Who’s after
restaurateurs food dollars and why they should care. While food consumers are a
highly fragmented group there are universal commonalities creating channel
disruptions. Consumers want what they want when they want it! Today it is all
about the consumer buying what the type of food they want, where they buy it
and how they buy it is in flux. You can buy food from large format food
retailers the ilk of Safeway Lifestyle stores, Kroger’s Fred Meyer,
Walmart Supercenters and, Whole Foods, or Smaller Format retailers like Trader
Joe, Fresh & Easy (Tesco), Dollar Stores, Walgreens, and of course restaurants.
The line between
restaurants and food retailers is growing ever thinner. The fight for America's
food dollars continues to intensify as consumers find fresh prepared
ready-2-eat food options at a wide and growing array of outlets across almost
every channel: convenience stores, chain drug stores, restaurants, grocery
stores, club stores, vending and even more non-food retailers like dollar
stores. While manufacturers, retailers and restaurants worry about choice
overload, consumers have embraced their new choices and show no signs of
returning to the old ways. This fight is taking place in what is called the
grocerant niche.
The restaurant industry
is not an industry known for trying to be first as in fastest to market with an
ideation, food or technology advance. In the United States the larger the chain
in almost all cases the more slowly they are to adopt something than a smaller
chain or independent restaurants will. Chain restaurants goal is simple feed
one meal at a time in the restaurant while protecting and edifying the brand.
Historically chain
restaurant leaders have denied the credibility of start-up competitors as
non-relevant. The pizza sector is a great example; evolving from family dinning
independents to national chain of "Red Roof" Italian, then to
delivery only outlets and now take-N-bake is garnering market share in
the pizza sector. (Note: Home Made Pizza Company and Papa Murphy's are further examples
of take and bake pizza operators.)
Trends in the Food
Industry Point to an Increase in Non-Traditional Meal Occasions
At the intersection of
the consumer, fresh prepared food and technology we fine that consumer eating
behavior is evolving and is now beyond the control of traditional food
marketers. Evolving culture and lifestyle, demographics along with the new
uncertain economy are all putting pressure on the American food consumer:
Demands of work, economic shrinkage, demands of raising a family, commuting,
social interaction, kid's after-school activities, all contribute to a food
marketplace where convenience vies with price over legacy brands. Recent
advances in food packaging and new points of non-traditional food distribution
have empowered consumer choice, and Americans are embracing these choices even
as legacy marketers cringe. Who's after restaurant food dollars… simply put…
everyone.
Why should you care if
Walgreens is selling fresh prepared ready-2-eat and made-2-order sandwiches?
Why should you care if Whole Foods, Trader Joe's, Safeway and Wegmans are
selling ready-2-eat and or heat-N-eat fresh pizza? Why should you care if
Coinstar is selling Seattle Best Coffee at 1,000 locations for $1.00?
You should care because
they are selling it, and you are not! The fastest growing sector of retail food
service for the past four years has been the Convenience store sector. The
C-store sectors growth in large part has been driven by fresh prepared food.
Non-traditional avenues of distribution are growing, gobbling market share
while establishing new patterns of consumption, price points and customer
loyalty.
The Shopper is in
Control Spurring New Retail Food Formats
Trader Joe's and Whole
Foods have created ready-2-eat and heat-N-eat fresh prepared food items with
qualitative differentiation as an entity with identity that has help propel
them into ready-2-eat fresh prepared food leadership. In fact recent research
shows that both Trader Joe's and Whole Foods are each known for high quality
(restaurant quality) ready-2-eat and heat-N-eat foods with distinctive
offerings. More important each is leading with innovative products and package
size that create value and have positioned each chain as a food
shopping destinationfor meal components customized and personalized for
immediate consumption or mix and matched for a meal time at home. In short they
are stealing your customers.
Walgreens fresh prepared food is restaurant
quality and priced less than Panera Bread or Corner Bakery CAFE. Both Panera Bread and Corner Bakery CAFEthrive in urban locations.
Walgreens is now growing price, quality and speed of service advantages over
legacy retailers. Legacy restaurant chains must reconsider the speed at which
they evolve and adapt or non-traditional outlets will capture profits margins
as well.
Traditional views of
meals and mealtime can pretty much be discarded. Legacy retailers waiting for
the "next big thing" to copy simply might be out of luck this time.
Legacy food retailers may not like to be first movers very much but it may
prove that waiting too long will not work this time.
Product, Packaging,
Placement, Portability and Price are Foodservice Solutions® 5 P’s
The retail food world is
evolving at an ever increasing pace filled with innovation in food, portion
size, points of distribution, and quality fresh prepared meal solutions. The
price, value, service equilibrium is resetting in retail foodservice. In order
to edify the brand and reinforce consumer relevance restaurateurs must leverage
Foodservice Solutions® 5P's of food marketing.
Many legacy food
retailers continue to practice brand protectionism, stifle the brand while
diminishing consumer relevance. The consumer is dynamic not static. Brands must
be dynamic, evolving with the consumer. Four more years of watching other
retail sectors thrive should be long enough. Success in the restaurant world is
no longer simply about what happens within your 4 walls.
Steven Johnson is
Grocerant Guru at Tacoma, WA based Foodservice Solutions®, with extensive
experience as a multi-unit restaurant operator, consultant, brand / product
positioning expert and public speaking. Facebook.com/Steven Johnson, Linkedin.com/in/grocerant or twitter.com/grocerant
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