National Restaurant Association Show 2015 - Consumers, Regulators Push for Transparency
Attendance at the National Restaurant Association (NRA) trade show was strong this year, and though many suppliers told OTR Global that the biennial North American Association of Food Equipment Manufacturers (NAFEM) show, which was moved to precede the NRA show for the first time ever, dampened attendance compared with last year, nearly all said the mood was more positive and actual purchases overall from restaurant operators during 2015 (at the NRA and NAFEM shows combined) were stronger yy. “The economy is better. Operators are opening more stores this year [yy],” one said. Not surprisingly, new, improved or future technology was everywhere, from the latest 3D food printing equipment by 3D Systems Corp. to Rethink Robotics Inc.’s Baxter the robot simulating operation of a Middleby Corp. fryer.
OTR Global photo
However, while technology may have been a common thread throughout NRA 2015, transparency was the theme.
In her keynote speech, describing what she believed was critical to her success, Arianna Huffington said, “Transparency is absolutely key.” She described AOL Inc.’s Huffington Post’s first use of native advertising and how the first client wanted to pull the ad at the first sign of a public consumer complaint in the comments section below the ad. The client took her advice to stick it out and play out the discussion with the disgruntled customer in the open, and it worked in their favor. “Look at what [Amazon.com Inc.’s] Zappos did. They built everything on customer service [and transparency],” she said.
Throughout the NRA show, from education sessions on menu labeling, winning over millennials, and sustainable aquaculture to conversations with suppliers about new operational initiatives and menu innovation, transparency emerged again and again as a common theme.
Menu Labeling
One of the most well-attended educational sessions at the show this year covered the new FDA-mandated menu-labeling requirements, a provision of the Affordable Care Act (ACA) scheduled to go into effect Dec. 1, which affects restaurant and retail food chains (such as coffee shops, grocery stores and convenience stores) with 20 or more stores operating under the same name. While many restaurant operators, such as Chipotle Mexican Grill Inc. and Panera Bread Co., began labeling calories on menus well ahead of the required date, the new regulations require more detailed nutritional labeling be made available upon request and that the statement, “2,000 calories a day is used for general nutrition advice, but calorie needs vary,” be included on menus and menu boards, so further action and expense may be needed by operators already labeling calories on menus.
During the Q&A following the session, there was a steady stream of questions from attendees on a range of topics, including oversight of implementation and how the regulations would apply in specific circumstances to a question on whether or not the FDA would come to stores to go over requirements and let restaurants know if they were in compliance; a representative from the NRA said no. Restaurants need to be ready for the FDA to drop by to verify compliance and accept any penalties that might be imposed for “misbranding” food if applicable (which includes the possibility of fines, imprisonment and/or confiscation of misbranded food). One attendee, a consultant on ACA provisions to restaurant operators, voiced his frustration about a lack of response from the FDA and the NRA to questions from his clients. “I have called and written several times to the FDA and to the NRA with specific questions from my clients, and I have not heard anything. It’s frustrating because my clients are ready to go [to implement the changes prior to the Dec. 1 deadline], but we can’t get any answers,” he said. The representative from the NRA on the panel said he should have heard back from them and suggested they speak after the session, but she also said that issues like this, in which clarity on several topics was still needed, may result in the Dec. 1 deadline being pushed back.
