March 12, 2007
Retail is Ready-To-Eat Restaurant Profits
By Tom Ryan
Are retail meals (ready-to-eat/ready-to-cook meal solutions) becoming an even bigger threat to restaurants and fast-food chains?
Technomic announced last week that it planned to launch a research study, Retail Meal Solutions: A New and Growing Opportunity for Foodservice Manufacturers, in order to help food manufacturers better understand the retail meal solutions market and tap into new opportunities.
The food industry research firm said food retailers–including supermarkets, convenience stores, warehouse/club stores, supercenters and various specialty retailers–“have all been intensifying their efforts to win back consumers’ dining-out dollars” through new and appealing meal solutions.
“Whole Foods probably deserves most of the credit for spawning this new interest among retailers,” said Ron Paul, president of Technomic. “They were the first to prove that consumers are drawn to ready-to-eat and ready-to-heat meal solutions, and will use them to replace home cooking or dining out, assuming that quality and variety aren’t compromised.”
Food retailers are pushing ready-to-eat/ready-to-cook meal solutions to differentiate themselves from their competition and drive traffic, but also to take back dollars from restaurants. The U.S. Department of Agriculture says Americans spend half of our food budgets on meals outside of home, double what was spent in 1970.
“One of the things [supermarkets] look for in additional sales is what’s for dinner tonight,” Bert Hambleton of Hambleton Resources, recently told The Seattle Times. “And they look enviously at the restaurant trade and say ‘Hey, how do we get some of that back?’ Because if you’re eating food at restaurants, you’re not eating it at home and you’re not buying groceries.”
The retail meal trend plays to the convenience required by today’s harried homebody. While it’s cheaper to buy groceries and cook at home, customers seem ready to pay more for food if they could use the time they would have spent preparing it to socialize with friends or play with the kids.
But Technomic said retail meals are also growing in popularity because food options are getting better. New and expanded meal offerings place a much stronger emphasis on quality and variety, integrating many of the trends shaping restaurant menus, such as ethnic foods, premium ingredients, customization and updated preparation techniques.
Mr. Paul noted that as more retailers upgrade their menu offerings for customers, manufacturers “need to step up their efforts to assist them by providing culinary expertise, new products, and assistance with training and merchandising.” Further, restaurant operators, both chains and independents, “need to recognize these developments for what they are–a direct competitive threat targeting their customers.”
Discussion Questions: What do you think Technomic will find out from its study into the retail meal trend? How big is the retail meals threat to the restaurant industry?
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I predict nothing new from Technomic’s study, but simply something they can publish to attract attention to their research business. Suppliers, manufacturers, and supermarket retailers have been on top of this marketing opportunity for decades. The idea that we all, or even a small percentage of us, live in areas where we can call ahead to our favorite restaurants (except pizza) and have them deliver meals to us in their parking lots–or our homes–is simply ludicrous and has no bearing on this trend whatsoever. Instead, supermarkets are the juggernauts of single-serving and home meal replacement offerings. They just need better marketing.
Yawn! Here we go again. It was HMR; Home Meal Replacement in the 80s and 90s, I believe. Another in the fad/topic of month club. Good for consultants and pundits. It would move the earth…. What was the last truly monumental/catastrophic event? One thing is certain: the never ending parade of innovations/threats will last forever. People, after all, need things to talk about at conventions. Our business is basically the same as it was 50 years ago. In the back door, out the front door…hopefully at a higher price. Products have evolved (although many of the mainstays are the same with a new aroma or new color/flavored filling. Even the clubs, superstores etc. operate on the same basic principals with just a different degree of merchandising, customer service and pricing.
“They [Whole Foods] were the first to prove that consumers are drawn to ready-to-eat and ready-to-heat meal solutions…” claimed Ron Paul of Technomic. This trend started well before Whole Foods was born. It really started with canned foods, then progressed to frozen then foods prepared in the supermarket itself (or in central kitchens). If the Technomic study can find something new, unexpected, or surprising, it will be valuable.
Ready-to-eat meal solutions are definitely here to stay. As productivity in US jobs increases, working adults have less and less time to cook at home. The traditional option to this was eating out, which also needed a considerable investment of time to get ready go to a restaurant and wait to be served (although there is the entertainment aspect to eating out). The two alternatives to eating out are take-out and ready-to-eat meals. For a while there was an equilibrium in the restaurant traffic and off-premises eating options. But over the last two years, off-premises is on the rise–ostensibly driven by more people finding less time to cook at home or wait to be served in restaurants–and retailers and grocers must try to find innovative ways to win back some of the grocery dollars. This will probably spur innovative take-out solutions on the part of the restaurants.
The interesting thing in all this was that I read somewhere last week (maybe even here) that Ahold had just arranged to sell their food service business. I don’t know why they made the decision, but I hope the agreement included some way for them to continue stocking their in-store offerings.
