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Foodservice in Retail - US - October 2017

"A strong foodservice program has become a differentiator within the highly competitive grocery retailing industry. Retailers are positioning themselves as foodservice destinations, offering trendy dishes or partnering with growing restaurant concepts for restaurants within a store. The lines between retailer and restaurant are continuing to blur, presenting an opportunity for retailers and a strong competitive threat to restaurants. A store’s foodservice program not only caters to consumers’ need for convenience, it also provides them with a unique, fun shopping experience."
- Caleb Bryant, Senior Foodservice Analyst

This Report looks at the following areas:

  • Supermarkets face falling market share
  • Foodservice can only do so much for grocers 
  • Grocers can’t replace restaurants

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Supermarkets face falling market share
            • Figure 1: MULO sales of food and drink, by retail channel, 2012 and 2017
          • Foodservice can only do so much for grocers
            • Figure 2: Reasons for choosing primary grocery retailer, August 2015
          • Grocers can’t replace restaurants
            • Figure 3: Foodservice in retail attitudes, by HH income, August 2017
          • The opportunities
            • Millennials are the target market for foodservice in retail concepts
              • Figure 4: Foodservice in retail attitudes, by generation, August 2017
            • Foodservice offerings can bring in non-loyalists
              • Figure 5: Concept interest, by segment shoppers, August 2017
            • Drive trial with samples and specials
              • Figure 6: Foodservice in retail purchase motivators, August 2017
            • What it means
            • The Market – What You Need to Know

              • Supermarkets need to stay competitive
                • Competition comes from all sides
                  • Behavioral changes make the case for foodservice in retail
                  • Market Breakdown

                    • Supermarkets are slowly losing market share to competitors
                      • Figure 7: MULO sales of food and drink, by retail channel, 2012 and 2017
                  • Market Perspective

                    • Meal kits threaten both foodservice and retail
                      • Dollar stores and discount grocers encroach on competitor’s market share
                        • C-stores, the original foodservice in retail
                          • Figure 8: Total US convenience store foodservice sales, at current prices, by segment, 2011-21
                        • Buying online in a digital world
                          • Figure 9: Online shopping attitudes and behaviors, August 2017
                      • Market Factors

                        • Supermarket and restaurant sales are neck-in-neck
                          • Figure 10: Food sales at home and away from home, January 2003-April 2017
                        • Millennials shop around
                          • Figure 11: Number of stores shopped for groceries, by demographics, August 2016
                        • Rockin’ the suburbs
                          • Figure 12: Net migration, by type of area, 2005-06 through 2015-16
                        • Labeling laws further delayed
                        • Key Players – What You Need to Know

                          • Grocers tackle foodservice
                            • Prepared foods are nice to have, not need to have
                              • Stores become restaurant destinations
                              • What’s Working?

                                • Foodservice becomes the norm at supermarkets
                                  • Hy-Vee
                                    • Mariano’s
                                      • Wegman’s
                                        • Lowe’s Foods
                                          • Kroger
                                            • Mass merchandisers upgrade their foodservice programs
                                              • Walmart moves beyond traditional QSRs
                                                • Can foodservice be Target’s niche?
                                                  • Whole Foods lays down the template for foodservice programs
                                                    • Grocery bars are a new opportunity for alcohol brands
                                                    • What’s Struggling?

                                                      • Foodservice alone couldn’t save Whole Foods
                                                        • Figure 13: Price of Whole Foods stock, 9/3/2012-8/21/2017
                                                      • Consumers choose stores based on convenience and price
                                                        • Figure 14: Reasons for choosing primary grocery retailer, August 2015
                                                      • Dollar stores and discount grocers thrive despite lack of foodservice programs
                                                        • Food safety issues arise
                                                        • What’s Next?

                                                          • Smaller stores, larger foodservice offerings
                                                            • Figure 15: TeaBot at 365
                                                            • Figure 16: Tablet ordering at 365
                                                          • Technology makes its way into the prepared foods section
                                                            • Grocers keep up with the trends
                                                              • Food halls completely blur the lines between retail and foodservice
                                                                • Restaurants become an opportunity for non-grocery retailers/CPG brands
                                                                • The Consumer – What You Need to Know

                                                                  • Younger consumers drive interest in grocer foodservice programs
                                                                    • Attract non-loyalists with foodservice
                                                                      • Not as fun as a restaurant
                                                                        • Provide diners with comfort and privacy
                                                                          • Spur sales with samples and specials
                                                                          • Foodservice in Retail Purchases

