The line between restaurants and foodretailers is growing ever thinner. The fight for America’s food dollarscontinues to intensify as consumers find fresh prepared ready-2-eat foodoptions at a wide and growing array of outlets across almost every channel:convenience stores, chain drug stores, restaurants, grocery stores, clubstores, vending and even more non-food retailers like dollar stores. While manufacturers, retailers andrestaurants worry about choice overload, consumers have embraced their newchoices and show no signs of returning to the old ways. This fight is takingplace in what is called the grocerant niche.
The restaurant industry is not anindustry known for trying to be first as in fastest to market with an ideation,food or technology advance. In the United States the larger the chain in almostall cases the more slowly they are to adopt something than a smaller chain orindependent restaurants will. Chainrestaurants goal is simple feed one meal at a time in the restaurant whileprotecting and edifying the brand.
Historically chain restaurant leaders have denied thecredibility of start-up competitors as non-relevant. The pizza sector is agreat example; evolving from family dinning independents to national chain of“Red Roof” Italian, then to delivery only outlets and now take-N-bake isgarnering market share in the pizza sector.
At the intersection of the consumer,fresh prepared food and technology we fine that consumer eating behavior isevolving and is now beyond the control of traditional food marketers. Evolvingculture and lifestyle, demographics along with the new uncertain economy areall putting pressure on the American food consumer: Demands of work, economicshrinkage, demands of raising a family, commuting, social interaction, kid’safter-school activities, all contribute to a food marketplace where conveniencevies with price over legacy brands. Recent advances in food packaging and newpoints of non-traditional food distribution have empowered consumer choice, andAmericans are embracing these choices even as legacy marketers cringe. Who’safter restaurant food dollars simply put everyone.
Why should you care if Walgreens isselling fresh prepared ready-2-eat and made-2-order sandwiches? Why should youcare if Whole Foods, Trader Joe’s, Safeway and Wegmans are selling ready-2-eatand or heat-N-eat fresh pizza? Whyshould you care if Coinstar is selling Seattle Best Coffee at 1,000 locationsfor $1.00?
You should care because they areselling it, and you are not! The fastest growing sector of retail food servicefor the past four years has been the Convenience store sector. The C-store sectors growth in large part hasbeen driven by fresh prepared food. Non-traditional avenues of distribution aregrowing, gobbling market share while establishing new patterns of consumption,price points and customer loyalty.
Trader Joe’s and Whole Foods have created ready-2-eat and heat-N-eat freshprepared food items with qualitative differentiation as an entity with identitythat has help propel them into ready-2-eat fresh prepared food leadership. In fact recent research shows that bothTrader Joe’s and Whole Foods are each known for high quality (restaurantquality) ready-2-eat and heat-N-eat foods with distinctive offerings. More important each is leading withinnovative products and package size that create value and have positioned eachchain as a food shopping destinationfor meal components customized and personalized for immediate consumption ormix and matched for a meal time at home. In short they are stealing yourcustomers.
Walgreens fresh prepared food is restaurant quality and priced less thanPanera Bread or Corner Bakery. BothPanera Bread and Corner bakery thrive in urban locations. Walgreens is nowgrowing price, quality and speed of service advantages over legacy retailers. Legacy restaurant chains must reconsider thespeed at which they evolve and adapt or non-traditional outlets will captureprofits margins as well.
Traditional views of meals and mealtimecan pretty much be discarded. Legacy retailers waiting for the “next big thing”to copy simply might be out of luck this time. Legacy food retailers may not like to be first movers very much but itmay prove that waiting too long will not work this time.
The retail food world is evolving at anever increasing pace filled with innovation in food, portion size, points ofdistribution, and quality fresh prepared meal solutions. The price, value, service equilibrium is resetting in retailfoodservice. In order to edify thebrand and reinforce consumer relevance restaurateurs leverage FoodserviceSolutions® 5P’s of food marketing: Product, Packaging, Placement,Portability and Price.
Many legacy foodretailers continue to practice brand protectionism, stifle the brand whilediminishing consumer relevance. Theconsumer is dynamic not static. Brandsmust be dynamic, evolving with the consumer. Four years of watching other retail sectors thrive should be longenough. Success in the restaurant world is no longer simply about what happenswithin your 4 walls.
StevenJohnson is Grocerant Guru at Tacoma, WA based Foodservice Solutions, withextensive experience as a multi-unit restaurant operator, consultant, brand /product positioning expert and public speaking. Facebook.com/Steven Johnson, Linkedin.com/in/grocerantor twitter.com/grocerant
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