Study: Meal Solutions Boost Market Share

ROSEANNE HARPER

CHICAGO — Supermarkets and other food retailers have sharpened up their prepared food programs and are now competing successfully against restaurants, according to a recent study by food-service consulting group Technomic, based here.

In fact, retailers — taking back a hefty share of meals sales from the food-service arena — will see their prepared food rings hit $25 billion by the end of this year.

Technomic calls the findings both a wake-up call to food service and a big encouragement to retailers.

“Retailers have been working on quality, and on expanding their offerings. They're selling complete meals, restaurant quality, from appetizers to desserts,” Ron Paul, Technomic's president, told SN last week.

“They've expanded square footage for prepared foods and have made multiple stations throughout the store. It's not just the deli anymore,” Paul continued.

“There are more options, and they've added appeal with things like wood-fired pizza ovens and smokers for barbecue.”

Paul said he believes Whole Foods Market's geographical expansion and revved-up meals programs have served as a catalyst.

“There certainly are others, including, of course, Wegmans and Ukrop's, who have been doing a good job with meals for a long time,” Paul said. “But Whole Foods attracted national attention around the time they opened their first New York [City] store. The one in the Time-Warner building.”

That seemed to be a turning point. Supermarkets decided they were going to get serious about meals and get some of the market share back that had been flowing to restaurants, Paul pointed out.

Actually, several supermarket chains and independents already stood on the leading edge with superior meals programs before Austin, Texas-based Whole Foods started its expansion and nearly simultaneous fine-tuning of its prepared foods offerings.

Indeed, Technomic's team of researchers mention a handful of them in their current research report, which is titled “Retail Meal Solutions — Opportunity Assessment.” The report mentions — in addition to Whole Foods Market — Bristol Farms, H.E. Butt's Central Market, Publix, Ukrop's and Wegmans. And the recent entry into this country of Tesco's Fresh & Easy concept was mentioned as a serious contender.

Other industry sources said they've observed that supermarkets have taken meals more seriously, possibly — in addition to other contributing factors — as a result of listening a little more closely to what their customers actually want.

“For many years, supermarkets watched restaurants gain market share in the battle for share of stomach,” Neil Stern, senior partner at McMillan Doolittle, Chicago, told SN. “As the numbers indicate, they are now fighting back, developing solid, consumer-driven programs that create more affordable and convenient meal solutions. The customer is still coming to the supermarket, and food retailers are doing a better job of filling some of their needs.”

Of all the factors that could be newly pulling customers toward retailer's meals programs, Technomic's Paul said, probably the most important is that retailers now are offering a complete meal, not just the entree or another part of it. Quality was always there in most cases, but now the customer can make a one-stop shopping trip and get something each member of the family will relish, he said.

Others agreed. “Supermarkets are now thinking, acting, operating and executing as bona fide food-service operators, with a focus on relevant offerings, great meal and plate presentations, fair prices, great flavors, variety and even “menu marketing,” said Ira Blumenthal, president of Atlanta-based Co-opportunities and executive-in-residence at Georgia State University's School of Hospitality. “Ultimately, the supermarket will win. Why? Three reasons: convenience, convenience and convenience.”

Growing demand for value and convenience was underscored in a separate, recent report by NPD Group, Port Washington, N.Y.

That research showed a quarter of consumers said they were visiting quick-service restaurants less frequently, and a full one-third said they were visiting casual-dining and family-style restaurants less often.

What's more, half of those who said they're eating less often at casual or family-style restaurants said they're now eating at home more often. Forty-two percent of people who said they visit quick-service restaurants less frequently said they're eating at home more often. They cited cheaper prices as the reason for more at-home eating. The slowdown in per capita restaurant visits has also coincided with all-time highs in gasoline prices.

Technomic's Paul said supermarkets and other retailers offering complete meal solutions have seen their customer traffic increase at twice the rate of restaurants' traffic over the past five years.