresh and com-
missary foods. Pricing at all of these options is very aggressive.
In the United States the steady growth of restaurant sales at the
expense of supermarkets, passing 50%of the food dollar by 2006,
came to a halt with the economic recession in 2009. Now super-
markets are clearly gaining back their lost market share with res-
taurants only claiming 47% of the food dollar in 2013. This trend
is mirrored in other economies as well. Consumers are attracted to
the price, quality, selection and convenience of nding prepared,
hot and ready to eat offerings in the supermarket without having to
be committed to a restaurant service experience.
Now though, consumers are just as likely to nd all of those attri-
butes inqualityproducts at the corner convenience store. Hot, tasty
meals, served in clean and comfortable settings at very affordable
prices are clearly a recipe for growth.
What this means for foodservice: Competition for the daily consumer-
spend on meals has always been intense. Now, a third category of
competitor, the hybrid convenience market, offers restaurant qual-
ity meals in an attractive setting. This is a challenge which must
be met, especially for restaurant companies involved in take-out,
delivery and hand-held food.
Restaurant companies will need to respond to this threat by being
innovative, whether in creating counter offers, blending their own
Science !"
Special: Anuga Industry Outlook 2013+
Christopher C.
Muller, Ph. D.,
Professor of the
Practice at Boston
Universitys
School of Hospital-
ity Administration,
is the worlds
leading thinker
and teacher in the
eld of Success-
ful Multi-Unit
Restaurant
Management.
He has published
several books on
this subject and
gives lectures
throughout the
world.
food into a market setting, or redesigning existing spaces to match
changing consumer demand.
2 Simultaneous Global + Tribal Perspectives. Both the developed and
the developing world economies are now intimately connected
by wireless telecommunications. It is predicted that by 2015 there
will be more smartphones, tablets and other mobile devices than
human beings around the globe. The Internet, which became just
20 years old on April 30, 2013, nowlinks the entire world together
through a few key strokes. That is the global perspective which
is nowavailable to billions of people.
Just like you and your customers, every day I send and receive
emails across continents and time zones, send SMS text messages
without caring where the reader is located, talk on Skype, follow
Twitter, send Instagram pictures, read news reports and watch
YouTube videos from anywhere at any time. We are the World
Wide Web, overnight citizens in a global community. Together
we are nowexperts on cuisines fromBangkok, Addis Ababa, New
Orleans andMarrakesh. If chef Claus Meyer meets his goal, La Paz
in Bolivia will be next. Look in your pantry or outside your front
door, what kind of meal will you have today: Pad Thai, Fettuccini
Primavera, Maki Sushi, Fish and Chips, or a Cheeseburger?
Yet at the same time, we are more tribal and insulated in our think-
ing than ever before. The instantaneous communication available
to us means that we now connect more with the people we know
personally than with those who are just beyond our reach. Counter
to predictions of a global village, the us-them barriers of personal
protection are thicker, the need to trust our truly intimate friends
stronger today than 20 years ago when the Internet entered our
lives. We create friends on Facebook, followers on Twitter, con-
nections on LinkedIn, and contacts on our iPads. We have an ex-
panded group of people in our newinterlocking families and tribes
who we connect with often, but we spend less time interacting
directly with people who are not in our tightening socio-economic
world. We live in isolated neighborhoods with people who share
our income, education, racial, age and political characteristics. We
attend business conferences with others who share similar pro-
les (and we read the same periodicals and books). We watch tele-
vision programs targeted to our particular demographic cohort.
And as Bob OBrien of NPD has pointed out, no matter where we
come fromor nowlive, on a daily basis we prefer to eat the food of
our native culture. This is the tribal perspective we are cloaking
ourselves in.
The meaning for foodservice: The paradox is summed up by this
phrase: Now I know people from everywhere, but I only trust
those who are like me. This means business leaders must be able
to offer expanding experience-based menus that combine the
exotic with the everyday, the new with the old, while offering a
safe global view from the comfort of the local table. Success in
!" A 7 FOODSERVICE EUROPE & MIDDLE EAST 3/13
Five Complex Trends
1 Rise of Hybrid Market-Restaurants
2 Global + Tribal Perspectives
3 Cashless Is Cool/Cash Is King
4 The End of Trade Secrets
5 Urbanism, Aging and the Single
Household

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# We are the World Wide Web, overnight
citizens in a global community.
the future will come from enhancing guest inclusion in a branded
restaurants self-dened tribe. I go there because it is really cut-
ting edge, and all my friends go there, too.
