Tim York, Markon Cooperative
Tim York, Markon Cooperative

Competition for the foodservice dollar is ramping up as the economy recovers slowly but surely from its downturn in 2008.

But consumers aren’t necessarily beating a path back to their favorite restaurants to celebrate.

While the down economy lured shoppers back to the grocery store, retailers seized the opportunity to ramp up meal options requiring little or no preparation. Convenience stores and other non-traditional foodservice outlets also saw opportunity to grab space.

There’s a blurring like never before between the foodservice and retail landscape.

A recent Technomic study found more than one-third (37%) of consumers say they purchase ready-to-eat foods from a supermarket or retail store weekly or more often.

At Whole Foods in Austin, Texas, patrons can choose from six concepts — from sushi to pasta — at a single location. What’s more, the prepared food section of many Whole Foods stores is located toward the front of the store in eating areas strategically located to lure in those passing by.

The placement of prepared foods reminds would-be restaurant goers there are options — ones that may align more closely with their desires for fresh, healthy, local and organic fare.

Across town at Central Market, diners can purchase “dinners for two,” which tout “a restaurant-quality, chef-prepared dinner ... when you don’t have time to cook, but do have time to swing by your store.”

Recent seasonal offerings include grilled salmon with tomatillo avocado sauce with a southwest vegetable saute, and herb grilled chicken with antipasto grilled vegetables.

These “fresh format stores” aren’t going away.

C-stores, retail wrestle for slice of foodservice pieAccording to a 2014 Willard Bishop study, fresh format stores (e.g., Whole Foods and other organic grocers) will have a 92% increase in sales between 2013-18, with a projected 63% increase in store count over the same period.

Convenience stores are also upping the ante, recognizing they too are competing with quick-service restaurants, fast food chains and traditional grocery stores.

According to a 2013 foodservice study conducted by Convenience Store News, almost two-thirds of C-store operators expect their foodservice sales to increase.

Prepared food purchased at C-stores and other retail locations and eaten at home has grown 12% since 2006, and is projected to grow at more than twice the pace of the restaurant industry overall, according to market research firm The NPD Group.

Remember the term “home meal replacement?” That was coined in the early ’90s — with Boston Market as the poster child for that new segment.

By 2022, NPD expects retail home meal replacement to grow by 10%, while restaurant traffic overall is expected to increase just 4%.

For restaurants to compete effectively, they must understand consumer segment-specific purchase drivers. Quick-service restaurants compete with supermarkets and C-stores on food quality and value, cleanliness, speed and warmth of service, and community involvement.

Casual-dining brands compete with grocery stores and upscale markets on convenience as well as staff knowledge, food flavor, quality and value.

Consumers still rank restaurants higher than other formats on food, service, atmosphere and speed. Prepared-food retailers, however, score higher on emotional connection and social responsibility.

Consumers demand that restaurants and retailers earn their trust. Trust these days means operators and suppliers alike will respond to the call for greater transparency in labeling, pricing and safety.

Buyers also expect to see new and exciting foods. Here, retailers are playing a greater role, because their fresh prepared food format facilitates new product trials.

When consumers choose retail, they’re looking to put together a meal “like home.” When they choose foodservice, they want an “away from home” experience.

Restaurants and retailers will keep battling for share, and consumer options will continue to proliferate. Providers across segments tout “fresh” positioning; dayparts are blurring; brand loyalty is more tenuous and demographics are evolving.

Packaged goods, food vending machines and the proliferation of food trucks and home-delivered meals make for a more intense competitive landscape.

Growers and shippers should take note of these emerging trends in retail foodservice and non-traditional channels.

Consumers — whatever the venue — want healthy, value-priced options. While it may be easy for those in the traditional restaurant industry and its suppliers to feel nervous because of this incredible amount of change, there is huge opportunity for produce, which remains in the good graces of all foodservice — traditional and emerging.

Tim York is CEO of Salinas, Calif., Markon Cooperative, made up of eight North American foodservice distributors. Centerplate is a monthly column offering a peek at “what’s now and next” for foodservice and the implications for the produce industry.


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