February 16, 2012
Survey Says Retailer Prepared Foods as Good as Restaurants
New research from Technomic shows that a growing percentage of consumers believe that prepared foods in retail stores are not only cheaper than similar items in restaurants, but the quality is also on par.
According to the research firm, retail stores have always matched up well against restaurants for convenience and value. In its more recent surveys, Technomic also found that retailers are getting higher grades for availability of premium and good-for-you items, food quality and freshness.
Jenny Anderson, who directs Technomic’s Retailer Meal Solutions (RMS) Monitor service, said in a press release, "Retailers’ prepared foods programs have evolved to the point that they are considered viable alternatives to restaurants of all types and service styles, from full- and quick-service to upscale and more affordable concepts.
Consumers heading to a variety or retail outlets today have choices in many locations going well beyond deli sandwiches (subs, heros, hoagies, po’ boys, etc.), mac and cheese and rotisserie chicken.
"The appeal goes well beyond convenience and value," said Ms. Anderson. "Consumers clearly recognize enhancements that are based on restaurant influences."
The improvements made by retailers have cost restaurants visits, according to Technomic. Restaurant formats affected most by the switch to retail outlets have been "family style, upscale fast food and traditional fast food." Over two-thirds of consumers who eat at these types of restaurants told the research firm that they had cut back on their visits.
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Discussion Questions
Discussion Questions: Have retailer prepared foods reached a quality level on par with restaurants? What should stores be doing to exploit their comparative benefits?
Poll
Smart retailers are increasing the amount of time and space they devote to offering prepared foods. Consumers need one-stop shopping convenience and there is no better way to satisfy loyal consumers than by affording them the opportunity to take a prepared meal home. Furthermore, many consumers actually choose the supermarket as a destination for prepared foods and of course they spend on other items while in the store.
Depends on the retailer. If you see a big lunchtime crowd in a supermarket then you know that store has achieved success in hot foods. Whole Foods does an excellent job. Even Safeway has a good sandwich program. Rouses in Louisiana and Mississippi is my lunchtime spot. When I drive by a Hy-Vee supermarket, I know where my lunch will be at. When you are actually looking forward to eating out at a supermarket, then you know that store has done its job. What’s even better is you save money by not having to tip anyone.
The best retailer prepared foods have probably reached a quality level on par with quick-serve restaurants and stores should leverage social media to encourage consumer “chatter” around their prepared meals. They could also run cross-channel promotions where the best online comments are used for in-store, or even local TV and radio advertising, with some type of reward for the winning consumers.
While some retailers, notably Wegmans and Whole Foods, have done a terrific job with prepared foods, the growth in food retail prepared meals is more one of a trade off. During the recent economic difficulties, consumers have been seeking ways to save money (versus time and convenience). Consumers with a compromise in mind are willing to spend the time and effort to pick up their meals at their food retailer and save on the entree amount, alcoholic and non-alcoholic beverages (found at home), and gratuity. This gives food retailers an opportunity to take share from restaurants.
However, this window may not last forever. Consumers still enjoy dining out and many have traded down and switched to food retail for meal solutions, but as the economy improves, I see a return to restaurants, unless food retailers are able to convince consumers of the value and taste proposition they are offering. This is a tremendous trial opportunity for food retailers who failed years ago at their first attempt at “home meal replacement.” The key is to provide restaurant quality without restaurant prices.
My meal at home last evening was much better than my restaurant breakfast this morning. That’s usually the case in my life, but my dining is not in the toniest places. So I confess that I start out with a subjective opinion.
Prepared foods are on par with or better than foods served in most restaurant chains. They are usually more economical too … but they require your quality time in that they convert you into a preparer and server. Retailers need to create the illusion that it’s more fun and fabulous to quickly cook prepared meals than to be “convenienced for coin” at your local restaurant where the salt and pepper shakers may have someone else’s fingerprints on them.
Prepared food is a big win for the retailer, if done correctly. If the food is of a high quality, is prepared by trained chefs, and is priced based its all-in costs, it can literally blow the competition away. Here in West Palm Beach, for instance, there is an Italian specialty grocer called Joseph’s Classic Market. They offer freshly prepared high quality dishes with an Italian sensibility. Dinner for two includes a pound of protein, two sides, two salads, and two desserts for $16.99, making a nice profit on the transaction. You can’t feed two people for this in a Mickey D’s with its processed food of questionable nutritional value.
They are definitely taking business from the restaurants.
Prepared foods are certainly improving.
Back in the UK I would almost always buy lunch at a retailer; often a small format urban store. Since about 10 years ago, prepared dinners/meals have also been of restaurant standard in some UK retailers too.