3 Cashless is Cool/Cash is King. Just as consumers want to be global in
their perspective and tribal in their viewpoint, many are beginning
to feel both liberated and lost in a digital economic system that is
becoming instantaneous and ubiquitous but also impersonal and
intrusive. The technology which offers us the convenience to go
digital with our banking and payment options is being embraced
around the world (as our smartphone is fast becoming our wallet).
The ability to electronically manage everything with a swipe of
our iPhone, fromour airline boarding passes to the chewing gumat
the airport kiosk, is no longer unusual; in many cases it is expected.
At the same time this newsystemof exchange is expanding we are
also voluntarily surrendering more and more personal information
about our purchase behaviors, collectively what is nowcalled Big
Data. We all know that Google and Amazon have extensive al-
gorithms tracking even our simple product inquiries, let alone the
actual purchases we make. The same is true of our credit and bank
debit cards or our PayPal and other secure on-line transactions.
In contrast, historically the restaurant industry has long been con-
sidered part of the secret grey economy because of the high re-
liance on cash transactions at all levels of the industry. While in
many markets this is still the case, more and more customers are
migrating to the convenience of a digital cashless payment pro-
tocol. In the United States many restaurants now see greater than
90% of transactions being electronic settlements.
Now, a paradox is beginning to be observed as two contrarian
views meld into a counter-trend. The rst is the change in per-
ception, especially among the Millennial Generation, surrounding
the invasiveness of big data into consumers personal lives. The
second is driven by the continuing stagnant economies in many
markets, where unemployment is rampant (especially effecting a
displaced, male and middle aged cohort). For both groups, people
are rediscovering time-honored ways to carve out a loose means
to support themselves, specically by joining the low barrier-to-
entry world of foodservice. These two groups of people, those
seeking to leave minimal digital footprints and those who have
fallen off the economic grid, have come to realize that using cash
for their transactions gives them freedom and control. This cash
is king mindset also appeals to consumers in the mainstreamwho
are starting to consider ways to remain anonymous with the use of
cash, and especially to consumers who are seeking to keep a retro
or anti-establishment prole.
The meaning for foodservice: As in all paradoxical market situations,
this one presents both opportunity and threats. Corporate restaur-
ant companies will benet tremendously from guests who nd
it more convenient to make purchases without needing to worry
about having cash. The use of electronic funds transfers, on a
smartphone or at a restaurant table, will improve sales whether
for the online ordering for delivery of a pizza or in the postponed
purchase at the highest levels of three-star cuisine.
At the same time pop-up restaurants, mobile trucks and street food
concepts will hurt mainstream bricks and mortar establishments.
Large companies can establish credibility with a disenfranchised
demographic by focusing on the cash is king no-credit counter-
culture movement. Pubs, gastropubs, entertainment venues and
other locally based restaurants can leverage the informality of a
cash-only environment, even at the loss of consumer convenience.
4 The End of Trade Secrets, Welcome to a Wikileaks World. The information
age has, as noted, been very rapid in reaching the restaurant mar-
ket, with many benets and unanticipated costs. Before the wide-
spread use of the Internet, senior managers could expect a reason-
able level of control over their intellectual property; what was
often termed their trade secrets. Each company had its own system
of operating, including proprietary manuals, policies and proce-
dures. It would have required a concerted effort by a competitor to
acquire this information, whether it was simply making purloined
photocopies of management forms or as complex as a competitor
hiring a senior executive with knowledge of those systems and
policies.
Historically restaurants have had a difcult time protecting their
intellectual property. Stories abound of legendary chefs offering a
guest the recipe for Tonights Special but leaving a crucial ingre-
dient out, or of the chef/patron who banned prep cooks from the
kitchen while he was seasoning the Lobster Bisque. Legend says
that only a limited number of people have ever known the full list
in KFCs eleven herbs and spices original batter or the avor
recipe for Coca-Cola.
But in an early restaurant brand valuation legal case, the judge
asked senior managers if employees were given copies of training
materials which they could study at home. When it was admitted
that they were, and that those original copies were not returned
later, the materials were declared in the public domain and no lon-
ger protected. The same held true for any design elements that
were publicly in view, or recipes that could be replicated by taste.
Today, the Internet, rmly in the age of Wikileaks and vast on-
!" Science
# Success in the future will come from
enhancing guest inclusion in a branded
restaurants self-dened tribe.

