Markon’s Tim York To Speak In Amsterdam:
How To Profit From Omni-Channel Proficiency… Foodservice, Retail And The Produce Supply Chain
Jim Prevor’s Perishable Pundit, October 11, 2018
Tim York is a produce industry superstar — he has been Chairman of the Produce Marketing Association, instrumental in the formation of the Center for Produce Safety in 2007, which he chaired for many years, and he spearheaded a focus on sustainability and built a great company.
So it is no surprise that he has often weighed in on important industry issues, and he has even been recognized by the Pundit with a special award. We’ve chronicled these engagements in pieces such as these:
Perishable Thoughts — Building The Future Of Our Industry
Tim York Takes Leadership Role In Food Safety Crisis
Single Step Award Winner — Tim York of Markon
Pundit’s Mailbag – Tim York Speaks Out: PMA Hires Chief Marketing Officer Lauren Scott But Is The Industry Willing To Test And Reject Sub-Par Fruit?
Tim York Will Chair Center For Produce Safety
Tim York Recognized For Food Safety Leadership
Dangers And Broader Implications Of Wal-Mart’s Sustainability Index
Produce Takes Greater Role In Sustainability Standards
Tim York Points Out Buyer Commitment To Food Safety
A Call For An Industrywide Sustainability And Social Responsibility Initiative
In the foodservice sector, Tim gets direct feedback from a diverse group of distributors. Just one of them, Maines Paper & Foodservice, for example, services a wide range of customers such as Darden and its fine dining concept, Capital Grille, onto Burger King, Subway, Wendy’s and IHOP. Across the national network, there are hospitals, prisons, nursing homes, assisted living facilities and more.
Since Markon is a cooperative, part of Tim’s job is to make sure that the members are positioned for success, so it is no surprise that he is thinking deeply about omni-channel.
In some ways, foodservice is well ahead of retail, especially with home delivery. In the younger generation, buying restaurant food on an app, such as UberEats, DeliveryDudes, Grubhub, etc., is par for the course.
The nature of things gives restaurants an advantage in some ways when it comes to seamlessly serving the customer. Retailers carry many products, restaurants just a few, so, unlike retail, the out-of-stocks are not a big issue. On the other hand, the high quality of restaurant food is difficult to sustain in delivery. Is it really omni-channel if the fries just don’t taste the same at home as they do in the restaurant?
The whole distinction between foodservice and retail may start to dissolve as omni-channel evolves. What is the difference if one goes to Instacart and orders a sub from a local grocery store or one goes to DoorDash and orders the same sub from Subway? Perhaps retailers will have an edge because they offer more choices. At Subway, there is “turkey” but a grocery store may offer an assortment of brands, flavors, salt content, etc. On the other hand, restaurants seem able to assemble an order and have it ready much faster than retailers.
In America, people spend more money at foodservice than they do at grocery stores. Grocery stores are increasingly incorporating foodservice elements both to differentiate from other grocery stores and to utilize space no longer needed as many dry grocery and packaged items are bought at warehouse clubs, supercenters and online.
One way that integration between retail and foodservice may be essential is to find ways to sample product. If a company such as Love Beets comes out with a new flavor of Beets, how will consumers know if buying off a telephone screen? Even more so if we move to voice ordering.
Of course, we can do some things technologically. Send emails or push notifications to people who have purchased similar products, similar flavor profiles, etc. But this is probably difficult as compared to a consumer seeing the product at a store.
But what if we could integrate products into restaurant menus? Kiwifruit gained currency in the US at retail only after it became trendy at restaurants. Maybe restaurants become the sampling channel for retail sales?
It is to wrestle with questions such as these that Tim is coming to Amsterdam. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Markon Cooperative, Inc.
Q: We’re excited to capitalize on your vital insights and expertise at this year’s Amsterdam Produce Summit. It’s great you’ll be doing a full presentation in addition to rejoining the iconic, distinguished thought-leader panel to bring unique perspective to the hot topic of omni-channel, for what promises to be another vibrant thought-provoking discussion…
As much of the discussion on omni-channel has been focused on retail, I am sure our audience will be curious to know how foodservice operators need to position themselves to compete as this omni-channel environment accelerates.
