5 Ways Retail Foodservice Is Growing in 2020

CHICAGO — The battle between retailers and restaurants continues to heat up. Two-thirds of consumers said they purchase prepared foods from retailers at least three times per month, an 11% increase from 2017, according to the 2019 Retail Foodservice Consumer Trend Report by CSP’s sister research firm, Technomic.

As retail foodservice menus diversify and consumers demand innovative offerings and full-service experiences at these locations, competition with restaurants will intensify.

Here are five ways retail foodservice continues to grow …

Nearly two-fifths (39%) of consumers said they would purchase more prepared foods from retailers if the value were improved, according to the report. There are many ways to increase the value of these options, such as implementing more sales and promotions and increasing variety and freshness of the ingredients. This is especially appealing to younger consumers, according to Technomic.

“Fresh grab-and-go offerings, quality ingredients and natural/organic offerings stand out as initiatives that are more likely to drive purchases among younger rather than older consumers,” Technomic said.

While convenience-store chains such as Circle K and Sheetz have begun using delivery services, most retailers have yet to try them. Roughly a third of consumers said they would be likely to use delivery for prepared food orders from retailers, yet only 14% of retail foodservice occasions take place via delivery, according to Technomic. Capitalizing on delivery services may help bridge the gap between retailers and restaurants, the report said.

“Growth of retail foodservice delivery has the potential to unseat some restaurant delivery occasions,” Technomic said. “For retailers who don’t offer delivery, third-party partnerships are currently the most turnkey solution to help avoid the complications of sourcing and managing a fleet of drivers.”

More than half (51%) of consumers who are purchasing prepared foods more often than they were a year ago said they have visited fast-food restaurants less often during the same time frame, according to the report. The quick and convenient nature of fast food makes the channel a top competitor for retail foodservice, Technomic said. Moreover, both channels focus on convenience as a business driver, heightening the competition even more.

Sixty-two percent of purchasers of prepared foods buy breakfast from retailers at least once a month, a 6% increase from 2017, according to the report. Despite the growth, retailers must keep their feet on the gas during this daypart because growing breakfast popularity means increased competition across other channels. Maintaining portability and speed for craveable breakfast options is essential, Technomic said.

“Keeping menu items simple and easy to execute can help with this,” it said. “Toeing the line between freshness and speed will also be key [because] most consumers do understand that with speed comes the increased likelihood that certain elements are prepared ahead of time.”

Sandwiches and wraps are on 97% of retailer’s prepared food menus—more than any other food item, according to the report. Sandwiches and wraps outpaced hot dogs (94%), Mexican fare (91%), burgers (71%) and pork dishes (71%). Sandwiches and hot dogs are commonly offered at retailers because they are portable, customizable and easy to prepare, Technomic said.

“Sandwiches and wraps continue to dominate both mass merchant and c-store menus,” Technomic said, pointing out that turkey, chicken, roast beef and ham were offered most frequently.