The concepts of Retail and Food Service are based largely on industrial definitions. The lines between them have been blurring for years. They are competing for the same food dollars. I applaud Technomic for recognizing this opportunity and initiating the research to support the industry.
The consumer simply wants a source for good value, convenience meals and is not concerned with artificial definitions of turf. New meal solution alternatives are a natural outgrowth of fundamental changes in household composition, lifestyles, and shopping habits.
The food retailer is going to have a hard time challenging the restaurant industry.
This is a battle that has been going on for the last 10 years and yet the “Home Meal Replacement”–a term coined by the grocery industry–has never taken off. Note Ahold pulling out of the market and Eatzi’s closing its stores. There may be one or two players that get this right but on the whole, the consumer who wants to eat out may do it for many reason other then just no time for cooking. Example: they hate to clean up, it give them a chance to we waited on, etc.
This is one place that I think the restaurant industry is going to win.
I can always call my favorite restaurant and still have the food delivered or call on the way home from work pull up outside the door in a parking place reserved for takeout/pickup customers; in some cases they will bring the order out to me.
Now that is convenience and customer service.
Healthy alternatives and active busy lifestyles are here to stay. HMR and RMS will be a significant market thrust for the future.
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I predict nothing new from Technomic’s study, but simply something they can publish to attract attention to their research business. Suppliers, manufacturers, and supermarket retailers have been on top of this marketing opportunity for decades. The idea that we all, or even a small percentage of us, live in areas where we can call ahead to our favorite restaurants (except pizza) and have them deliver meals to us in their parking lots–or our homes–is simply ludicrous and has no bearing on this trend whatsoever. Instead, supermarkets are the juggernauts of single-serving and home meal replacement offerings. They just need better marketing.
Yawn! Here we go again. It was HMR; Home Meal Replacement in the 80s and 90s, I believe. Another in the fad/topic of month club. Good for consultants and pundits. It would move the earth…. What was the last truly monumental/catastrophic event? One thing is certain: the never ending parade of innovations/threats will last forever. People, after all, need things to talk about at conventions. Our business is basically the same as it was 50 years ago. In the back door, out the front door…hopefully at a higher price. Products have evolved (although many of the mainstays are the same with a new aroma or new color/flavored filling. Even the clubs, superstores etc. operate on the same basic principals with just a different degree of merchandising, customer service and pricing.
“They [Whole Foods] were the first to prove that consumers are drawn to ready-to-eat and ready-to-heat meal solutions…” claimed Ron Paul of Technomic. This trend started well before Whole Foods was born. It really started with canned foods, then progressed to frozen then foods prepared in the supermarket itself (or in central kitchens). If the Technomic study can find something new, unexpected, or surprising, it will be valuable.
Ready-to-eat meal solutions are definitely here to stay. As productivity in US jobs increases, working adults have less and less time to cook at home. The traditional option to this was eating out, which also needed a considerable investment of time to get ready go to a restaurant and wait to be served (although there is the entertainment aspect to eating out). The two alternatives to eating out are take-out and ready-to-eat meals. For a while there was an equilibrium in the restaurant traffic and off-premises eating options. But over the last two years, off-premises is on the rise–ostensibly driven by more people finding less time to cook at home or wait to be served in restaurants–and retailers and grocers must try to find innovative ways to win back some of the grocery dollars. This will probably spur innovative take-out solutions on the part of the restaurants.
The interesting thing in all this was that I read somewhere last week (maybe even here) that Ahold had just arranged to sell their food service business. I don’t know why they made the decision, but I hope the agreement included some way for them to continue stocking their in-store offerings.
The concepts of Retail and Food Service are based largely on industrial definitions. The lines between them have been blurring for years. They are competing for the same food dollars. I applaud Technomic for recognizing this opportunity and initiating the research to support the industry.
The consumer simply wants a source for good value, convenience meals and is not concerned with artificial definitions of turf. New meal solution alternatives are a natural outgrowth of fundamental changes in household composition, lifestyles, and shopping habits.
The food retailer is going to have a hard time challenging the restaurant industry.
This is a battle that has been going on for the last 10 years and yet the “Home Meal Replacement”–a term coined by the grocery industry–has never taken off. Note Ahold pulling out of the market and Eatzi’s closing its stores. There may be one or two players that get this right but on the whole, the consumer who wants to eat out may do it for many reason other then just no time for cooking. Example: they hate to clean up, it give them a chance to we waited on, etc.
This is one place that I think the restaurant industry is going to win.
I can always call my favorite restaurant and still have the food delivered or call on the way home from work pull up outside the door in a parking place reserved for takeout/pickup customers; in some cases they will bring the order out to me.
Now that is convenience and customer service.
Healthy alternatives and active busy lifestyles are here to stay. HMR and RMS will be a significant market thrust for the future.