* How is the omni-channel phenomenon affecting foodservice strategies?
* How will the impact and integration of technology, as well as utilization of social media, affect future foodservice purchases?
* Then there’s the issue of channel-blurring and competitive dynamics:
— retailers building meal solutions/prepared meals into their assortments and online/offline synergies raising the heat on foodservice operators.
— licensing brand names — the branding of foodservice items sold in restaurants and in retail — and how these concepts tie into partnership opportunities.
Overall, what are the biggest challenges and opportunities going forward and what is your advice to produce industry suppliers?
A: I’ve been researching all these angles… I think Miguel Gómez, who will be presenting in Amsterdam, has done an excellent job in his preview Q&A piece of outlining what omni-channel really means — meeting the customer wherever the customer is and providing a solution that is as frictionless as possible. It’s about providing customer solutions in ways that are easiest for them.
The foundation of this is about big data. You’ve got to have the right data capabilities to help in driving these strategies.
Q: Times have certainly changed…is the foodservice industry mastering that challenge?
A: We’re in a very competitive battle for consumers. You know there are one million restaurants in the United States. There’s an explosion of ways in which we can eat food, whether it’s pick it up at a retail store, pick it up at a restaurant, have it delivered, or consume it on site. There are numerous ways you can do that, and numerous places, including vendors with food trucks and kiosks and those sorts of things.
It’s a cut-throat environment, and that’s one of the reasons I think you’re seeing this focus on omni-channel approach.
The interesting thing is how very new this concept is, at least the technology of it for restaurants. If you go into Nation’s Restaurant News, there is virtually nothing on the topic. If you go into the National Restaurant Association, you have two articles over the past five years that use the terminology omni-channel.
Not just the terminology, but the concept of omni-channel is relatively new for foodservice. Certainly there are some lessons we can take from how it’s functioning in the retail environment.
Q: What lessons are those?
A: As we’re talking about this, omni-channel is really looking at the overall customer experience and then looking at sales across all channels. Rather than trying to focus strictly within restaurants, we’re looking at different ways and different channels of getting at that.
It’s about providing customers the same products via offline and online and making it seamless.
One of the highlights is the focus on the branding that is necessary. Let me give you an example of how branding can be affected positively and negatively…
Take a chain like PF Chang's. I don’t know the quality of the chain’s loyalty program or omni-channel strategy, but you can get PF Chang’s in at least four different ways. One would be to go eat at the restaurant itself. The others would be to have the product delivered from the restaurant, or you could order and pick it up to eat at home or somewhere other than the restaurant. The fourth way is to visit the frozen food department of your retailer and buy PF Chang’s frozen entrées you cook yourself.
Q: Will that frozen entrée deliver the same satisfaction?
A: Here’s where branding is critical and where the opportunities and vulnerabilities come into play for foodservice operators. I would suggest first off that what comes in a frozen package that you cook at home isn’t going to be the same quality or the same experience coming out of a restaurant.
Sitting down at a restaurant and having a hot sizzling steak served to you on a steaming plate at your table is a different experience than when some delivery person picks it up at PF Chang’s, makes two other stops along the way, and brings your order to your front door in a paper sack, not as hot, and not as presentable in a cardboard container.
So, there are some hurdles we must overcome in the restaurant industry as to how we present ourselves, how we transfer that same branding experience we would get in a restaurant to the other channels. One of the challenges around omni-channel is making sure we’re providing the same experience.
Starbucks is a good case study, Jim (Prevor) and I were talking about Starbucks. The Starbucks rewards app is top of the list for omni-channel. You can get a seamless user experience across all channels. You’ve got an opportunity to load your Starbucks’ card, and to check your card balance through your phone, through their website or at the store.
