The hourglass consumer
The emergence of a strong middle-class made America the mightiest country on Earth for decades. Since people organized into clans and towns, there have always been the rich/powerful class and the poor. The advent of a middle-class allowed the hard working to achieve a level of success for themselves where they could live in a nice neighborhood, buy a car and send their kids to college.
Post-industrialized America puts pressure on those in the middle. The poor in America remain poor, but much better off than the truly poor in the rest of the world. The rich remain, well — rich. Fewer job opportunities, stagnant wages and ever-increasing governmental taxes are pushing more Americans back into the ranks of the poor. This trend has created an "hourglass consumer" where millions of people receive food stamps and eat well on less costly food, those in the middle see their food dollar squeezed and the rich remain, well — rich and can eat what they like.
Food manufacturers and distributors followed this three-tiered class distinction. In the 1970's and 80's there were many manufacturers that were small, medium and large, typically serving small, medium and large distributors and restaurants. Consolidation saw large companies buy the medium-sized companies. These new larger companies could compete on efficiencies and the small ones could compete on service. The ones in the middle were attacked from both sides so they either sold or closed.
Restaurants are organized like the classes in our society, lower, middle and upper based on price-points. Whichever group you chose to serve, there was a consumer for your restaurant. As the middle is squeezed, those operators that serve the middle will find their customer counts slipping.
What can you do?
Like the industry and society-at-large, choose a side. Lower your food cost and quality and compete on price, or raise your quality and price-point and earn the business of those that can afford to spend more. It's easier to go cheap but you compete with the multi-nationals who can buy better and out-market you. Moving up the scale requires planning, patience and marketing that clearly communicated what makes your pizzeria better.
The hourglass consumer trend is real. Hoping for improvement in the macroeconomic picture is a risky proposition, as the expression from the 90's said, "hope is not a strategy." Be bold and find the place where consumers will love your food, love your service and bring their friends.
Wishing you success in pizza – Ed
Ed Zimmerman Ed Zimmerman is a pizza industry veteran and President of The Food Connector. His almost four decades of foodservice experience includes food manufacturing and distribution leadership, food industry technology, marketing services and restaurant and grocery operations management.