Consumers have shown an increased willingness to spend on inexpensive indulgences offered by the foodservice segment as an ‘escape.’
It seems we don’t eat within very defined timeframes much anymore and that has been a bit of a boon for snacking and specialty beverage concepts.
According to Technomic Ignite data, the afternoon snacking daypart has experienced nearly a full percentage point increase in the past year compared to a slight decrease in late-night snacking and flatness in morning snacking. According to Robert Byrne, director of consumer and industry insights at Technomic, this has led consumers to opt for savory snack options or smoothies.
Perhaps that’s why the smoothie segment has continued to grow, as have concepts like Wetzel’s Pretzels. Indeed, for one of his 2024 predictions, Vincent Montanelli, CEO of Wetzel’s Pretzel’s, hypothesized that consumers will continue to be sensitive around pricing and will therefore trade out full meals for snacking. The snacking phenomenon may also explain why Wetzel’s is expanding its portfolio to include Twisted by Wetzel’s, which aims to “disrupt the snacking category” with innovations like the Pizza Bomb or Pretzel Chimney Cakes. The concept is aimed Gen Z consumers specifically, who are major drivers of this trend (see, also, charcuterie boards and “Girl Dinner”). Interestingly, these discretionary snack and beverage concepts continue to grow despite broader industry traffic erosion driven by higher pricing, as well as some trade down activity in general.
“As the cost of a meal – even at QSR – becomes a barrier to purchase, I believe consumers will increasingly turn to lower cost snacking options to satisfy their cravings for some type of restaurant purchase,” Byrne said. “Consumers love restaurants and enjoy treating themselves to foodservice whenever possible.”
That said, this “treating of selves” environment extends from savory/smoothie to indulgent, dessert-based snacks like cookies or ice cream. As such, there’s plenty of bullishness there too, as reflected during a recent industry outlook panel hosted by ICR. Stacy Peterson, CEO of Jeni’s Ice Cream, said the draw to hers and similar concepts is the escapism effect created by such products.
“There is a vulnerability to eating ice cream and there is presence in the moment. This little luxury brings joy,” she said, adding that Jeni’s has grown 25% against a challenging backdrop, despite some pullback due to higher pricing. Jeni’s opened 16 new scoop shops in five new markets this year and is now in over 2,000 retail stores. A bunch of runway also remains.
“We see a ton of growth in all of our segments and, being less than 100 stores, there are entire regions we haven’t expanded in yet,” she said.
In 2024, Jeni’s plans to expand further into its new novelty category and add even more retailers with a target of gaining more market share.
James Vitrano, CEO and co-owner of New Orleans-based, high-end treat concept Sucré, described his brand as a “buy with your eye, sit and escape” type of place, where consumers are happy to be removed from the day-to-day world and treat themselves.
“We’re highly bullish. It’s an exciting niche to be in because like so many luxury brands, this is something people save up for or want to experience, so they enjoy it,” Vitrano said. “This is an experience-oriented outing and I think the experience is a little immune to economics. People want to escape.”
Like Jeni’s, Sucré also has significant white space and just opened its first franchised location. It will continue to use franchising as a secondary growth model in 2024 and 2025.
“Our margins are exquisite, and our operations are simple,” Vitrano said.
Allison Lauenstein, who oversees the QSR division at Fat Brands including Great American Cookies, Marble Slab and Pretzelmaker, said consumers also use her brands as a destination and a break.
“We have found that consumers want to take a break and connect and they’re thankfully still coming to us,” she said.
Much of the concepts’ growth has come from the delivery channel, which has been a bit of a surprise for her.
“Not being center plate, we’re always an extra stop and what we’ve been seeing is actual growth and also looking at how we can be ubiquitous. We’ve had continued (third-party delivery) growth month-over-month and a lot of our franchisees call it their eighth day,” she said.
Fat Brands is also finding growth in a concept that co-brands Great American Cookies and Marble Slab, or what Lauenstein calls “cookies and cream. The company recently signed two new development deals to open 10 such co-branded locations across Texas throughout the next five years.
“This is really a growth vehicle for the future for both of these brands, not only because it provides the consumer with a full array of treats, but for franchisees, it maximizes that space and leverages things behind the counter,” she said. “We’re seeing growth coming from both new and existing franchisees and I think that’s one of the best signals of having a strong brand. Even when you think internationally, our brands still make sense because consumers are still looking for those treats.”
In other words, this snacking culture – whether meal replacement or indulgent oriented – is universal. And though it may seem discretionary against a pressured macroenvironmental backdrop, the trend toward such non-traditional noshing is likely to continue.
“Consumers continue to confound economists and defy expectations for slower spending at foodservice. Although it is discretionary, it may be one of the least expensive indulgences available to all consumers,” Byrne said. “I believe that if a consumer has $10 in their pocket, they will spend it at foodservice. If that $10 won’t buy me a meal, I will still use it and purchase what I can – which increasingly may be more of a snack item.”
Contact Alicia Kelso at [email protected]
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