Your information and balance are updated in real time across all those same channels, and you can accumulate rewards or track purchases across all three channels. And Starbucks does it well.
Another interesting thing I read about Starbucks… because people order via its app, Starbucks doesn’t have the ability to manage order flow at a restaurant. You manage flow within a restaurant when people stand in line.
You can only take so many orders and serve so many people at a time. On an app, you could have 15 orders come up at the same time. Another challenge is how do restaurants manage those peak period times when they have so many customers. It’s a nice problem to have, but it’s something you have to think about.
It is also a big problem for retail. People don’t just want delivery, just like they don’t want just coffee; they want to know they can reliably get their delivery in a certain time period and that their coffee will be ready within a few minutes.
Let me share some other thoughts with you. Interestingly enough, if you look at how restaurant online ordering has evolved, you have a certain percent of total restaurant orders placed digitally via app, internet or text. In 2014, those online orders amounted to 2 percent of total orders, and in 2018, it’s only 5 percent. That’s still 95 percent of orders placed in house.
Now those numbers are across all restaurants. Starbucks is probably much higher than that, and there are others that are much lower. It shows you that for the industry as a whole, consumers haven’t really adapted this omni-channel approach perhaps as broadly as they have in retail.
However retailers, restaurants and the whole supply chain need to have an eagle eye around this area. Investment bank UBS published a report called Is the Kitchen Dead? – Millennials are three times as likely to order from an app as their parents are, and food delivery apps are, on average, in the top 40 most downloaded apps. Growth is fast, and UBS put it this way: “There could be a scenario where by 2030 most meals currently cooked at home are instead ordered online and delivered from either restaurants or central kitchens.”
Of course, how supermarkets evolve depends on how this picture plays out. Even if people cook less, they may order from the foodservice department of their grocery store.
Going back to Starbucks and what it has done, it used to only allow members of its Starbucks Rewards loyalty program to use its app. That was around 15 million people who were members and thus eligible. Then Starbucks’ executives realized that the data they could derive from people using the app was priceless. So they opened it up to all 60 million customers they have each month.
What they’ve done now is track additional data by requiring Wi Fi sign-in and requiring registrations for promotions. This has enabled Starbuck’s to provide you as a consumer personalized fields based on your buying habits. In effect, what Starbucks is doing is finding ways to gather information so this giant company can personalize the customer experience the way a local coffee shop with owner-operators might have been able to do in years past.
Starbucks also has a multi-faceted business model that practically screams omni-channel. They have the company-operated Starbucks’ outlets, they have licensed arrangements to offer Starbucks’ coffee in locations such as hospitals, universities, airports… and grocery stores. You can buy their branded coffee at retail stores. They also have a multi-brand concept. In fact do you know who the second largest coffee roaster and wholesaler is in the United states, after Starbucks? That is Seattle’s Best Coffee, a subsidiary of Starbucks! It is a more mainstream brand with relationships with Burger King, Subway, Chevron gas stations, AMC Movie theaters…and Safeway.
I ran across another program called SevenRooms. I’m not sure where they got that terminology, but it’s a cloud-based restaurant reservations system that operators use.
Q: Is this a customer data collection system?
A: What they can do is begin to create detailed customer profiles; what are their preferred dining times, what are their preferred entrees, are they vegan or pescatarians, do they have allergies, what are their wine preferences, even keep track of what kind of service they like — should you be hovering and hands on all the time, or disappear. So, it’s about the customer experience and being able to tailor that.
Q: This pushes back against the impersonalized effects that can ensue because of growing automatization, in somewhat of an ironic twist.
A: Why this is an interesting subject is because that was the thing you could only get with a mom-and-pop kind of restaurant, where you know the clients when they walk in the door and they know you, and they say, ‘Hi Norm,’ and they know what you want.
Now you’re transferring that ability to multiple restaurants that can track what your preferences are and know you in a more intimidate way than was possible before.
Obviously, the whole idea behind this is increasing customers and driving repeat business.
Q: How do you think some of this information translates to a retailer?
