Exclusive: State of Foodservice at Retail

Part 1: How to decode the foodservice-at-retail consumer

OAK BROOK, Ill. -- Patient optimism is how we define the state of foodservice at retail. Sales figures, food quality, traffic and overall concept evolution are all more or less on an upward trajectory. But its penetration continues to be a small piece of the total foodservice pie, and sluggish economic recovery keeps consumer spending at a very gradual incline.

In an increasingly competitive industry, finding bright spots is crucial to gaining an edge. As part of Fare’s annual State of the Industries, we share what’s up, what’s down and what’s next for foodservice at retail. Following are insights on the foodservice-at-retail consumer--where they’re shopping and how. (Stay tuned for the next installment in the Aug. 1 issue of Fare Digest, focusing on the c-store channel.)

Fare received an exclusive early look at the findings from Packaged Facts’ Prepared Foods and Ready-to-Eat Foods at Retail study. The study reveals supermarkets dominate retail-foodservice consumers’ minds, but c-stores earn important marks for specific need states and loyalty.

Sixty-two percent of respondents purchased prepared foods from a supermarket in the previous three months, compared to 30% for c-stores. Walmart saw 34% of respondents purchasing prepared foods in the past three months, compared to 25% for all other supercenters and wholesale clubs alike. Thirteen percent of respondents purchased foods from a drug store.

While supermarkets saw the greatest number of people purchasing prepared foods, c-store foodservice users buy prepared foods there just as often as supermarket users--a mean use of 5.7 times.

“[This] underscores the importance of small-basket trips made largely on the basis of immediate need and/or convenience of purchase,” says David Morris, managing consultant, Kaleidoscope Research Consulting, and author of Packaged Facts’ syndicated foodservice studies.

Because supermarkets and c-stores still satisfy largely different needs, the real competition for supermarket prepared foods is supercenters and wholesale clubs, especially as they begin infiltrating city centers with smaller, more convenient concepts, says Morris. The mean use for Walmart foodservice shoppers is 4.7 times, other supercenters 4.0 times and wholesale club stores 3.3 times.

Meanwhile, many c-store foodservice users would also visit a supermarket for a meal, but the same cannot be said for supermarket shoppers at c-stores. When asked where they would have gone if they had not purchased a meal from a c-store, 38% of c-store users said they’d have gone to a supermarket. When the same question was posed to supermarket users, only 8% said they would have gone to a c-store.

This disparity reveals each channel’s competitive advantage, says Morris: “Supermarkets are still better poised to deliver on quality, taste and variety. C-stores are built around speed, so while c-store users may be shopping at a c-store, if they had more time--or more time to plan--many might get prepared foods at a supermarket instead.”

The survey also broke down use (in past three months) and frequency by region. Overall, consumers in the West purchase retail foodservice more than any other region, across all channels. In nearly all channels (except supermarket), consumers in the Northeast purchase prepared foods the least, but frequency among those users is not far off from those in other regions.

Meanwhile, an analysis of consumer perceptions of QSRs reveals that supermarkets are perceived to be slightly better priced, with slightly better tasting food and healthier offerings than QSRs. C-stores received neutral responses.

Other key findings from the study include:

• For both c-store and supermarket foodservice users, about half of prepared-meal purchases were planned in advance of entering the store.
• About a quarter of c-store users (22%) said buying the food was the No. 1 reason for the visit. That number dropped to 15% for supermarket users.
• Very few consumers used special promotions for their purchase.
• Supermarket users are more likely to buy food for more than one person.
• C-stores have supermarkets beat in terms of ease of eating on the go.
• C-store users who bought prepared foods six or more times in the past three months are 21% more likely to cite the food as the primary reason for visiting the store.
• Those same users are 31% more likely to use a promotion tied into a nonfood purchase. That number drops quite significantly for one- to two-time users.

Stay tuned for the next installment of the State of the Industries in the Aug. 1 issue of Fare Digest, focusing on the c-store channel.