Packaged Food/Foodservice Overview

Samantha Strong Murphey, Freelance writer

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Upscaling Image

Just about every industry publication is talking about the rise of fast casual, according to Timothy Powell, director of research and consulting for Technomic Inc. “It’s the one segment that allows consumers to trade down from full service but still receive a great meal, no tipping required, in a pleasant environment,” he says. And c-store owners are upscaling their images to match their fast-casual competitors. “To compete with fast casual, we anticipate that we will see places offering more premium products and fresh ingredients and innovating and renovating their concepts,” says NPD Group analyst Bonnie Riggs. But, she warns, c-store retailers shouldn’t get so caught up in mimicking fast-casual menus and décor that they stray too far from their core business: the morning meal and ready-to-go snacks.

“Focus on your strengths,” Riggs says. “The brightest spot throughout this decade for the whole foodservice industry is the morning meal.”

1% According to a forecast by The NPD Group, the foodservice industry as a whole will grow less than 1% each year from now until 2019, not even keeping pace with population growth. But, says Riggs, sectors within the industry—c-stores, for example—will grow at a faster rate. Understanding the desires of everchanging consumers is crucial for claiming a bigger, stronger portion of this slim market share.

Wellness & Environmentalism

Health-conscious and environmentally conscious consumers should be on the c-store owner’s radar. For the 9% of consumers who visit restaurants and say they look for healthy options, it’s not about calories, fat, sodium or any of the other healthy hot-buttons. “That’s what they’re doing at home,” Riggs says. When they go out, “they’re looking for fresh ingredients, quality food, portion-size options and a particular cooking  method: grilled.” Consumers want something flavorful, but they want options available so they can make better decisions. For example, offer  whole-grain breadinstead of white breadwhile keeping the sandwichingredients the same, says Eric Giandelone, director of foodservice for Mintel International: “Small changes like that are more likely to be successful.” As health consciousness rises in prominence in consumers’ minds, animal treatment rises in prominence in the media. Chipotle’s first national televised ad focused on animal treatment by humans, and McDonald’s recently made an announcement about raising its animal treatment standard. “The success of Chipotle would indicate that there’s a market out there for that,” Giandelone says. “Taking careof the animals at least createsthe perception of abetter product.”

Creative Packaging

According to Powell, packaging is the new “battleground” for c-stores in the foodservice business. “They see grab-and-go as the opportunity and packaging (functionality, durability, versatility and eco-friendly attributes) as a single component of the dining experience,” Powell says.

Manufacturers are getting increasingly creative with packaging for sandwiches or even rollergrill items. Again, the fast-casual surge is behind it. “They’ve just raised the bar,” Riggs says. “Because of fast casual, you now want the food you order to be ready for immediate consumption in packaging that’s portable, that holds well and that meets environmental concerns.”

Prepared Foods Land at Grocery and Drug Stores

Supermarket and drug stores are going after prepared foods in a big way. “Walgreens already made its big splash with the fl agship Walgreens and Duane Reade stores, and supermarkets just continue to up the ante,” Giandelone says. But figuring out what that means for competition is a tricky task. Riggs doesn’t think this trend will be much of a threat to c-stores; Giandelone agrees.

“In the grocery store, the foodservice eats away sales from the rest of the store. You buy

prepared chicken instead of the raw ingredients to make it yourself, for example. But I’m not sure that it takes away sales from the restaurant industry,” he says. “Convenience is ... competing with that QSR space directly.” Giandelone says the biggest obstacles for c-stores on this front are that people don’t see c-store options as appealing or that they aren’t aware the options exist. “If you’re serious about making a real play here, you’ll have to remedy those things,” he says.


According to Mintel, these are the most commonly ordered foods at quick-serve restaurants. At the same time, 51% of QSR consumers support “the trend toward healthier fast food,” with 36% seeking a greater variety of healthy foods and another 33% looking for more portion- controlled options, Mintel reports.

68%:  Percent of drug-store shoppers who say price is the most important factor when shopping in the channel, according to Mintel. Sixty percent say they shop at drug stores only when they need to do fi ll-in shopping, while 59% shop only at the drug store closest to where they live.



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