A: You asked about meal kits earlier... Kroger bought a company called Home Chef earlier this year. In essence, Kroger said, “we want to be where our customers are and make it easier for them.”
I think it’s perfectly logical that retailers are in the home meal replacement business. Consumers are already stopping in the supermarket for milk or bananas and taking care of their other shopping needs, so at the same time can pick up a meal kit very easily.
You don’t have the extra cost and waste of all the packaging like Styrofoam that goes with all the home delivery meals. That makes sense to me, but if we had one or two stand-alone meal kit companies, I think that’s the limitation.
Q: Are you speaking about consolidation of the category here?
A: I don’t know how many home meal replacement type companies there are, but I guess some are going to fall by the wayside; some more successful ones will be acquired by retailers and some others will go out of business I believe.
It’s interesting also as I’m reading up on omni-channel and even multi-channel, how it’s written about in foodservice compared to retailers. Subway MyWay rewards program, which they introduced earlier this year, integrates a smart phone app, online and instore kiosk ordering, and you earn rewards on your dollars spent, and you also get surprise offers and special promotions.
The omni-channel approach in foodservice is different so far than how it’s being applied in retail. I don’t know if I’ve checked off all your boxes.
Q: This is great. I’m wondering if we can now move our discussion into the produce arena, so important to your strategic thinking for growth. All one needs to do is open your profile on the Markon website highlighted by your mantra: “I am inspired by the opportunity to increase foodservice produce consumption through innovative products, packaging, and preparation.”
A: One of the changes in dining habits we’re seeing is the longer trend of the plant-forward approach — reduction in the size of proteins, and even meatless Mondays has caught on a bit. There is a move away from strictly protein and making it more of a plant-focused plate.
In the Great Recession, beef prices went up and consumers had less money to spend, so we saw smaller and different cuts of meat. We saw the emergence of the snout-to-tail approach with meats where they’re using all parts of the carcass. At the same time, we saw the advance of this plant- based approach because of the lower serving cost of vegetables.
But what we’ve really seen is how foodservice operators and chefs are using traditional techniques and the same applications of preparing meats for fresh produce. One example, maybe more of a fad than a trend, is using jack fruit in BBQ sauce and shredding it so it appears as a BBQ pork sandwich. You’d be hard pressed to know the difference whether you’re eating jack fruit or eating pork. It’s cooked the same way and mirrors that same flavor.
You even have the impossible burger, the meatless burger phenomenally close to what a regular hamburger tastes like and looks like. Even beyond that, you have the techniques of charring, barbecuing and searing vegetables the same way in which we cook a steak or another protein, and how approachable this can be for a consumer. These are familiar cooking techniques but applied in a different way.
Q: The Culinary Institute of America (CIA) calls it the Protein Flip... I covered a fiery competition at CIA in collaboration with the Mushroom Council for Produce Business (“Veggie Forward Dishes Become Trendy”), where student chefs were tasked with innovating the best “blenditarian” burger, while flipping the produce/protein proportions.
A: Now the protein is being used to flavor the dish, but produce is dead center. These are new ways of looking at eating and meal preparation.
I’m proud to say in my 40-year career, we’re in the right business to be in. We’re not in the beef industry, we’re not RJ Reynolds… we’re in a space where people want to be, and love our products.
Online, we should be considering our responsibility to help inspire new ideas, new usages and new items that address this trend.
Q: Can you talk about the influences of social media and platforms like Instagram.
A: One of the trends is the “instagrammable effect.” Chefs are actually thinking of how their dishes will look on an Instagram photo, and how to make it attractive. I believe the reason why watermelon radishes became so popular is because they look so good in photography. People think about that when making plate presentations. Watermelon radishes are an example of how we’ve seen that applied. It helped drive radish consumption.
l saw where a restaurant had really interesting mosaic tile on the floor in the bathroom, so people were taking pictures of their feet on the tile floor. The customer restaurant experience was being extended to the bathrooms and taking pictures of their shoes! Those are Millennials for you.