                                                                            • Prepared chicken dishes are a household favorite
                                                                              • Figure 17: Foodservice in retail purchases, August 2017
                                                                            • Men purchase ready-to-eat options
                                                                              • Figure 18: Foodservice in retail purchases, by gender, August 2017
                                                                            • Millennials are the target market
                                                                              • Figure 19: Foodservice in retail purchases, by age, August 2017
                                                                            • Affluent consumers are more likely to buy prepared dishes
                                                                              • Figure 20: Foodservice in retail purchases, by age and HH income, August 2017
                                                                            • Foodservice purchases highest in Northeast, lowest in Midwest
                                                                              • Figure 21: Foodservice in retail purchases, by region, August 2017
                                                                              • Figure 22: Foodservice in retail purchases, by area, August 2017
                                                                            • Parents look for convenient prepared options
                                                                              • Figure 23: Foodservice in retail purchases, by parental status and age, August 2017
                                                                            • Natural grocer consumers are most likely to buy prepared options
                                                                              • Figure 24: Foodservice in retail purchases, by segment shoppers, August 2017
                                                                              • Figure 25: Foodservice in retail purchases, by segment shoppers (loyalists), August 2017
                                                                          • Foodservice in Retail Concept Interest

                                                                            • A third of consumers are not interested in any foodservice concept
                                                                              • Figure 26: Concept interest, August 2017
                                                                            • TURF analysis: Foodservice concept interest
                                                                              • Figure 27: TURF analysis – Store concept interest, August 2017
                                                                            • Foodservice options appeal to iGens/Millennials
                                                                              • Figure 28: Concept interest, by generation, August 2017
                                                                            • Men prefer QSRs while women want coffee shops
                                                                              • Figure 29: Concept interest, by gender and age, August 2017
                                                                            • Those in the Northeast are open to grocery FSRs
                                                                              • Figure 30: Concept interest, by region, August 2017
                                                                            • Foodservice options helps grocers appeal to non-loyalists
                                                                              • Figure 31: Concept interest, by segment shoppers, August 2017
                                                                            • In their own words: Ideal foodservice in retail concept
                                                                            • Consumption Location

                                                                              • Most prepared options are consumed at home
                                                                                • Figure 32: Consumption location, August 2017
                                                                                • Figure 33: Mariano’s email, August 13, 2017 “New Loadable Lunch & Dinner Menu: Prime Rib Meal, Buffalo Rotisserie Chicken Salad, Cubano Panini and more”
                                                                              • Millennials are most likely to eat options AFH
                                                                                • Figure 34: Consumption location, by age, August 2017
                                                                            • Foodservice in Retail Attitudes

                                                                              • Consumers value the convenience of foodservice in retail
                                                                                • Figure 35: Foodservice in retail attitudes, August 2017
                                                                              • Younger men are the grocery bar drinkers
                                                                                • Figure 36: Foodservice in retail attitudes, by gender and age, August 2017
                                                                              • Fun for all ages
                                                                                • Figure 37: Foodservice in retail attitudes, by generation, August 2017
                                                                              • Urban parents are most likely to enjoy foodservice programs
                                                                                • Figure 38: Foodservice in retail attitudes, by parental status and age, August 2017
                                                                                • Figure 39: Foodservice in retail attitudes, CHAID output, August 2017
                                                                              • Natural grocer consumers are most enthusiastic about foodservice in retail
                                                                                • Figure 40: Foodservice in retail attitudes, by segment shoppers, August 2017
                                                                            • Retail Versus Foodservice Associations

                                                                              • Methodology
                                                                                • Consumers think of retail foodservice foods as fresh and healthy
                                                                                  • Figure 41: Retail and foodservice associations, August 2017
                                                                              • Purchase Motivators

                                                                                • Samples and specials may drive sales
                                                                                  • Figure 42: Retail in foodservice purchase motivators, August 2017
                                                                                  • Figure 43: Hy-Vee, August 1, 2017 “Pick up dinner tonight”
                                                                                • Motivate female customers with samples and selection
                                                                                  • Figure 44: Retail in foodservice purchase motivators, by gender, August 2017
                                                                                • Boomers may prove to be an elusive target
                                                                                  • Figure 45: Retail in foodservice purchase motivators, by generation, August 2017
                                                                                • Loyalists aren’t that interested in trying foodservice options
                                                                                  • Figure 46: Retail in foodservice purchase motivators, by segment shoppers, August 2017
                                                                                • A great in-store experience motivates urbanites
                                                                                  • Figure 47: Retail in foodservice purchase motivators, by area, August 2017
                                                                              • Appendix – Data Sources and Abbreviations

                                                                                • Data sources
                                                                                  • Sales data
                                                                                    • Consumer survey data
                                                                                      • Consumer qualitative research
                                                                                        • Abbreviations and terms
                                                                                          • Abbreviations
                                                                                            • Terms

                                                                                            Foodservice in Retail - US - October 2017

                                                                                            US $3,995.00 (Excl.Tax)