Grocery/Drug/Mass Foodservice Trend 2014: Wins Beyond Wegmans?

Urban flagships, regional stalwarts continue to control grocery, drug-store spotlight

Robert Lillegard, Freelance writer

Abbie Westra, Director, Editorial, CSP

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Despite the gains of a few innovative brands, 2013 didn’t reap many foodservice rewards for grocery, drug and mass channels.

While c-stores saw a 1% boost in foodservice traffi c, food and drug segments were fl at, says Bonnie Riggs, restaurant industry analyst for The NPD Group: “From an incremental standpoint, it’s a loss.”

Justin Massa, founder and CEO of Food Genius, says that while foodservice is top of mind for a few leading brands, previous gains have been difficult to follow up on.

“I think there’s a lot of experimentation,” Massa says. “I don’t know that anyone nailed it. They have fi gured out all of the easy wins. If they’re going to continue to grow, they need to do things that are harder to execute.”

There are a few chains that receive very positive reviews in foodservice in Technomic’s Consumer Brand Metrics tracking tool, including H-E-B, Publix and especially Wegmans.

Donna Hood Crecca, senior director for Technomic, says that supermarket foodservice in general rates very well for ambiance, though drug stores do not. And while numbers are down in terms of sales and growth—and some chains score quite low—there are individual companies that are aggressively moving forward into the foodservice space.

Massa concurs. “Everyone we speak to or work with in those two channels is focusing on increasing the percentage of revenue that comes from prepared foods,” he says. “Here in Chicago, my favorite example is the fl agship Walgreens downtown [that] offers sushi that’s made to order. It’s literally the first thing you encounter when you walk in the door. I know people who go there for lunch every day now.”

“[It’s] grab and go in urban markets working to convey fresh and fast,” Crecca says of drug chains.

Of course, success in retail foodservice largely depends on the location. Flashy urban flagships from Whole Foods and Walgreens have caught the attention of the media, but perhaps the real win is analyzing the success of regional chains such as Wegmans, based in Rochester, N.Y., and Lunds/Byerly’s in the Minneapolis/St. Paul metro area.

So while high-end grocers continue to receive top grades in foodservice and drug chains test the waters, these retailers are playing catchup with both QSRs and c-stores—and the gap is growing.

“The only part of food and drug stores that’s growing [are] lunch and supper meals that are purchased to eat at home,” Riggs says. “The rest is negative.”

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