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.”
NEXT: Data! Deli, Service & Ambiance
Deli Prepared-Foods Dollar Share
Year ending December 2013
The category that saw the most notable increase in share of sales last year was dips/spreads/toppings. It also experienced the largest growth in dollar sales.
| Category | Dollar share | PCYA* |
| Prepared chicken | 28.5% | 9.4% |
| Salads | 16.1% | 3.9% |
| Entrées | 11.2% | 5.8% |
| Sandwiches | 10.8% | 5.7% |
| Dips/spreads/toppings | 8.1% | 15.3% |
| Pizza | 5.3% | 2.3% |
| Sushi | 4.8% | 7.0% |
| Snacks | 3.8% | 8.6% |
| Platters | 3.2% | 4.3% |
| Sides | 2.2% | 10.2% |
| Soups | 2,1% | 10.4% |
| Other | 3.8% | 6.8% |
| Other | 100% | 7.3% |
Source: Nielsen Perishables Group FreshFacts--Grocery plus Walmart, Sam’s Club and Target
*Percent change from a year ago
Deli Entrée Dollar Share by Subcategory
Pork entrées saw the largest leap in share of deli entrée sales. The category overall saw 7% gains.
| Entrée subcategory | Dollars ($ millions) | % of deli entrée dollar | PCYA* |
| Other entrées | $333.39 | 25.0% | 6.7% |
| Asian entrées | $171.89 | 12.9% | 0.4% |
| Pasta entrées | $169.75 | 12.7% | 9.2% |
| Pork | $112.30 | 8.4% | 17.6% |
| Turkey | $110.89 | 8.3% | 1.4% |
| Franks and dinner sausages | $108.86 | 8.2% | 4.6% |
| Mexican entrées | $93.34 | 7.0% | 14.3% |
| Beef | $90.25 | 6.8% | 6.3% |
| Seafood | $71.45 | 5.3% | 8.6% |
| Pot pies | $41.14 | 3.1% | 7.6% |
| Ham | $18.26 | 1.4% | 9.8% |
| Vegetable entrées | $14.13 | 1.1% | 5.6% |
| Fowl | $17,042 | 0.0% | -6.2% |
| Total | $1,335.66 | 100.0% | 7.0% |
Source: Nielsen Perishables Group FreshFacts--Grocery plus Walmart, Sam’s Club and Target
*Percent change from a year ago
Drug Store Prepared-Meal Purchases by Gender
Percent answering “important” or “extremely important”
When asked why they are purchasing prepared foods from drug stores more often, the majority of respondents cited the affordability of the offers and the stores’ fast service. Women appreciated the overall convenience more than any other attribute.
| Attribute | Male | Female | Overall |
| Affordability | 56% | 50% | 53% |
| Fast service | 66% | 42% | 53% |
| Overall convenience | 44% | 57% | 51% |
| Good service | 44% | 32% | 38% |
| Variety of the food/beverages | 44% | 32% | 38% |
| Quality of the food/beverages | 42% | 35% | 38% |
| More of these stores are off ering prepared foods | 34% | 35% | 35% |
Source: Technomic Inc.
Importance of Service & Ambiance in Prepared-Meal Purchases
Percent answering “important” or “extremely important” When asked the importance of the following factors in their decision to purchase a prepared item or meal from a retail store, cleanliness was paramount for both male and female consumers.
| Attribute | Male | Female | Overall |
| Cleanliness | 84% | 95% | 90% |
| Speed of service | 64% | 73% | 69% |
| Friendliness of staff | 60% | 73% | 67% |
| Knowledge of staff | 50% | 61% | 56% |
| Décor and atmosphere of prepared-foods section | 34% | 40% | 37% |
| Seating area atmosphere | 28% | 31% | 29% |
| Kid appeal | 22% | 35% | 29% |
Source: Technomic Inc.
