The Lempert Report LIVE

Food Delivery Challenges, Shoppers Spending Choices, Futuristic Food

February 27, 2023 Phil Lempert Season 3 Episode 67
The Lempert Report LIVE
Food Delivery Challenges, Shoppers Spending Choices, Futuristic Food
Show Notes Transcript

Welcome to The Lempert Report LIVE

• Food delivery has yet more challenges
• Consumers say they want more sustainable options – what retailers should do now
• Are GMO labels working?
3D food printing is alive and well
• And a fast-food chain’s secret weapon.
• On the Bullseye it’s all about “de-influencers” and why they are even more important to pay attention to than influencers.

Phil:

Welcome to the Lempert Report LIVE. On today’s broadcast– food delivery has yet more challenges, consumers say they want more sustainable options– what retailers should do now, are GMO labels working? 3D food printing is alive and well, and a fast-food chain’s secret weapon. On the Bullseye it’s all about“de-influencers” and why they are even more important to pay attention to than influencers. Check out Food News Today on SupermarketGuru.com for the most up to the minute newsfeed courtesy of our partnership with Cision. Let’s get started. So, Sally, when we talk about food delivery, what's happening is there are a lot of cities who are now changing their caps during the pandemic, they started capping delivery services at 15%. They're now taking those off. There's complaints coming from restaurants and consumers. Some say that they're gonna go b ack up as high as 30%, and there's actually the delivery companies themselves that are complaining and talking about the tens of millions of dollars that they h ave lost because of these caps. What is going on with food delivery?

Sally:

Yes, Phil. Well, you know, back when the shutdown happened, and we were right at the beginning of the pandemic, these caps were actually put in place in some cities to really help these restaurants that were struggling and had lost so much business. So, putting that cap on the commission helped them stay in business. But now cities like San Francisco, New York, C lark County in L as Vegas, they are now dropping those commission caps. So now th e U ber Eats and DoorDash and GrubHub, all these companies, they can go back up. Now, they ar e s aying that they need these big commissions on the restaurants because, i f they didn't have them, they would have to hike up the delivery fees for customers. So that is the argument coming from the delivery side. From the restaurant side is a different story.

Phil:

Yeah, and I've gotta tell you, I think that the whole food delivery situation has got to change, quickly. And I think otherwise it's gonna go the way of the Dodo bird. Food delivery has been a convenience, obviously, i n necessity during the pandemic. But, I don't think that food delivery works outside of major metropolitan areas like New York, like Chicago, where there's high concentrations of it. And frankly, when I look at the disconnect between food delivery, not only from the economics, but as we've talked about before, food delivery delivery has none of the human emotionof food. And I think that's the biggest drawback that a lot of these food delivery services have. It's all about speed. It's all about doing as many deliveries as you can. And frankly, they don't really care about the food a nd connecting with the person who's ordering the food. And I think that's gotta change if food delivery is gonna survive.

Sally:

Yes. And you know, something else I've noticed, Phil, is that half the time when we order food to be delivered here in Nashville at our home, there's a mistake in the order. And the problem is that we can't talk directly to the restaurant, to get that resolved. It's on the delivery company. And so it really doesn't; it's very difficult to get it resolved and to get a refund or to get the right order. So there is a disconnect right here, I think also with the customer and the restaurant's relationship.

Phil:

Yeah. And I think it's gonna have to be fixed before, you know, it can proceed. And as we've talked about a dozen times in New York City alone, there's over 60,000 bike delivery services for either people, for either restaurants or supermarkets. And that's way too many. And again, a lot of these drivers are just complaining that they can't make money or the dangers. And also these companies keep on pushing them, so they're getting in traffic accidents, they're getting their bikes stolen. We need a different way. Maybe it's drones. I don't know. I don't think so. But who knows? Let's talk about sustainability. There's a new survey that's just come out that says that 65% of consumers want to make the right spending choices to live a healthier and more sustainable life. I don't think anybody can really a rgue with that. But you know, if we take a look at sustainability, and I'm gonna go back to what I always say, it's about climate. It's about agriculture. We've got record droughts, w e' ve got record floods globally. And frankly, you know, we're not even talking about the whole methane gas situation, which is looming in front of us. What can retailers do to be able to help this sit uation? Not only retailers, but what should retailers and brands be doing?

Sally:

Yes. Well, you know, a great company that is a great example, sort of leading the charge in this area is Nestle. And, they are investing in 500,000 farmers to transition to regenerative farming practices, To take care of the soil and to keep the soil really healthy. They're replenishing natural water cycles and doing things to soak up carbon emissions. So, these are great efforts they're doing. But what's also in the conversation for retailers and for brands is how to get consumers to be attracted to food products that are better for the climate. Because we can change the way that we farm, but we also need to change the way that we eat.