Q: I find it funny when people are doing a whole twitter feed of what they are eating and taking pictures of their food every day and putting it on Instagram… but executives tell stories where a customer photo of a creative dish travels through the Internet and everyone gravitates to that restaurant… or sales go through the roof on a unique produce item being shared on Facebook...
A: It makes me crazy sometimes to go to a restaurant and see Millennials taking all these pictures of their food and posting them on social media, but this is the reality we’re in. The results are not always positive.
Q: Did you have a chance to read Lisa Cork’s two-part preview Q&A (here and here) for her talk in Amsterdam? She warns how social media posts can annihilate a company’s brand or reputation. She implores produce industry executives to take control of how their brands are being portrayed and utilized online...
A: I did, and I’m looking forward to hearing Lisa’s presentation and having the chance to speak with her in Amsterdam. In the same way, anyone can write a review whether factual or not.
We had a restaurant in Texas a few months ago that had a rodent problem and wanted to blame it on us but it wasn’t our fault. In any case, the photos went viral and the restaurant’s sales dropped by half. Things can happen very quickly. And even the people you don’t think are paying attention to social media, the news reaches them and they’re hearing that message also.
Q: To provide more context, could you provide the evolution of Markon toward this omni-channel future and how you’re working with companies in this quest?
A: One of the ways in which our members are looking at these different channels… Gordon Foodservice has about 175 Gordon Foodservice Stores, more like cash-and-carry stores.
Those are good for large families and home consumers, but they’re selling many of the same products that are being sold in the restaurants. An operator can go into one of those stores and get additional products between receiving deliveries, or if the chain is too small, they can come and pick up the products they need on a regular basis.
Here again, it’s about coming up with solutions and being there for customers wherever they are. And Gordon Foodservice, of course, has data tracking your purchases and suggesting items. They’ve really put a stronger focus on having a multi-channel product approach. And other companies are in it, such as Shamrock Foods.
Q: What are your projections for foodservice advancements in omni-channel? From what you describe, the channel in general is relatively new to this space, or at least not moving at the same pace as the retail side...
A: I’m not comfortable projecting specific numbers, but clearly there is a need for operators to use and collect big data to help them meet the customer where the customers are. That requires figuring out individual customer needs in a very targeted way. What you learn may be counterintuitive.
Q: Do you have any examples?
A: If you look at who eats at fast food restaurants, my guess would have been the Number One users would be less affluent people. Actually, what we find is the more affluent you are, the more frequently you eat at fast food establishments; lower income 31 percent compared to higher income 42 percent for visits per week to a QSR.
In terms of omni-channel growth in foodservice, I can only point you to the numbers I shared earlier that only 5 percent of orders are placed online. It certainly reduces young people’s need to interact with each other.
I think there is an older generation that yearns to have interaction, whereas the younger generation can be happy not talking to anyone and get just what they want without any human interaction. This is why we need multiple strategies to appeal to many different customers.
It’s interesting, I go back to what I said before. Foodservice is not as evolved in thinking about omni-channel as retailers, and maybe it’s just the nature of the product. You can take home a meal kit from a supermarket, and it doesn’t matter if it’s in the cart one hour or three hours or if you stop along the way to have drink with friends.
In foodservice, however, if you’re leaving that restaurant with the meal or if it is not delivered quickly or packaged properly, we know this directly affects the quality, and it’s one of the things foodservice is concerned about.
Q: I can tell you that retailers are also concerned about the scenario you describe where food can be left in a consumer’s hot car for hours in terms of affecting the quality...
A: That’s a valid point. There are a couple of instances in foodservice where chains are looking to address some of these concerns. Subway is one of them. Subway is testing delivery. They have an app and also have a Google product, called RCS, Rich Communication Services. It’s a messaging app not specific to Subway, that you can do an order, arrange pickup or delivery, find special offers, prepare order, and track your rewards all through this google product. What Subway is trying to do is make a seamless and convenient experience for the customer, give customers what they want when and where they want it.