NEXT: Foot Traffic & Purchase Frequency
Traffic Report: Food & Drug
Food and drug segments experienced flat traffic last year. Comparatively, c-stores saw 1% growth and QSRs were also flat.
| Year ending | Traffic PCYA* |
| Dec. 2011 | 0% |
| Dec. 2012 | -1% |
| Dec. 2013 | 0% |
Source: The NPD Group/CREST
*Percent change from a year ago
Deli Visit and Purchase Frequency
While specialty markets bring in more shoppers to their deli/bakery/prepared-foods areas than traditional supermarkets, actual purchase frequencies are relatively close.
| Made a purchase | Browsed, did not purchase | Did not visit | N/A, no section like this | Total dept. visitors (purchased + just browsed) | Conversion (purchased /total visitors) | |
| All shoppers | ||||||
| Cold prepared foods grab-and-go case | 25.0% | 27.8% | 38.7% | 8.5% | 52.8% | 47.3% |
| Staffed hot prepared foods counter | 24.0% | 22.7% | 41.3% | 11.9% | 46.7% | 51.4% |
| Staffed cold prepared foods counter | 19.4% | 24.6% | 43.9% | 12.1% | 44.0% | 44.0% |
| Cold self-service bar (salad bar, olive bar, etc.) | 13.6% | 21.8% | 43.8% | 20.8% | 35.4% | 38.5% |
| Hot self-service bar (soup bar, hot buff et, etc.) | 11.4% | 23.9% | 43.0% | 21.7% | 35.3% | 32.4% |
| Average across all departments*** | 24.3% | 24.7% | 38.5% | 12.6% | 48.9% | 47.9% |
| Shoppers of traditional supermarkets | ||||||
| Cold prepared foods grab-and-go case | 18.2% | 27.6% | 47.9% | 6.3% | 45.8% | 39.8% |
| Staffed hot prepared foods counter | 18.5% | 22.4% | 50.0% | 9.1% | 40.9% | 45.2% |
| Staffed cold prepared foods counter | 16.1% | 22.8% | 51.7% | 9.3% | 38.9% | 41.4% |
| Cold self-service bar | 9.6% | 20.0% | 53.0% | 17.4% | 29.6% | 32.5% |
| Hot self-service bar | 6.8% | 21.9% | 53.6% | 17.8% | 28.7% | 23.6% |
| Average across all departments*** | 21.2% | 23.2% | 46.4% | 9.3% | 44.3% | 44.6% |
| Shoppers of specialty markets | ||||||
| Cold prepared foods grab-and-go case | 37.5% | 34.2% | 21.7% | 6.7% | 71.7% | 52.3% |
| Staffed hot prepared foods counter | 29.2% | 27.5% | 27.5% | 15.8% | 56.7% | 51.5% |
| Staffed cold prepared foods counter | 25.8% | 29.2% | 34.2% | 10.8% | 55.0% | 47.0% |
| Cold self-service bar | 24.2% | 28.3% | 30.0% | 17.5% | 52.5% | 46.0% |
| Hot self-service bar | 24.2% | 30.8% | 24.2% | 20.8% | 55.0% | 43.9% |
| Average across all departments*** | 30.7% | 30.8% | 25.0% | 13.4% | 61.6% | 49.6% |
Source: International Dairy•Deli•Bakery Association
*** Includes deli meat/cheese and bakery counters
Food & Drug Day-Part Distribution
Year ending December 2013
Food/drug performed well during the a.m. day-part while losing traffic the rest of the day.
| Day-part | Share of traffic | PCYA* |
| Morning meals | 19% | 11% |
| Lunch | 29% | -3% |
| Supper | 22% | -3% |
| P.M. snack | 30% | -1% |
Source: The NPD Group/CREST
*Percent change from a year ago
Grocery Deli Share of Sales
Year ending December 2013
Prepared foods have commanded more than half of all supermarket deli sales over the past four years.
| Prepared foods | 55.6% |
| Deli meat | 20.9% |
| Deli cheese | 18.3% |
| Beverages | 4.0% |
| Other | 0.2% |
Source: Nielsen Perishables Group FreshFacts--Grocery plus Walmart, Sam’s Club and Target
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