Is the Restaurant Industry Ready?
Posted by estiator at 15 February, at 10 : 55 AM Print
ONE WORD: A HEALTHIER WAY OF LIFE
Anyone who has walked into a grocery store in the last few years will not be surprised at the premise that consumption of organic foods has been growing dramatically. Increased availability, increased affordability and an increased number of healthconscious consumers have brought the segment from being a novelty to mainstream. Estiator looks at the movement and considers its growing impact on the restaurant industry.
Is the Restaurant Industry Ready?
BY CONSTANTINE KOLITSAS
IT was in the last decade of the previous century that organic food became a buzzword, soon to become big business as stores such as Whole Foods appealed to families with extra food dollars to spend from coastto-coast. When the USDA released its national standards for organic products in 2002, the movement moved directly into the mainstream with growth in the sector outpacing growth in conventional food sales up to sevenfold. Soon, nearly every grocery store offered organic alternatives, with most having a designated organic section.
Today, organic foods are (to some extent) present in 82% of American homes; with annual sales estimated at $45 billion. The increase in organic consumption has, of course, driven down the price. With the purchase of Whole Foods by Amazon, the chain, which had earned the sarcastic moniker “Whole Paycheck” from its detractors, has seen prices decrease somewhat, fulfilling a promise made at the time of the company’s $13.4 billion acquisition. But Whole Foods isn’t the only driver in the increasing affordability of organic foods: simple economics of supply and demand are at play. As the market grew, more competitors moved into the space and increased supply, which has reined in pricing, making it more affordable. And the cycle will continue as affordability becomes a driver. Walk through the meat aisle in Costco and it’s easy to see how organic meats have displaced shelf space previously commanded by non-organic foods. And the data supports the observations: sales of organic meat and poultry increased by more than 17% in 2017; to $991 million.
And if the economics are driving a conversion, that conversion is not going to go away when money is tight: according to a survey by the Organic Traders Association, once an organic consumer converts, they rarely go back to purchasing conventional foods, regardless of their economics. The conversion, then, becomes a lifestyle one.
Of course, the true root of the conversion is not pricing, although pricing is certainly the driver. The true root reason is a desire to move away from the impact of pesticides and chemicals on the food chains well as genetically modified foods. And that desire is increasingly becoming a consideration when choosing a restaurant.
A new concept of seating
“As the Millennial generation started spending money on food outside the home, the industry has been ‘forced’ to move toward healthier, high-quality menu alternatives,” wrote Forbes Magazine last August. “Once begun, this movement toward fresher, greener menus has continued to accelerate at an ever increased pace.”
As evidence, even traditional health-killers like Taco Bell and McDonalds are moving toward menu items that are less processed: the former promising to move toward cagefree eggs and reducing the amount of artificial ingredients in its foods, while the latter has moved to fresh beef for its quarter pounders and signature craft burger line. Other moves by fast food players include the addition of organic beverages at Wendy’s; pure organic beef burgers at Elevation Burger; and organic tofu and naturally-raised pork products at Noodle & Company.
And it’s not just the chains that are concerned with organic and locally-sourced foods: in a National Restaurant Survey of 1,600 chefs conducted in 2016, locally sourced, organic foods were identified as among the top ten trends that they were embracing, specifically calling out locally sourced meats and seafoods; locally grown produce; and hyper-local sourcing.
The conversation is taking place not just among hardcore industry analysts and experts, but among the companies that service the foodservice industry in various capacities. Sirvo, a recruitment website for the hospitality industry, recently wrote that the industry “can expect to see a steady increase in organic and locally sourced menu offerings…” This is a move that can serve, not only to attract new consumers, but also to meet the demands of former and existing consumers; the growing emphasis being placed on sustainability, transparency and food safety will only strengthen this trend.
“Restaurateurs who have been authentic and trustworthy about what ingredients are used in their products and where they come from, are those who have most highly succeeded,” it writes. “Regardless of how consumers perceive or define the food items they demand, the industry is clearly moving toward a well-defined, clean-eating trend that extends toward a healthier way of life.”
Increasingly, consumers are also demanding information about how foods are being prepared. “They want to know about food portions and how it is prepared. Consumers are interested in exactly what the ingredients are, where they originated, and what a given restaurant’s effect is on the environment.”
There exists, however, a very large discrepancy in how food in a grocery store is held accountable with regard to the organic label, and how food in a restaurant is held accountable.
In an article published by the New York Times in August, this fact was brought to national attention when a Queens resident noticed that food being delivered to a local Bareburger location did not have an organic certification stamp; Bareburger uses the term “organic” in much of its marketing collateral and on its menus. Priya Krishna, the journalist who wrote the exposé, came to the result that restaurants are not required to undergo the same rigorous certification process as farms and food companies.
“While farms and other businesses that want to advertise their wares as organic have to answer to certifying organizations that conduct annual inspections for the Department of Agriculture, restaurants do not,” wrote Krishna, adding that a restaurant may obtain organic certification if it desires, but that there is no such requirement that it does so.
According to Jennifer Tucker, the deputy administrator of the National Organic Program (which was created by the Department of Agriculture in 2002 to implement uniform standards for the organic food industry), restaurants are allowed to use the “organic” claim as long as they make a “reasonable” effort to use organic ingredients. However, a definition of what is construed a reasonable effort does not exist; and there is no monitoring agency or body to enforce it.
When the rules were put in place, restaurants were exempted, writes Krishna, because there were few restaurants claiming to serve organic food. “The certification process is expensive, and it was thought that requiring compliance might impose too heavy a burden on restaurateurs. And restaurants found in violation of the loose standards would be reprimanded with a letter instructing them to cease and desist the use of the term.
Still, in the day-and-age of social media, a financial penalty imposed by the government could potentially be dwarfed by the financial impact of a public that has lost trust in a restaurant’s truth-in-menu practices.
So, regardless of the government’s toothless regulations as it applies to organic food served in restaurants, attempts to mislead an increasingly educated and hyper-aware public could spell doom for a restaurant looking to stretch the truth.