Dunkn’ Donuts, which just changed its name to just Dunkin’ because of the health issues associated with the donut connotation, is also experimenting with new concepts. They’re saying customers want a seamless experience between brick-and-mortar and ecommerce. Those are two other examples in foodservice I can point to that are really doing it well.
The common elements of omni-channel approach to foodservice, bricks-and-mortar potential for delivery, an app from which they can order and then track their order. Domino’s has an app where you can actually follow your pizza within the store, rolling out the crust and putting sauce and cheese on it is one step, another step is when it’s going into the oven...and you can track that on the app. I’m not sure how many of us are that excited about following our Domino pizza, but the concept is interesting.
They’re trying to give consumers an experience. Newer generations are looking for an experience and how do you deliver that when they’re not walking into a restaurant and ordering takeout. So, we’re looking to do that through customized apps and rewards programs, and to make it fun and engaging like following your Domino’s pizza in the system from the preparation process through delivery.
Q: What advice do you have for produce suppliers along the supply chain?
A: So much of what we read about omni-channel is about telling stories, such as Starbuck’s Guatemalan coffee grower who’s in the hills of Antigua at 6,200 feet, and it’s a third-generation family. They really bring that transparency and story to life.
We’ve talked about this in the past… our industry needs to tell our story, and it’s a continuation of that; what takes place, who’s the farmer behind that fruit, how the product was raised and where, a fourth-generation farm in the Salinas Valley, or grown with irrigated water melted from snowy mountains in Sierra, California...
You know, there’s a whole lot of romance that goes into it. Restaurants understand how to romance and create an experience, and that’s what growers and shippers need to think about and convey.
At the same time, technology from a logistics standpoint in the different channels is a critical component.
Accenture is working with Subway to help them be more efficient in the supply chain and just-in-time, better scheduling for employees during busy times, and all the information accumulating from the app and online from restaurant ordering to help improve efficiencies and costs.
Today’s consumers want to order any time through any channel and pick up food at their convenience. That can be a tall order even for a leading brand, to make sure every touch point is covered on the front end, as well as on the back end and how to make operations more efficient and so on.
The retail and foodservice environment is very competitive. We’ve used the term for years ‘share of stomach,’ and everyone is fighting for it.
Q: At the Amsterdam Produce Summit, industry leaders across channels and countries come together to identify common interests and share ideas. Are there particular things you’re looking to learn or goals you have in mind?
A: As we’ve seen in past conferences you’ve put on, it is fascinating the information you bring; hearing what the other speakers have to say, and how that applies to our own channels. I like hanging out with smart people and exploring how we can help the industry develop and innovate.
Sometimes omni-channel is thought of in a very simplistic way: Bricks or clicks. Digital or physical. But the evolution of foodservice has us think more broadly. Since the goal of omni-channel is to service the customers where and when and how they wish, the best way to look at omni-channel is through the prism of various customer interactions.
At a restaurant, consumers may:
1) Walk in a place and order and wait.
2) Send an order online through a computer screen for pick-up.
3) Send an order with a mobile app and pick-up
4) Order with a voice device for pick-up
5) Send an order online through a computer screen for delivery
6) Send an order with a mobile app for delivery
7) Order with a voice device for delivery
8) Call in and place an order for pick-up
9) Call in and place an order for delivery
10) Make a reservation by phone and eat in the restaurant
11) Make a reservation on a computer screen and eat at the restaurant
12) Make a reservation on a mobile app and eat at the restaurant.
13) Make a reservation via a voice device and eat at the restaurant
14) Walk in and dine at the restaurant
That is at laest 14 different customer interactions or channels to be considered. Add in buying the same foods or brands via retail options and there are many more.
Maintaining consistency and customer satisfaction across these channels is no easy task.
Come and join us in Amsterdam as we "grill" Tim York to explore the answers and what opportunities are created for retail, foodservice and the produce supply chain by this new world of omni-channel.
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