When Retail Foodservice Shines

Six percent of the roughly 62 billion commercial foodservice meals and snacks consumed in a year are purchased at retail stores — food, drug, discount, department, and price clubs — while convenience stores represent an additional 7%, a new report from The NPD Group showed.

Retail foodservice represents a spending level of almost $13 billion, said NPD’s recently released Retail Meal Solutions report.

The report analyzed how retailers are currently satisfying consumer needs for ready-to-eat foods. It showed that ready-to-eat meal and snack purchases in retail increased 2% for the year ending August 2008.

The quick service restaurant (QSR) segment, with which retail stores directly compete in providing convenience meal solutions, served only 1% more meals and snacks. The full-service restaurant segment realized a downturn.

“Consumers’ increasing use of foodservice for ready-made meals has long been recognized by grocery retailers as an opportunity,” said Bonnie Riggs, NPD restaurant industry analyst and author of the Retail Meal Solutions report. “For some time, retail stores have offered prepared foods in the deli department, but have now expanded foodservice offerings to include a variety of cold and hot ready-to-consume meals and snacks.”

The report dispelled the prevailing belief that supper is the prime daypart for retail meal and snack solutions. NPD finds supper accounts for only 17% of retail meal solutions consumed, but is steadily growing, whereas it’s a weakening daypart for QSR.

The PM Snack daypart represents the largest share (35%) of ready-to-eat food consumed, followed by lunch with 27% share, and then morning meal, which represents a 21% share.

“Retail outlets are more dependent on morning meals and PM Snack purchases than QSR,” Riggs said. “These are the on-the-go needs that are being met by retailers — consumers making those purchases on the way to work, to eat at work, or in their car. Purchases that otherwise would have been made at a QSR.”

Consumer motivation in purchasing prepared meals and snacks from retail stores include convenience, availability of healthier options, variety and affordability – all attributes that consumers reported as lacking at QSRs, Riggs said.

“As always, it’s a matter of learning and understanding consumers’ needs when it comes to meal and snack solutions,” she said.

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