The retail landscape is different here in the US. I wouldn’t consider visiting the walkable retailers from my office to grab lunch (CVS and Walgreens), but maybe in time I might….
As some have already noted, it all depends on where you eat and where you shop. Is the best supermarket cuisine better than the average mid to low-priced restaurant? No question. Is a good deal of supermarket take out on par with the most mediocre steam table? Sadly, too often the case.
I happened to be blessed by living between three upscale markets whose Kobi beef sandwiches would put any restaurant to shame. But if we’re talking broasted chicken that’s been drying under a heat lamp for five hours, the argument starts to fail a bit.
Many retailers have done a fine job with meal solutions, and I agree with the thread here. Two other points I’d make: in states where restaurants are required to post nutritionals on menus, supermarkets have the opportunity to come up with healthier alternatives and compare their offerings, calorie/fat/sodium-wise, with restaurants. And, one reason I like supermarkets vs. restaurants is the ability to choose my own portion size. Some restaurants have such enormous portions as to be ridiculous, and one reason Americans are obese is they like to be in the “clean-your-plate club.” At one mid-tier restaurant chain recently, the smallest meal I saw was well over what I wanted, and around 1,800 calories. A woman across from me at the table, who almost proudly told us she was diabetic and on dialysis twice a week, put down over 4,000 calories in that one sitting. We’ll all be paying for her sooner rather than later.
I feel this is an apple and orange comparison. Let us know what retailer can make Peking Duck or show us the room in the back where the retailer ages steaks.
This comparison appears to be against buffet style steam trays filled with prepared foods, and that comparison can only be applied to all-you-can-eat buffets, not restaurants.
Generally speaking (exceptions abound), I find the sodium and fat content in supermarket-prepared food to be much higher than most sit-down restaurants, quick-service (fast food) notwithstanding. But I do agree that some retailers have managed to produce prepared food that approaches casual dining in quality and complexity which is a big development in itself. It’s about convenience and value of course, but also about the “ambiance” which is very important to any dining experience.
My thought on this topic is that during the boom years many grew accustomed to dining out. This made the idea of preparing food less and less attractive. There is also the issue of senior household membership in full time careers making non work and travel time a very valued commodity. To secure lower costs and still save time, the prepared foods sections of food markets were patronized. As time went by and the markets declined, the use of supermarket prepared foods sections grew and retailers merchandised to keep and grow the business.
I really have trouble believing that the prepared foods of mainstream supermarkets are on par with restaurants of any type, except fast feeders. One mystery to me is why Publix, consistently ranked near the very top of supermarkets in almost every area, has a prepared foods program that includes little more than sandwiches, fried chicken, and mac & cheese. It runs against the grain of everything else they are trying to accomplish. Yes, the sandwiches are Boars Head, but that’s really the only plus. I second Bill Emerson’s comment about Joseph’s Classic Market, but it’s a specialty store. Whole Foods has some decent options, but it’s not in a league with a decent restaurant. And, let’s not even talk about the prepared food options at Costco, which have been virtually the same as long as I can remember. And, their hot dogs are boiled!
Yes, many grocery chains — Wegmans, Whole Foods, many others — offer prepared foods that are at or above restaurant quality. The grocers can clearly win on value and convenience. What they can’t economically offer is a restaurant quality experience; so the restaurants should double down on service and the diner experience in order to preserve share of wallet.
As restaurants cut back on quality and quantity in their panic to mitigate rising ingredient costs, retailers can probably sit tight and still compare favorably. Consumers who frequent particular restaurant brands are bound to notice as their favorite menu items get heavier on filler. Prepared food is popping up in frequently-visited formats and channels from mass to drug, and in a multitude of harder-to-track variations. Advantage, retailer!
Traditionally, casual dinning suffers during difficult economic times. The convenience of not cooking dinner, cleaning up, and all aspects involved become a luxury when household budgets are reduced.
I do believe the deli/prepared foods counter at most grocers has improved dramatically, I also see bigger efforts from retailers to encourage trial, and “Quality Food” is the price of entry for non QSR food.
The reason casual dinning has lost market share is the economy. Without complete dinning data (including QSR gains or losses during the same period), I’m assuming consumers have shifted their dollars to the prepared food counters. And if my assumptions are correct, a rebound on the economy will also bring a return by consumers to casual dinning.
Grocers need to work on establishing the habit or tradition of the prepared foods dinning with consumers now. Make it more convenient — and I mean very very convenient — introduce online ordering, curb service, seasonal promotions. Also retailers can remove the guilt of not preparing foods by promoting a healthy option, special dietary needs, and healthy kid options.