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Special: Anuga Industry Outlook 2013+ A 8 "! FOODSERVICE EUROPE & MIDDLE EAST 3/13
line postings of loadable manuals and proprietary forms, makes
it all but impossible to protect a company from the transparency
of email, Facebook or Google. Few people, after a short online
search, cannot nd and download most of the worlds top restaur-
ant training manuals. Transparency is the word of the day.
What this means for foodservice: We are in a time when the old model
of creating and holding a sustainable competitive advantage by
having a protectable product or service mark no longer applies.
Hackers, trackers, stalkers or anyone with an interest can nd all
the competitive items about a restaurant they need after just a short
search. The newrules are that a company must nd its own unique
but transitory selling platform, then, by using newcommunication
technology via social media build a strong personal connection
between the guest and the restaurant brand.
Marketing is a truly a one-on-one activity, all the doors and win-
dows into the kitchen and the managers ofce are wide open, so
it is time to hide in plain sight. Restaurant leaders need to post nu-
tritional information, recipes, guides to healthy eating, vendor and
supplier information, basically anything which used to be consi-
dered secret on the website or on a menu because any information
which is hidden by choice will be found and used in an unfortunate
way. Restaurants have always operated as open systems this new
trend should be embraced by management.
5 Urbanism, Aging, and the Single Household. There are three key demo-
graphic trends which will impact the foodservice industry for the
next 10-20 years; migration from rural to urban centers, the aging
of developed regional populations, and the rise of single person
households. These are all global innature, but eachwill have a more
serious effect on the traditional service economies of the Northern
Hemisphere, especially Europe, North America and Japan.
The global population is growing and it is also moving, but in very
different ways by region. It is a fact that in 2013 more than 50% of
the worlds population now resides in urban areas. But the seven
largest metropolitan areas in the world are all found in Asia, only
three of the 20 largest cities are in North America (New York, Los
Angeles, Chicago) and only one is in Europe (Moscow). This is in
stark contrast to the fact that almost 4 out of 5 residents of North and
South America live in urban centers, closely followed by Europe
Science !"
with more than two-thirds of its population
already in cities, yet only 45% are urba-
nized in Asia. It is hard to believe that the
teeming cities of Asia are only beginning to
absorb expanding populations; but by glo-
bal standards the regions urban areas are
less than half full. Migration, people mo-
ving themselves from rural to urban areas,
will continue in all regions of the world and
clearly will have an enormous impact on
nations and economies in the future.
This impact, though, will be felt very dif-
ferently in each region of the world. The
positive potential and the challenge for
developing Asian countries will be how
to absorb additional millions of people seeking employment, ad-
vancement and housing into their currently large urban centers.
The challenge for Europe, on the other hand, is how to maintain
current levels of social welfare as the population of city residents
is aging rapidly; without additional young workers these cities
will atrophy. In North America, where this urban migration has
been rmly in place for years, the impact will be felt as decades of
low infrastructure investment results in clogged inner cities desi-
gned around the automobile which was always more suited to less
densely populated suburban and rural environments. Infrastruc-
ture investment is a problem in Istanbul and Moscow, while an
older, single lifestyle has major consequences in Tokyo, Rome and
Stockholm. Manhattan Island in NewYork literally does not have
enough miles of streets to hold all of the cars driving through it on
any given day; a single trafc delay has the potential to deadlock
the entire city.
What this means for foodservice: Densely populated urban centers are
very good for the restaurant industry, which can rely heavily on
pedestrian footfall. Mass public transit hubs are being renewed to
become rising commercial centers, as they more and more become
the Zero Corner urban crossroads described by William White
in the 1960s. Aging populations of single household residents will
increase the use of take-out and delivered meals, especially as
center-city housing options become increasingly smaller with less
cooking and eating options.
Restaurant companies which built their empires chasing popu-
lations out into the extended ex-urban areas will see benets as
these centers continue to morph into cities themselves in a hub-
and-spoke manner around the expanding center city. On the other
hand, companies with extensive real estate invested in suburban
and rural towns may nd it hard to sustain these units as popu-
lations there collapse leaving behind a new exiled collection of
impoverished rural communities. #
Degree of Urbanization
Europe Worldwide Asia Africa Australia,
Oceania
Latin Am.,
Caribbean
North
America
71%
51%
66%
45%
39%
79%
78%
percentage of urban population in total population by continent in 2012
Source: DSW (Deutsche Stiftung Weltbevlkerung) data report 2012
# Today, the Internet makes it all but
impossible to protect a company from the
transparency of email, Facebook or Google.
Special: Anuga Industry Outlook 2013+ !" A 9 FOODSERVICE EUROPE & MIDDLE EAST 3/13