Retail ready-to-eat catches on at expense of QSRs

Articles
December 29, 2008

Retail ready-to-eat catches on at expense of QSRs

Retailers are growing their foodservice sales at the direct expense of quick-service restaurants. They’re capitalizing mostly on afternoon snacks (35% of retail meal solutions revenue) and morning meals (21%), according to new research by NPD Group, Port Washington, NY. “These are the on-the-go needs that are being met by retailers—consumers making those purchases on the way to work, to eat at work, or in their car—purchases that otherwise would have been made at a QSR,” explained Bonnie Riggs, restaurant industry analyst and author of NPD’s Retail Meal Solutions report. The report dispels the popular notion that supper is the prime day part for retail meal and snack solutions. Though supper is growing steadily at retail (while declining at QSRs), it still accounts for just 17% of retail meals. Lunch generates 17% of the estimated $13 billion spent on retail foodservice annually. On a unit basis, retail foodservice channels (food, drug, discount and department stores and wholesale clubs) pumped out 6% of the approximate 62 billion commercial foodservice meals and snacks consumed in a year. Convenience stores generated another 7%, noted NPD in its report covering the 12 months ended August 2008.

Retailers are growing their foodservice sales at the direct expense of quick-service restaurants. They’re capitalizing mostly on afternoon snacks (35% of retail meal solutions revenue) and morning meals (21%), according to new research by NPD Group, Port Washington, NY. “These are the on-the-go needs that are being met by retailers—consumers making those purchases on the way to work, to eat at work, or in their car—purchases that otherwise would have been made at a QSR,” explained Bonnie Riggs, restaurant industry analyst and author of NPD’s Retail Meal Solutions report.

          The report dispels the popular notion that supper is the prime day part for retail meal and snack solutions. Though supper is growing steadily at retail (while declining at QSRs), it still accounts for just 17% of retail meals. Lunch generates 17% of the estimated $13 billion spent on retail foodservice annually.

            On a unit basis, retail foodservice channels (food, drug, discount and department stores and wholesale clubs) pumped out 6% of the approximate 62 billion commercial foodservice meals and snacks consumed in a year. Convenience stores generated another 7%, noted NPD in its report covering the 12 months ended August 2008.

            Convenience is the primary appeal of retail offers. But it is the other components of ready-to-eat retail food that are clinching the shift: more healthier options, variety and affordability than available at QSRs. Ready-to-eat purchases at retail rose 2% in the period, while QSRs served only 1% more meals and snacks over the year earlier, and full-service restaurants served less.

            Perimeter focus is certainly one key driver of this retail ready-to-eat growth. Yet the expansion of small retail formats such as Tesco Fresh & Easy and Walmart Marketside—which are designed for quick ready-to-eat convenience—ought to accelerate this shift, believes SupermarketGuru.com. And as long as food suppliers and retailers cook up dishes that balance nutrition with value, they should be able to put more distance between themselves and QSR competitors.