I’m surprised by this information. It’s hard to imagine grocery prepared foods equal to or better than a hot meal placed in front of you from just about any decent casual diner. For one, the presentation itself is far superior. For another, you’ve probably had a libation or two, thus enhancing the presentation and taste (or lack of). Maybe the research was only done with sober guests, I’m just saying.
Whether or not the quality of the pre-made meals are actually on par with restaurants may be a moot point. What matters is perception and convenience. With packed schedules and families’ growing demand to get good, healthy meal options to take home (i.e. not fast food), it’s clear there are great opportunities for retailers (Walgreens, Target, and traditional grocers) to capitalize on the demand while also creating deeper customer loyalty and engagement.
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Smart retailers are increasing the amount of time and space they devote to offering prepared foods. Consumers need one-stop shopping convenience and there is no better way to satisfy loyal consumers than by affording them the opportunity to take a prepared meal home. Furthermore, many consumers actually choose the supermarket as a destination for prepared foods and of course they spend on other items while in the store.
Depends on the retailer. If you see a big lunchtime crowd in a supermarket then you know that store has achieved success in hot foods. Whole Foods does an excellent job. Even Safeway has a good sandwich program. Rouses in Louisiana and Mississippi is my lunchtime spot. When I drive by a Hy-Vee supermarket, I know where my lunch will be at. When you are actually looking forward to eating out at a supermarket, then you know that store has done its job. What’s even better is you save money by not having to tip anyone.
The best retailer prepared foods have probably reached a quality level on par with quick-serve restaurants and stores should leverage social media to encourage consumer “chatter” around their prepared meals. They could also run cross-channel promotions where the best online comments are used for in-store, or even local TV and radio advertising, with some type of reward for the winning consumers.
While some retailers, notably Wegmans and Whole Foods, have done a terrific job with prepared foods, the growth in food retail prepared meals is more one of a trade off. During the recent economic difficulties, consumers have been seeking ways to save money (versus time and convenience). Consumers with a compromise in mind are willing to spend the time and effort to pick up their meals at their food retailer and save on the entree amount, alcoholic and non-alcoholic beverages (found at home), and gratuity. This gives food retailers an opportunity to take share from restaurants.
However, this window may not last forever. Consumers still enjoy dining out and many have traded down and switched to food retail for meal solutions, but as the economy improves, I see a return to restaurants, unless food retailers are able to convince consumers of the value and taste proposition they are offering. This is a tremendous trial opportunity for food retailers who failed years ago at their first attempt at “home meal replacement.” The key is to provide restaurant quality without restaurant prices.
My meal at home last evening was much better than my restaurant breakfast this morning. That’s usually the case in my life, but my dining is not in the toniest places. So I confess that I start out with a subjective opinion.
Prepared foods are on par with or better than foods served in most restaurant chains. They are usually more economical too … but they require your quality time in that they convert you into a preparer and server. Retailers need to create the illusion that it’s more fun and fabulous to quickly cook prepared meals than to be “convenienced for coin” at your local restaurant where the salt and pepper shakers may have someone else’s fingerprints on them.
Prepared food is a big win for the retailer, if done correctly. If the food is of a high quality, is prepared by trained chefs, and is priced based its all-in costs, it can literally blow the competition away. Here in West Palm Beach, for instance, there is an Italian specialty grocer called Joseph’s Classic Market. They offer freshly prepared high quality dishes with an Italian sensibility. Dinner for two includes a pound of protein, two sides, two salads, and two desserts for $16.99, making a nice profit on the transaction. You can’t feed two people for this in a Mickey D’s with its processed food of questionable nutritional value.
They are definitely taking business from the restaurants.
Prepared foods are certainly improving.
Back in the UK I would almost always buy lunch at a retailer; often a small format urban store. Since about 10 years ago, prepared dinners/meals have also been of restaurant standard in some UK retailers too.
The retail landscape is different here in the US. I wouldn’t consider visiting the walkable retailers from my office to grab lunch (CVS and Walgreens), but maybe in time I might….
As some have already noted, it all depends on where you eat and where you shop. Is the best supermarket cuisine better than the average mid to low-priced restaurant? No question. Is a good deal of supermarket take out on par with the most mediocre steam table? Sadly, too often the case.
I happened to be blessed by living between three upscale markets whose Kobi beef sandwiches would put any restaurant to shame. But if we’re talking broasted chicken that’s been drying under a heat lamp for five hours, the argument starts to fail a bit.
