Convenience, price, and variety are among the factors that will drive consumers to purchase prepared foods in supermarkets, according to a recent report from Technomic.
The 2023 Retail Foodservice Consumer Trend Report, which surveyed 1,500 retail foodservice users online last fall, found that retailers have made progress on improving consumer perceptions about the quality of prepared foods in their stores. The report found that 90% of supermarket prepared-foods buyers believe they are getting good value from these items, and 74% of consumers agreed that the quality of retail prepared foods has greatly improved over the past two years.
Technomic’s data showed that the number of consumers who purchase prepared foods from grocery stores monthly or more often has risen slightly over the past two years, although these purchases remain below pre-pandemic levels.
On average, consumers purchase prepared food about a third of the time while shopping in retail stores (33%), and slightly less often when shopping on retailers’ websites (29%). Traditional supermarkets and mass merchandisers are the primary destinations for prepared meals, and these are the only segments that have consistently seen an increase in prepared food purchase frequency per month, the report found.
Frequent purchasers of retail foodservice spend approximately $11.08 per visit on prepared foods, up slightly from $10.30 in 2021, according to Technomic’s research.
While the report shows some of the gains that retailers have made in their prepared-foods offerings, there may be multiple factors that have otherwise limited the growth of these purchases. Grocery-price inflation, for example, has led consumers to seek lower-priced options throughout the store. In addition, as some consumers have resumed their daily work commutes in the wake of the pandemic, they appear to have shifted their prepared-foods breakfast purchases back to the c-store and coffee-shop channels, according to John Williams, manager, research and insights, Technomic.
These findings and others in the report highlight the potential opportunities for supermarket retailers to drive more sales of prepared foods, he said.
The value equation
Although consumers perceive retail prepared foods to be a good value, they appear to be seeking to save even more money by doing the cooking themselves at home, the report found.
Fifty-nine percent of respondents cited price as an important or extremely important factor when buying retail prepared foods, up from 52% in 2021. That concern about cost may be leading consumers to opt for cooking from scratch instead, despite the improved perceptions about the quality of retail prepared foods, said Williams.
“We saw that 43% of consumers are now viewing home cooking as the preferred alternative to retail prepared foods, which was a noticeable increase from the prior years that we ran the study,” he said.
Interestingly, restaurant meals were not nearly as popular as home cooking when it comes to finding an alternative to retail prepared foods. Restaurant takeout was cited by 21% of consumers as a substitute for retail foodservice, and dining in at restaurants was cited by 9%.
Catering to non-cooks
Among the key strengths that prepared foods offer retail shoppers, however, is that they provide a solution for consumers whose cooking skills are limited. In fact, 39% of consumers agreed they purchase prepared meals for that reason, the Technomic research found.
Consumers’ low level of confidence in their cooking abilities also bodes well for store-bought meal kits. These offerings, which generally include partially prepared ingredients and easy-to-follow instructions in a single package, can provide cost savings compared with restaurant meals as well as added convenience for consumers who would rather not cook completely from scratch.
In fact, the report found that the most appealing attribute of meal kits is that they make meal prep easier or more convenient, as cited by 54% of respondents. Consumers also like the “grab-and-go” aspect of meal kits — 47% of survey respondents said they like being able to pick up meal kits while running errands.
Meal kits also offer the ability for consumers to try new dishes and explore new cuisines. Forty percent of consumers said they appreciate that there are a variety of options available in store-bought meal kits.
“We saw that retail meal kits presented an opportunity to offer a cost-effective and convenient alternative to cooking at home by combining the grocery items with the prepared food items that they could purchase as well in that trip,” said Williams.
The convenience factor
About half of consumers (49%) said they find grab-and-go retail prepared foods appealing, including 51% of consumers age 34 and under. Grab-and-go came in just slightly behind consumers’ preferred format, made-to-order prepared foods, which was cited by 52% of consumers across all ages.
The report suggests that retailers consider how they might enhance the visibility and accessibility of prepared foods in order to appeal to consumers’ demand for convenience. Twenty-nine percent of consumers said the location of the prepared foods area was a factor in their decision to buy.
This may be particularly important for breakfast and snack items, Williams said. These are dayparts when consumers, especially young consumers, are seeking convenient prepared-foods solutions.
Retailers could make their prepared-foods offerings even more convenient for shoppers by offering digital ordering via mobile apps, websites, or in-store kiosks, and ensuring that prepared foods are available for curbside pickup and delivery, the report suggested.
The report cited The Fresh Market as an example, noting that the retailer offers groceries and prepared foods for same-day delivery via DoorDash, Uber Eats, and Instacart.
Disparity among dayparts
Supermarkets have lost ground in the breakfast daypart when it comes to prepared foods, while convenience stores have gained, according to the report. This trend appears to be a result of the fact that more consumers are commuting to work again, and returning to pre-pandemic routines of picking up breakfast at traditional quick-service restaurants and c-stores as part of their morning commutes.
