Wednesday, December 23, 2009

Food Fight: Retail Foodservice vs Restaurants who is going to win?

Mike Hughlett of the Chicago Tribune thinks “economic ugliness caught up with fast food. Customer traffic steadily declined through the year, and by the fourth quarter even McDonald's, which had held up best against the deluge, was experiencing a sales decline in U.S. outlets open at least 13 months.”

That is one point that I agree with him but there is an undercurrent of consumer empowerment some food retailers have grab a hold of and for them it paying big rewards. Bonnie Riggs, a restaurant analyst at market researcher NPD Group supports Mike’s conclusions but she may be a bit narrow in her approach to the situation only looking at the restaurant sector.

Other’s like Mac Brand of the Bellwether Food Group thinks "We believe there is a fundamental shift in the way consumers use restaurants. Consumers have realized they don't need to spend as much to enjoy themselves, and they don't need to go out as much."

Here at Foodservice Solutions we believe both views are narrow and miss the big picture. Consumers spending habits changed two years prior the start of the “economic ugliness” that began in 2007. In fact in 2005 the percent of income spent on food increased in the retail foodservice sector for the first time in 25 years and has continued. The customer moved first and since 2005 the percent of income spent on food in the restaurant sector had declined.

Safeway’s “lifestyle” stores selling ready-to-eat and ready-to-heat prepared grocerant food are showing positive sales increase and Broad Street Licensing Group (BSLG) reports that innovative, interactive, Convenience store Wawa is seeing significant gains in the range of 7 %. Focusing on grocerant prepared foods that are better for you and offered with service, freshness and utilizing quality packaging they are garnering share from both Dunkin Donuts and McDonalds.

In addition BSLG states the top three priorities of the C-store shopper today are 1.) Friendly employees, 2.) fresh food, and 3) a variety of services. Offering bundled meal options with portability is a key to successful retailing.

The restaurant industry is not the only retail sector sell ready-to-eat and ready-to-heat food. Consumer are attracted to fresh, bundled food options for the entire family. They are not shopping in one exclusive channel. Supermarkets and Convenience stores have spent years conducting research on the consumer and the restaurant industry and it looks to me as if it is starting to pay dividends.

Foodservice Solutions of Tacoma, WA is the global leader in the Grocerant niche. View my complete profile at: or leave a comment or question below. For more read this article:

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