Many retailers have done a fine job with meal solutions, and I agree with the thread here. Two other points I’d make: in states where restaurants are required to post nutritionals on menus, supermarkets have the opportunity to come up with healthier alternatives and compare their offerings, calorie/fat/sodium-wise, with restaurants. And, one reason I like supermarkets vs. restaurants is the ability to choose my own portion size. Some restaurants have such enormous portions as to be ridiculous, and one reason Americans are obese is they like to be in the “clean-your-plate club.” At one mid-tier restaurant chain recently, the smallest meal I saw was well over what I wanted, and around 1,800 calories. A woman across from me at the table, who almost proudly told us she was diabetic and on dialysis twice a week, put down over 4,000 calories in that one sitting. We’ll all be paying for her sooner rather than later.
I feel this is an apple and orange comparison. Let us know what retailer can make Peking Duck or show us the room in the back where the retailer ages steaks.
This comparison appears to be against buffet style steam trays filled with prepared foods, and that comparison can only be applied to all-you-can-eat buffets, not restaurants.
Generally speaking (exceptions abound), I find the sodium and fat content in supermarket-prepared food to be much higher than most sit-down restaurants, quick-service (fast food) notwithstanding. But I do agree that some retailers have managed to produce prepared food that approaches casual dining in quality and complexity which is a big development in itself. It’s about convenience and value of course, but also about the “ambiance” which is very important to any dining experience.
My thought on this topic is that during the boom years many grew accustomed to dining out. This made the idea of preparing food less and less attractive. There is also the issue of senior household membership in full time careers making non work and travel time a very valued commodity. To secure lower costs and still save time, the prepared foods sections of food markets were patronized. As time went by and the markets declined, the use of supermarket prepared foods sections grew and retailers merchandised to keep and grow the business.
I really have trouble believing that the prepared foods of mainstream supermarkets are on par with restaurants of any type, except fast feeders. One mystery to me is why Publix, consistently ranked near the very top of supermarkets in almost every area, has a prepared foods program that includes little more than sandwiches, fried chicken, and mac & cheese. It runs against the grain of everything else they are trying to accomplish. Yes, the sandwiches are Boars Head, but that’s really the only plus. I second Bill Emerson’s comment about Joseph’s Classic Market, but it’s a specialty store. Whole Foods has some decent options, but it’s not in a league with a decent restaurant. And, let’s not even talk about the prepared food options at Costco, which have been virtually the same as long as I can remember. And, their hot dogs are boiled!
Yes, many grocery chains — Wegmans, Whole Foods, many others — offer prepared foods that are at or above restaurant quality. The grocers can clearly win on value and convenience. What they can’t economically offer is a restaurant quality experience; so the restaurants should double down on service and the diner experience in order to preserve share of wallet.
As restaurants cut back on quality and quantity in their panic to mitigate rising ingredient costs, retailers can probably sit tight and still compare favorably. Consumers who frequent particular restaurant brands are bound to notice as their favorite menu items get heavier on filler. Prepared food is popping up in frequently-visited formats and channels from mass to drug, and in a multitude of harder-to-track variations. Advantage, retailer!
Traditionally, casual dinning suffers during difficult economic times. The convenience of not cooking dinner, cleaning up, and all aspects involved become a luxury when household budgets are reduced.
I do believe the deli/prepared foods counter at most grocers has improved dramatically, I also see bigger efforts from retailers to encourage trial, and “Quality Food” is the price of entry for non QSR food.
The reason casual dinning has lost market share is the economy. Without complete dinning data (including QSR gains or losses during the same period), I’m assuming consumers have shifted their dollars to the prepared food counters. And if my assumptions are correct, a rebound on the economy will also bring a return by consumers to casual dinning.
Grocers need to work on establishing the habit or tradition of the prepared foods dinning with consumers now. Make it more convenient — and I mean very very convenient — introduce online ordering, curb service, seasonal promotions. Also retailers can remove the guilt of not preparing foods by promoting a healthy option, special dietary needs, and healthy kid options.
I’m surprised by this information. It’s hard to imagine grocery prepared foods equal to or better than a hot meal placed in front of you from just about any decent casual diner. For one, the presentation itself is far superior. For another, you’ve probably had a libation or two, thus enhancing the presentation and taste (or lack of). Maybe the research was only done with sober guests, I’m just saying.
Whether or not the quality of the pre-made meals are actually on par with restaurants may be a moot point. What matters is perception and convenience. With packed schedules and families’ growing demand to get good, healthy meal options to take home (i.e. not fast food), it’s clear there are great opportunities for retailers (Walgreens, Target, and traditional grocers) to capitalize on the demand while also creating deeper customer loyalty and engagement.