Last year, the National Restaurant Association (NRA) projected that retail-host restaurants (including convenience stores, grocery and drug and general-merchandise stores) would bring in $31 billion in food and drink sales in 2010. That's a 4.9% growth change from 2009, or 2.3% in real growth change.
Last month, the NRA released its 2011 projections and again offered a favorable forecast for the segment: $32 billion in sales and 4.2% growth change (1.8% real growth change). (Note that Chicago-based consultancy Technomic forecasts an even more favorable year for retail foodservice with a projected $35 billion in sales.)
[image-nocss]Fare Digest asked Hudson Riehle, senior vice president of research for the NRA, what he thought of the segment's growth opportunity, and how it compared to the rest of the industry.
"Retail-host foodservice is definitely one of the bright spots within the restaurant industry," Riehle told Fare Digest. "Historically and looking forward for the remainder of this year, the segment's growth rates exceed the industry average performance."
Part of the segment's strength is the diversity of locations. Consumer spending on away-from-home meals has nearly doubled over the past 50 years. This sustained, long-term growth reflects a shift in the way Americans look at eating away from home. A major factor in that shift, Riehle explains, is convenience.
"The integration of foodservice in many of these retail locations increases the points of access to the consumer, so that they can actually allocate a greater portion of their spending towards the away-from-home segment," he says.
Further, the overall growth of the restaurant industry has largely come from off-premises occasionstakeout, delivery, drive-thru and curbside. Takeout, says Riehle, will continue to drive growth over the next decade.
"So, where that takeout comes from, obviously, there will be greater points of access. In the end the consumer is basically looking for a meal solution, and whether that solution comes out of a pharmacy unit, the grocery store, or a traditional brick-and-mortar restaurant, in the end it's the consumer making a decision to allocate their food dollars toward the away-from-home market."
The economic downturn certainly opened up an opportunity for these nontraditional channels to steal share of stomach from quick-serve, fast-casual and full-service restaurants. But as some assume consumers will automatically trade back up as they loosen their purse strings, Riehle sees the industry as an even playing field.
"Consumers are much more discriminating and much less forgiving. If their last experience doesn't have a positive price-to-value perception, they are quite quick to vote with their feet.
"The focus on value continues this year and certainly well into next year as the employment market is slow to come back."
Yet despite a forecast of almost 2% in real growth, retail foodservice is still a small sliver of the $600 billion industry.
"You're not talking about a very large segment in terms of the total market, but in terms of the growth rates it is far above the industry average."
And Riehle sees good news for the foodservice industry as a whole. Just over two out of five Americans report they're not using restaurants as much as they'd like in their daily lifestyleand it's even higher among females, the primary driver of at-home preparation.
"It behooves operators in this environment to focus on their marketing, social media and advertising mix to nudge that consumer into the decision to spend their away-from-home dollars. And it's great to be in an industry which the consumer loves and wants to use. About nine out of 10 Americans enjoy using foodservice, so it's not a hard sell to begin with.
"There's no immediate rebound to prosperity," he adds, "but there's still ample room for growth."
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.