In addition, breakfast is the easiest meal to prepare at home, Williams pointed out. Even consumers who have resumed their pre-pandemic commutes may be preparing breakfast at home to save money. Those who are working from home may be either making breakfast from scratch or continuing their pandemic routines of eating heat-and-eat breakfast foods from the freezer, such as waffles and pre-made breakfast sandwiches.
“With the success of breakfast in convenience stores, other retailers could take the opportunity to grow this daypart by introducing similar offerings in a way that makes it quick and easy to take on the go,” said Williams.
Both the breakfast and snacking dayparts in retail prepared foods are driven primarily by younger consumers ages 18 to 34, he pointed out.
Forty-three percent of consumers reported having ever purchased prepared breakfast foods in a convenience store, compared with 18% who said they had done so in a traditional supermarket. Mass merchants, specialty stores, drugstores, warehouse clubs, and micromarkets were all at about the same level as supermarkets when it came to prepared breakfast purchases, the Technomic report found.
C-stores are also the preferred destination for prepared-foods snacks, with 47% of consumers reporting that they have bought prepared-foods snacks at c-stores, compared with 26% who have bought foodservice snacks at supermarkets.
What traditional supermarkets lack in breakfast appeal, however, they make up for at the dinner daypart. About two thirds of survey respondents (67%) reported having purchased a prepared dinner at a traditional supermarket, compared with 18% who have bought dinner at a c-store. Supermarkets edged out both mass merchandisers and warehouse clubs when it came to prepared foods for the dinner daypart, both of which were cited by 63% of consumers.
Where the kids go to eat
The report also found that when it comes to using supermarket foodservice, consumers under age 35 lag their older counterparts. While 85% of those age 35 and older said they had purchased prepared foods in a supermarket, only 76% of consumers ages 18-34 reported having done so.
Younger consumers, however, outpaced their older counterparts in purchasing prepared foods at every other retail format. The gap was particularly pronounced at drugstores and micromarkets, where younger consumers significantly outpaced their older counterparts. Forty-one percent of young consumers report having purchased prepared foods at a drugstore, and 31% have bought prepared foods at a micromarket, compared with 17% of older consumers who have bought prepared foods at either format.
Young consumers are also much more likely to include beverages, side dishes, and desserts with their prepared-foods purchases, the report found. For example, 67% of consumers ages 18-34 said they purchased beverages with prepared foods often or every time, vs. 53% of consumers overall. The purchase of side dishes showed a similar disparity among age groups, and desserts skewed even more toward purchases by younger consumers.
The report suggests that retailers focus on catering to the diverse preferences of consumers ages 18-34, and should provide offerings that include a wider variety of convenient and appealing products, particularly for breakfast and snacks.
Promoting prepared foods
The report also provided insights about consumers’ decision process when it comes to the path to purchase prepared foods.
More than half of retail food purchases — 60% — were planned ahead of time, Williams noted. Because of this, the report recommends that retailers design a multifaceted marketing strategy that influences consumers during their planning stage, as well as when they are in the store.
Consumers under age 35 were somewhat more likely to buy prepared foods on impulse than their older counterparts.
And when it comes to impulse purchases, appearances matter. Fifty percent of survey respondents said that their most recent purchase of prepared foods was driven by how good or appetizing the food looked, an increase from 46% in 2021.
Healthful and high-quality
Consumers (69%) said they’d like to see more healthy and sustainable items in the retail prepared foods assortment. Premium and specialty ingredients are also important, as consumers seek items that help them enjoy a more luxurious dining experience at home, according to the report.
In addition, 37% said clean labels were important, and 36% said listing nutritional information was important. Including natural, locally sourced, or sustainable ingredients, making nutritional claims, and posting the calorie count were all considered important by about a quarter to a third of survey respondents.
Prepared foods still have to taste good. The taste of the food ranked as the key factor in the decision to purchase prepared foods, cited by 70% as important or extremely important.
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Methodology summary:
The methodology for this report included comprehensive secondary research using Technomic’s Ignite platform to assess trends in retail foodservice, alongside a quantitative survey of 1,500 retail foodservice users conducted between Oct. 13-23, 2023. Participants were required to have purchased retail prepared foods at least monthly, with the survey’s findings subject to plus or minus 2.5% at the 95% confidence interval. Notably, the report cautions that differences highlighted may not be statistically significant and that data comparison with previous publications might be affected by changes in data collection methods or survey restructuring.
Further depth was added through segmentation of survey respondents into user groups based on dining-out frequency and specific market segments reflecting their foodservice behaviors and attitudes, as defined by Technomic. This segmentation, combined with data from Technomic Ignite Menu, enabled the analysis of pricing trends across 48 U.S. retailers, focusing on supermarket foodservice and convenience stores from Q3 2021 to Q3 2023. The report also provides definitions for key retail formats including mass merchandisers, specialty food retailers, convenience stores, supermarket foodservices, warehouse/club stores and drugstores, each differentiated by their product offerings and service models.
