Every year at the Dot Foods annual trade show, an update is given on the state of the food industry. Once again, Dot CEO Joe Tracy updated attendees; below is a summary of the information he presented the crowd of more than 2,000 people.
Personal consumption is what drives the GDP, and personal consumption is up 1.2 percent. This is good news for everyone in the industry. It's also good news that the economy doesn't care about politics.
Food prices are up overall, and the unemployment rate has gone down to 3.7 percent; we have a changing workforce with more on-demand workers out there. It will be imperative to figure out how to change our jobs and schedules to accommodate the demands of today's workers.
There was a $1.5 trillion spend in the U.S. food industry in the last year; in the next five years, the big winner in growth appears to be the non-traditional food channels, like food trucks, meal kits, and farmers' markets. People perceive the products to be fresher and better because it's sourced locally and unique.
With this in mind, restaurant traffic has been flat to declining for the past 10 quarters; although, some of the larger chains are having significant growth. Domino's Pizza and Chick-fil-A are winners here, having shares that have increased exponentially-Raising Cane's is actually growing by having a laser focus on the one item they do really well.
In the same vein as having laser focus, Tracy told attendees they need to have a formula for success.
Something that makes it harder for operators is diet trends. Whether paleo, vegetarian, vegan, keto, or otherwise, independents are leading the pack and being more creative, because they don't have the guardrails chains have.
Innovation drives category growth, whether it's investing in emerging ethnic-driven sauces or other health foods … in every industry, the thriving companies are those that invest in innovation. Beyond ingredients, the digital ordering trend is booming.
You need to have a plan for delivery if you want to grow, Tracy said.
While grocery has been relatively flat, Aldi and Lidl are growing---and having success with smaller store footprints and their limited assortment strategy.
E-commerce was also up 40 percent in 2018, and Tracy said he continues to see dollar store sales grow. The big story there is they continue to focus on food; dollar stores have grown their food sales by 55 percent since 2012.
Online grocery shopping is up 61 percent; Walmart has gained ground on Amazon and is formidable competition as their online segment grows. Everyone is focusing time and energy on the last mile, on how to do delivery. Online ordering will increase 10 times by 2030. That's why everyone is chasing it.
Truck driver turnover rates are still high, and there is still a driver shortage going on. Drivers are getting older, and the industry is losing drivers to construction jobs and those who can be home every night.
Tracy said that Dot Foods has had three pay increases for drivers in the last 18 months, but it's still a challenge to fill seats. Pay increases are not the entire solution, but definitely a part of them.
Will the freight market rebound? Not anytime soon, Tracy said.
At the heart of all of this is Dot's mission: "to positively and significantly contribute to the success of our business partners. If we aren't doing business to put you in a position to win, then our business isn't sustainable," Tracy said. "That is why our ability to stay out in front of the driver shortage is so important."
In the future, speed to market is important as well as more visibility to Dot's data and inventory, but also reliability of service.
We have stumbled, we have had our hiccups, and we are focused on fixing that and continually improving and innovating, Tracy said.
Innovations 2020 will take place April 15-17, 2020. Stay tuned for more information about that show.