SCHAUMBURG, Ill. -- Ron Paul summed up the opportunity for attendees of CSP's Foodservice at Retail Expo 2008 (FARE) with one beefy percentage: The current state of the economy aside, as much as 60% of the American population buys pizza, Chinese food or some other form of takeout at least once a week.
"Retailers have attacked [casual-dining restaurants] where they're most vulnerable: takeout," Paul, cofounder, president and CEO of Chicago-based foodservice consultancy Technomic Inc., said during the FARE opening general session. "That's where the opportunity exists."
Traditional [image-nocss] supermarkets may top the list of nonrestaurant food options for what Paul called "retail meal solutions," meaning prepared foods crafted by outlets not fitting the conventional definition of a restaurant. "Virtually 100%" of consumers, he said, shop in supermarkets, a dynamic that has helped them build sales of rotisserie chicken, soups and salads and made-to-order sandwiches. But retail outlets beyond food-focused supermarkets—convenience stores, upscale grocery stores, mass merchandisers—can nibble away at restaurants ' share of prepared-food sales, given the right tools.
"You need to think about sampling to make that happen," he suggested.
Convenience and location each play a critical role, but consumers' purchasing decisions are largely determined on the food itself. Consumers are most influenced by taste and freshness, the quality of ingredients and the appearance of the food, according to a recent Technomic survey of more than 1,500 adult consumers nationwide. Other important influences include portion size, menu variety and the availability of better-for-you items.
Nonfood-related factors such as overall value, price and cleanliness also come into play: "The cleanliness of the bathroom—that's a clue. The cleanliness of the windows—that 's a clue," he said. Packaging also is a factor: "Black-bottom containers look of a higher quality than foam containers." He also said more consumers are becoming interested in environmentally friendly "eco-packaging," so retailers should consider that when determining the vessels in which they merchandise prepared foods.
Different retail channels share the upper hand in terms of consumer usage, depending on the day-part. Because of this disparity, Paul said it is critical to offer different food options with different price points for each daypart: for dinner, perhaps a $10 piece of salmon and a $2 container of pasta salad. "One size does not fit all," he said.
For breakfast, 44% of consumers said they stop at a convenience store; such purchases could consist of something as simple as a cup of coffee, or something more substantive in the form of a breakfast sandwich or muffin. Every other retail channel, from specialty food stores—Whole Foods, Trader Joe's, etc.—to mass merchandisers, was a less-convenient option for breakfast purchases, according to Paul's data.
For the lunch daypart, retail channels were on more equal footing in terms of consumer usage, while traditional supermarkets (76% of consumer respondents) and warehouse clubs (73%) clearly held the advantage over other channels for the dinner daypart. Consumers judged c-stores (22%) a much less appealing option for dinner.
Paul underscored other market trends affecting how and where consumers buy meal solutions. Restaurateurs have begun adding services to make prepared-foods purchases more alluring, revolving mainly around convenience: pre-orders, curbside pickup, limited delivery, etc. And that poses a stiff challenge to retailers, which may find it difficult to attain the convenience levels found at some limited-service restaurants, according to Paul.
He also said many retailers—supermarkets especially—now offer multiple prepared-foods stations in stores. Such setups give consumes more choices, but may also lessen the convenience factor because multiple in-store stops could interfere with speed of service.
Location and convenience aside, Paul's address centered on a common theme, however: Retailers' food must match that of restaurants in order to capture a greater share. "That's where you can win," he said. "Ultimately it comes down to quality."
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