However, despite some confusion and frustration about the new menu-labeling regulations, the overall message from panelists about menu labeling was positive. Don Fox, CEO of FireHouse Restaurant Group Inc., said, “We’ve got 884 stores [all but 32 franchised], and there’s nothing more important right now than helping restaurants get this right. … But [listing calories] is the right thing to do. We should be doing something about obesity in this country. … We have benefited from adding the under-500 calorie sandwiches to our menu, but there’s nothing to say that you have to change your menu or remove the more indulgent items. At our stores, we have seen no distinct shift so far in ordering [since adding calories to the menu]. That may change when this [regulation] goes national; we’ll see. But it’s about providing options, and I’m all for transparency. I think the challenge will be more for the operators with a focus on super-indulgent items.” G.J. Hart, CEO of California Pizza Kitchen (CPK), said, “Get in front of it. Educate servers. Where are the calories coming from? Embrace the change; don’t be on the defensive. Millennials don’t necessarily equate calories with being bad. They want to know where the calories come from.” Hart went on to describe CPK’s “next evolution,” in which stores will be updated using natural building materials and menus will include a wider range of foods made with sustainable ingredients and an expanded wine list. Hart expects 80 CPK restaurants to be converted this year, with Chicago being one of the first markets.
The pre-menu labeling session concluded with a look to the future from moderator Anita Jones-Mueller, President and CEO of Healthy Dining, who urged operators to recognize the importance of accurate calorie and ingredient information amid rising food-related health issues and a growing movement toward the “quantified self,” in which more people begin to use technology, such as Fitbit Inc. Trackers, the Apple Inc. Watch; mobile apps and websites, such as Welltok Inc., Under Armour Inc.’s MyFitnessPal; and most recently, easily accessible blood tests from Theranos Inc. to gather and track their own personal health and wellness data.
Operations
Operationally and across platforms, companies are pushing for transparency. At the website-creation company Mopro's booth, one associate said Google Inc.'s April 21 "Mobilegeddon" deadline, which threatened all companies fighting for the top listing with demotion if their sites were not scalable (allowing viewers to have the same experience on multiple screen sizes), was driving a large percentage of business this year.
At another booth, a food supplier to Chipotle said it was demanding that all customers move to a new labeling platform. "They have something called GS1, where they are requiring all of their suppliers to add scannable labels on all products. It acts similar to an RFID tag, where all the information about the product is contained on a single bar. The main benefit to Chipotle is transparency and traceability. They can tell exactly where and when a product was shipped and all the info needed -- info on every package. It will cost Chipotle more because we will have to change up the production line every time we do a run for them, but they're OK with that."
Millennials
OTR Global spoke to a longtime source -- a supplier to Panera and others -- coming out of an educational session titled "Winning Over Millennials: Through the Eyes of Chain Chefs," and again, transparency was mentioned. “The key trend now for millennials is clean food. Panera, of course, has their whole clean food initiative right now [which involves moving to all-natural ingredients and listing them]. [It has] customization also. Dunkin’ Brands [Inc.] was there [speaking at the session]. They feel like millennial customers care most about customization; they want to see clean stores -- clean bathrooms. They feel if a store is dirty or out of date, they can’t trust the food, either. They also want new items -- not your parents' doughnut. [They want] something new, just for their generation, with new ingredients.”
Domestic Aquaculture
During his educational session on domestic aquaculture, Barton Seaver discussed a new vision of sustainability in which the story behind the menu is as important as the dish itself. Seaver, director of the Sustainable Seafood and Health Initiative at the Harvard T.H. Chan School of Public Health, noted that while his old view of sustainability relied on a “scare narrative” of bad vs. good, his new view takes in the entire community, with domestic aquaculture restoring -- not just sustaining ecosystems, communities and economic growth. He discussed the huge opportunity for the United States, which is the third largest consumer of seafood and has the largest percentage of ocean territory of any country in the world, yet only produces 4% of what it consumes. Seaver mentioned Hog Island Oyster Co., which farms oysters just north of San Francisco, as an example of the type of domestic aquaculture he believes could be carried out on a much larger scale with different species. One bag of oysters growing in the Hog Island farm, he noted, contains more than 100 other species supported with the oysters as their base, helping restore the ecosystem of the bay while creating jobs and making a good profit. He encouraged restaurant operators to support their local fish farms and fishing industries and to encourage servers to tell the story of the community behind the items on their menus. Domestic acquaculture, Seaver said, could be the first move toward seafood as a truly sustainable food source for the entire world.