Phil:

And the way we communicate. And what this group from WeForum talks about are three ways to do that. One is having clear and credible information. I mean, that's one of the big problems that we've got in the food world. Having clear, credible, accurate information, m atter of f a ct, we also go on where they say affordability and availability, that's the problem. Their data shows that one in tw o consumers cit e co s ts is th e main barrier to making more sustainable choices. We can't have that happen. And third, which was really interesting to me, was attractiveness. So taking away the obvious barriers of price and a vai lability, and p roviding the clarity to allow informed decisions, only half of the problem. It's also vital that we make sustainable options as tasty and appealing, if not more so than less sustainable alternatives. We can't compromise on quality and enjoyment, no question about it. I mean, when we started to see organics first come out and they were way overpriced, it was a wake up call to the organic industry. They came more in line with their prices, and guess what happened? Consumers gravitated towards them. And it's a burgeoning business that keeps on growing. Talking about organics, we had about a year ago, GMO food labeling that was passed by USDA. They required it. What's going on with it? Or I haven't heard anything about it or people paying attention to it. Has it affected the sales of GMO products? What's going on?

Sally:

Yes. It's really interesting, Phil, because, years ago, when we were covering GMOs, it seemed to be a very hot topic among consumers, and now you see very little about it. But since the law has been passed that these products that contain GMOs have to be labeled, was a t first v oluntary and then last year it became mandatory. There has been a little bit of confusion on this. Now, for starters, the word GMO is not used in the label. Bio-engineered is the word that is used. And some people feel that ar e p eople that are critics of this feel like that's really not painting the full picture for people. Now, there are 13 products that are considered GMO. If you Google GMO agriculture, you can find that list. But one of the main things on there that is oftentimes in foods that we eat is corn. And we find this in high fructose corn syrup. Now, the problem here is that this corn is processed so much when making these products, that it's essentially stripped of its DNA. So these companies can get around labeling it as bio-engineered because it is no longer a bio-engineered product once it has been through this process.

Phil:

Yeah. And, you bring up corn, but corn, canola, soybeans, and sugar beets, most of those are being used as ingredients. And most of the crops that are grown are GMOs. It's amazing to me. And if you look at products that have this declaration on it, it's in tiny type on the back of the label. And if in fact we w ant to affect change and really have this clear and concise messaging as we talked about with sustainability, it should be right u p f ront. Having said that, even with this labeling, we haven't seen a difference in sales of GMO products. And also a few years ago, if you r emember, we did a report Brazil put in a GMO labeling, with a big symbol on the front of the package, and it didn't affect sales whatsoever. So I think you've got a good amount of the population that frankly, d oesn't care if they have GMO's or not. And as long as the br ands a re disclosing it properly and completely, th en make your choice at the supermarket. 3D printing is one of the things that I've been talking about for many years. I love this concept. And the folks at Rutgers University in New Brunswick, New Jersey, have a new 3D printer. What a re they printing?

Sally:

You're gonna love this, Phil, because it's one of your favorite foods. They are printing chocolate and not just regular chocolate, they're printing a healthy chocolate. They're using a different type of emulsifier, t o make this chocolate. So, it has less fat in it.

Phil:

Yeah, I think food printing has so much, whether it's changing the ingredients like this chocolate to make it healthier, we've seen the pizza 3D printer on sale, f or probably about five years already. And I still go back to the idea of 3D printing cakes, you know, in supermarkets is the way to go. Because every time I walk into every supermarket, they've got these beautiful cakes that are there. And I just have to wonder what happens at the end of the day when, you know, half of them we re s old, what happens to the other half? And sure, I think it's great that they give it to food banks and so on, but I'd like a little bi t b etter nutrition given to people on food assistance programs than these sugary cakes, th at are designed for Happy Birthday and Happy Anniversary. Talking about cakes, there's a fast food chain, I'm gonna call it fast fo od, bu t it's not fast foo d. I t's called Crumbl, if you're not familiar with it. They now have over 700 locations in the US. They are relying on social media to get the word out, and I love their whole strategy and their whole approach. What Crumbl produces are cookies. And what they do is they only have weekly drops of four cookies. So when you go into a Crumbl shop, there's only four cookies that are there. Truth be told, I have not been to a Crumbl. There isn't one here in Southern California at least yet. But you look at what they're doing on social media, spec ifically on TikTok and Instagram. They are th e n inth most downloaded app on the Apple Store, not just for food, just anything ninth most downloaded app. That's way ahead of Dunkin Donuts and Pizza Hut. They have 3.4 million followers on Instagram. McDonald's has 4.5 million just to give you an idea and you know, I I really think that Crumbl has hit on something really smart because every time you go in there, there's a special cookie and it makes you feel special. And it's almost like going to a dollar store and not knowing what you're gonna find and then finding these cool things. What do you think about Crumbl?

