Remember the old
adage one step back then two forward. In order to understand what is
occurring in the retail food landscape today sometimes its best if we take a
look back. The shift in food retail
consumers spending patterns or retail food consumer discontinuity started
well before the economic down turn.
I hear regularly
from clients that “our consumer is not doing what they have always done”. I
have but one simple reply, your consumer is not the same as her/she was a
year ago, five years ago nor will they be next year and neither should your
The confluence of
increasing consumer knowledge about food via TV, the “food network”, and
rapid restaurant industry growth, coupled with concept sameness, combined
with the weak economy allowed trepidation too crept into restaurant executive
planning meetings and board rooms across the industry in 2008 and seemly stay
In far too many restaurant
companies the cry was for just wait it’s the economy not us all will be fine.
That prevalence of mediocrity and complacency at the C-level was extremely
naive. As an industry restaurateurs
concern is and should be share of stomach; first by company, second by
niche-market share, and third the restaurant industry overall at all times.
The economy is not
the largest problem it is competition for share of stomach; specifically by
the ready-2-eat prepared meal section of the grocery stores, Convenience
stores, and Chain Drug stores. Under reported but significantly noted first
in 2005 by Foodservice Solutions®. That was the first year that recorded a
consumer increase in percent household spending for food in grocery stores
and away from restaurants in 25 years.
The shift had been
slow in coming but it has continued since 2005. That was the first such
directional move in 25 years. That 25 year span can best be recalled as the
golden age of chain restaurants, and marks a huge shift. The timing of this
is important. Those were the boom
years for the restaurant industry. During that period we witnessed double
digit growth in new units with most tier one players year after year.
It is important to note that in the past 15 years the average grocery store
has dropped or discontinued carrying 15,000 Sku’s (individual food
ingredients) which is equal to two isles in a standard grocery store. They
replaced them with less than 200 ready-2-eat and heat-N-eat fresh prepared
food products. They created from those new ready-2-eat and heat-N-eat Sku’s a
mix and match components that consumers bundled into customized family meals.
Consumers now say most ready-2-eat components are restaurant quality. Those products are driving an increase in
customer frequency and loyalty for Grocery stores, C-stores and Retail Drug
On top of that
they have integrated the ready-2-eat and multi-daypart meal components food
products foods into national advertising and weekly flyers. YES, an ilk
equivalent to a restaurant meal bundled and priced very competitive with a
focus on fresh better for you. Harris Teeter once described its remodeled
stores salad bar and ready-2-eat foods as CASH COWS. Safeway stock is up sharply over the same
period with the proven results from their ongoing remodel prepared food
focused lifestyle stores. It must also
be noted here that during that 25 year period while the US population was
booming, grocery stores declined in number by 25,000 units while the
restaurant industry grew by 200,000 plus outlets.
prepared food Industry leadership is being driven by European retailers.
Three of specific note are Marks & Spencer, Morrison’s (M-Local) and
Trader Joe’s with “tonight’s dinner” mostly refrigerated or quick chilled
food components which blend their store brands with branded ingredients and
simultaneously put their prepared meals on par with homemade. Today, Walgreens and Duane Reade both US
retail drug stores are aggressively expanding into fresh ready-2-eat and
heat-N-eat prepared food.
initiative can best be called convenient meal participation. For the consumer
it is interactive, participatory and inviting, providing “like” homemade
touches via component bundling creating personal satisfaction. This as
extremely compelling because Walgreens is an 81 Billion dollar company well
financed and that makes this very competitive for the restaurant industry.
This is not a fad but a trend that is now 27 years in the making. The trend began in 1985 with the food
industry focus on Home Meal Replacement (HMR) and has progressed into a
full-fledged battle for the consumer’s food dollar and share of stomach by
all retail sectors.
The race for the
consumer is transformational with more competitive points of distribution
opening up all of the time. The traditional metrics for measuring success at
chain restaurants is currently being challenged by the success of chains
like; Buffalo Wild Wings, Chipotle, and Papa Murphy’s. These firms have
carved out niche’s based on purpose, choice, convenience and price. Realism
is reflected in the customer counts and continued sales numbers for these
The economy is a
focus now, however since 2005 clear indicators are now providing a picture of
what is important and changing with consumer eating habits particularly HOW
THEY EAT, WHEN THEY EAT, and WHY THEY EAT.
Most notable is
the change in consumer vision and role of food: including social eating,
eating economically, environmental eating and eating for personal benefit!
Yes personal benefit, only in America do consumers go on diets to eat their
way thin! Ok, ask yourself does that
work? If no keep reading.
chains particularly have addressed these issues and seem to be having
success; Domino’s, Starbucks and Cheesecake Factory. Each company has had a
dramatic overhaul of menu and positioning are now recovering building new and
additional loyal customers.
industry has not proved as agile as the Grocery, C-store or Drug Store
sectors when it comes to attracting new consumer while expanding fresh food
offerings since 2005. The confluence of events may in fact force our industry
to look at how we run our business. It will not however force us to stick to
outdated metrics, methods or models. Yes, “times they are a changing”. The
challenge is to recapture share of stomach.
The grocery and
drug store sector particularly have spent millions studying restaurant
quality food, levels of service, packaging and product positioning. They have
a wealth of knowledge and it is in play. The restaurant industries legacy of
innovation combined with its ability to get products to market faster, places
it first in the mind’s eye of the consumer. Increase success in the Grocerant
niche call Foodservice Solutions®