Eliminating the 1.8%

Abbie Westra, Director, Editorial, CSP

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It’s been three years since we began compiling the latest data around the foodservice-at-retail industry for our annual handbook, and consumers continue to shift more of their foodservice dollars toward convenience driven meals.

And surprisingly, the gains aren’t coming only from immediate consumption. Are cent forecast from The NPD Group indicates that by 2022, prepared foods purchased at retail for at-home consumption will grow at a pace more than twice that expected for the restaurant industry overall. Commercial foodservice traffic in that time frame will grow by 4%, while retail home meal replacements is expected to grow 10%.

On the c-store side, foodservice continues to drive new revenue. It contributed 15.8% of sales in 2012, according to preliminary numbers from the 2013 NACS State of the Industry Report of 2012 Data. The segment also continues to see nice year-over-year gains in foodservice traffic, based on numbers from The NPD Group.

The grocery segment, meanwhile, dominates foodservice-at-retail sales. According to Technomic, supermarkets account for 68% of fresh prepared food sales, compared to 20% from c-stores and 12% from mass/club. But it’s theirs to lose: Consumers appear to be reducing their foodservice spend at traditional supermarkets, returning to old habits as the economy improves. All retailers should take this as a warning sign that a new customer is not necessarily a loyal one.

The non-commercial sector remains a bellwether of food trends. Colleges and universities continue to roll out unique foodservice-at-retail concepts, and health care is following suit as foodservice directors place a greater emphasis on guest and employee dining. Operators such as the University of California, San Francisco Medical Center and University of North Carolina Hospitals are making great gains through creative menuing, design and customer experience. Both the National Restaurant Association (NRA) and Technomic expect strong numbers out of the health-care sector this year.

In our annual State of Foodservice at Retail Study, which we conduct in conjunction with the FARE conference, operators across the channels told us things are looking up in the year to come. Seventy-eight percent said they expect business conditions to improve somewhat or greatly this year; 20%expect things to stay the same. Only1.8% believes things will decline somewhat or a lot.

If you’re part of the 1.8%, my hope is the next 60 or so pages will present you with a few ideas to turn that around.

Where would I look? Snacking, for one. It’s safe to say the grazing craze is not a fad, but rather a permanent way of life. Traditional restaurants, packaged snack manufacturers and even beverage companies are trying to get in on Americans ‘around-the-clock consumption. C-stores have the upper hand in that they carry both foodservice and CPGsnack items. Of course, I’d also look at what limited-service restaurants are working on. If they are true to their word (or what they told the NRA in its annual operator survey), operators are focusing on creating appealing yet wholesome meal options for kids. Don’t allow a lack of healthful kids’ meals to turn customers away from your store.

On the menu, the top-selling foods from retail outlets, according to NPD, are fried chicken, turkey sandwiches and chips. It doesn’t take an advanced degree in gastronomy: Deliver the basics really well, and the game is halfway won.

At the same time, customers want a narrative to go with their eating occasions. Create an experience through branding, a strong store experience and exciting flavors for those who are culinarily advanced.

Consumers will continue to increase their spend at foodservice-at-retail outlets in the years to come. In exchange for their dollars, operators must cater to their daily lives with healthful and functional options, convenience and value. Deliver that with a little brand narrative, and you have not only a sale, but also a promise for more to come.

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