Sally:

I think this company is brilliant, and I think they are really leveraging the popularity of TikTok and video content. They have 6.4 million followers on TikTok, and, you know, Starbucks has 1.9 million, so that is incredible that they have gained that many followers, but it's not surprising because when they drop these cookies, they put out a really cool, exciting video. One that I watched h ad electronic dance music along with it which made it even more popular, I'm sure on TikTok using that music. But it's something fresh each week. So it's exciting for people who are scrolling TikTok, t o watch t hose videos, to share those videos with their friends to go in the store because they know it's an event that is only for one week and then the c ookie's going to be gone the next week. I really love what this company is doing.

Phil:

And also operationally, it's much easier to produce four unique recipes for cookies a week, versus having probably 30 or 40 different cookies. It amazes me and I''m gonna equate it to growing up in Newark, where you had a bagel place and you had a plain bagel, you had salt bagel, I wa nt t o s ay you had Sesame Bagel and Poppy Bagels, and that was it. You now go into a bagel place and there's probably, I don't know, 20 or 30 different kinds of bagels. I still like plain bagels best.

Sally:

Well, and also think how exciting it's for the employees too, like that the cookies change every week.

Phil:

Great point.

Sally:

That you know, it's not the same thing that they're serving up every week. So it could make the work environment a lot more fun.

Phil:

Yeah, great point. And hopefully they get free cookies as well.

Sally:

Yes.

Phil:

At least, at least those for the week. Thanks, Sally. On today’s Bullseye– earlier this month Aaron Paquette raised an important issue in his column on Mediapost. His discussion focused on what is now one of the most important groups that a brand– whether retailer or CPG– need to pay attention to– the“de”influencers. The under the radar influencer industry is now worth$15 billion a year and 95% of brands are using them to promote on social media channels. Mostly confined to the health and beauty categories, he says, deinfluencing attempts to persuade social media users not to buy the latest, greatest, or most expensive products. Deinfluencers deconstruct conspicuous consumerism while promoting sustainability and substituting lower-cost goods. It is also a backlash to the seemingly never-ending product placement phenomenon that continues to grow, even with all the disclosures and controversies. Deinfluencers are much less subtle than influencers– they call out brands by name. Mediapost cites TikToker MaddieBWells who earns 1.8 million views by calling Mario Badescu face cream a“monstrosity.” KatieHub.Org receives a similar number of views for calling out Dior lip oil as“garbage” and“mid.” Jacquelyn Mengel accuses Olaplex shampoo and conditioner of making her hair fall out. And Dara Levitan calls Pixi On-The-Glow Blush the“tackiest” blush she’s ever used. They also recommend less expensive alternatives– which in this economy is welcomed by just about all shoppers. Even deinfluencers have critics though. They report that they still talk about products in order to build their own followers and often recommend products of their own in place of the ones they’re deinfluencing. Paquette raising the most important issue- what can brands learn from this trend? Here are his tips:*Integrate brands authentically. Followers need to believe that influencers actually use and like the brand, a belief that’s easily compromised if they’re promoting 15 different brands or faking use cases. The goal should be to recruit influencers who already use the brand in their day-to-day life; who can offer category exclusivity; or who can convincingly document their usage.*Vet influencers carefully. It’s probably not a good idea to work with influencers who call other products a“monstrosity” or“garbage.” In addition to those two– my recommendation is to find an influencer that truly has the knowledge and passion for your brand. For example, if you are using an influencer to promote your supermarket’s offerings– make sure that they are a shopper in your store. Don’t partner with someone for example who is a Walmart shopper(unless you are Walmart of course)– their heart and soul won’t be in it! And it shows. Likewise, choose celebrity endorsers carefully– and do your homework. You are the caretaker of your brand– and by extension, so is the influencer you hire– for better or worse. Have a meal with the influencer you are thinking about hiring. See how they act and react. In a relaxed setting you can easily tell if they are faking it and just looking for the payday before you hand over that agreement for them to sign. Remember when the Beef Council hired James Garner to do their TV spots. Right after the very expensive campaign launched, he underwent quadruple heart bypass surgery. Beef council tried to blame his condition on smoking and tried to ignore the high cholesterol health facts about beef. With the rise of social media, we have seen thousands of influencers cashing in– some are certainly legit– and some are doing it just for the money. Frankly, I think the deinfluencer trend is a good checks and balances that the industry has sorely needed– as long as the deinfluencer is also knowledgeable, credible, tells the truth– and doesn’t try to sell you their own product or service. The Lempert Report is all about inspiring ideas, making our industry think and challenging each other. Let’s think about“being the shopper” and how we can bring our supermarkets and restaurants closer to meet their needs. I hope you’ll come back to join us on next week’s installment of The Lempert report LIVE when we focus on the biggest and best insights– and the things that really matter. Be sure to visit SupermarketGuru.com for the latest marketing analysis, issues and trends and don’t forget to join us back here next Monday at 2:30pm Eastern for more.