SPRINGDALE, Ark. -- Dining out is out. Takeout is in. According to the foodservice industry this trend resulted in $15 billion in takeout food sales last year. Springdale, Ark.-based Tyson Foods Inc. is after a piece of that pie, reported The Springdale Morning News.
The company's prepared foods segment had sales of $2.6 billion in 2006, roughly 10% of Tyson Foods' annual revenue, said the report. In the first nine months of 2007, the company reported prepared foods sales of $2 billion, up $9 million from the same period a year ago. The increase was [image-nocss] attributed to a 3.1% price hike for these ready-now food items.
Stephens Inc. analyst Farha Aslam predicted the prepared foods segment will report higher sales in the fourth quarter. She told the newspaper that the segment should close out the year with $2.7 billion in sales, a 38% increase over 2006.
Ready-to-eat foods are part of Tyson Foods' move away from lower margin meat commodities, a trend seen across the industry for the last decade, Sylvia Wulf, a vice president in the company's foodservice division, told the paper.
Tyson Foods holds a 40% market share in pepperoni and a 30% share in pizza crusts and toppings, according to the report, which added that tortillas are also important to the company. These products don't reach the shelves of local groceries packaged with the Tyson logo. Tyson Foods uses the products to create fully cooked, prepared food items such as wraps or quesadillas, which it sells to foodservice vendors.
These ready-to-eat foods are sold at food court venues across the nation. Tyson Foods products, without the logo, can be found at the Ford Center in Oklahoma City, in Pennsylvania's Hershey Park and on most major college campuses. Ready-to-eat products like Bonici Brothers Pizza, chicken salad wraps from Crustanos or Tex-Mex entrees from Ancho Grill all have one thing in common: Tyson Foods produces the ingredients.
The brands and others are owned by Tyson Foods and made available to foodservice vendors through the company's branded solutions program, which is not a franchise prototype, according to the company's website.
The company also markets dozens of ready-to-eat foods like rotisserie chicken and pork, spicy fried chicken, buffalo wings, quesadillas, tacos, soups and side dishes through a variety of its foodservice options. The fully cooked products are sold to grocery and convenience store chains, schools, hotel chains, hospitals and the U.S. military.
Traditional supermarkets have seen higher sales in the prepared foods or home replacement meal categories, the report said. Columbus, Ohio-based Retail Forward reported earlier this year that prepared food sales among major supermarket chains with annual sales of $2 million or more, increased an average 8.2% annually between 2000 and 2005. Meat and poultry sales increased only 0.7% in the same comparison.
In 2006, supermarkets made gains as a source of takeout food, closing the competitive gap with fast-food restaurants, Food Marketing Institute senior vice president Michael Sansolo told the paper. According to the trade group's research, 27% of shoppers buy takeout food most often in supermarkets, up 18% recorded over the previous five years. The research put supermarkets well ahead of full-service restaurants, which had 18%, and closer to fast-food outlets, which captured 35% of the takeout market. FMI reported nearly 40% of retailers feature quick-stop prepared food areas in the store, compared to 28% a year ago.
Tyson Foods works with grocery retailers to develop ready-to-eat foods that fit consumers needs, said Wulf. Casual dining can cost roughly $11 to $12 per person, while deli takeout from the local supermarket costs an average of $5 to $7 per person with no added tip, Wulf said. Given the wide variety and quality of prepared foods coming to the market place, Wulf said, it's no surprise busy families on a budget often opt for takeout.
The fastest growing segment in the retail foodservice industry is deli sales at c-stores, supermarkets and discount stores, said the Morning News. These sales are growing at roughly 7% per year, compared to a 2% growth in the overall food away from home market, Wulf told the paper.
The New York-based NPD Group Inc. estimates eight billion meals and snacks were purchased at retail deli counters in supermarkets, discount and c-stores last year. Ready-to-eat foods sold at retail deli counters include food items such as fried chicken strips, egg rolls and taquitos. These prepared food sales compete with restaurant takeout and casual dining sales.
The NPD report indicated that c-stores recorded 54% of all foodservice traffic at retail outlets, but still represent a small percentage of overall foodservice growth across the industry. This has spurred c-stores to expand their foodservice items. "We are all familiar with the roller grills of wieners and warming stations at local convenience stores. These retailers are actively looking for new food products like taquito crispers that can utilize the same machinery they already have in place," Wulf said.
C-stores are becoming more consumer relevant and trying to cash in on the foodservice sales as a way to offset the rising costs of labor, utilities and credit card processing, Jennifer Halterman, a senior consultant with Retail Forward, told the paper.
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