Remember the oldadage one step back then two forward. In order to understand what is occurringin the retail food landscape today sometimes its best if we take a lookback. The shift in food retailconsumers spending patterns or retail food consumer discontinuity started wellbefore the economic down turn.
I hear regularlyfrom clients that “our consumer is not doing what they have always done”. Ihave but one simple reply, your consumer is not the same as her/she was a yearago, five years ago nor will they be next year and neither should your brandbe.
The confluence ofincreasing consumer knowledge about food via TV, the “food network”, and rapidrestaurant industry growth, coupled with concept sameness, combined with theweak economy allowed trepidation too crept into restaurant executive planningmeetings and board rooms across the industry in 2008 and seemly stay there.
In far too manyrestaurant companies the cry was for just wait it’s the economy not us all willbe fine. That prevalence of mediocrity and complacency at the C-level wasextremely naive. As an industryrestaurateurs concern is and should be share of stomach; first by company,second by niche-market share, and third the restaurant industry overall at alltimes.
The economy is not thelargest problem it is competition for share of stomach; specifically by theready-2-eat prepared meal section of the grocery stores, Convenience stores,and Chain Drug stores. Under reported but significantly noted first in 2005 byFoodservice Solutions®. That was the first year that recorded a consumerincrease in percent household spending for food in grocery stores and away fromrestaurants in 25 years.
The shift had beenslow in coming but it has continued since 2005. That was the first such directionalmove in 25 years. That 25 year span can best be recalled as the golden age ofchain restaurants, and marks a huge shift. The timing of this isimportant. Those were the boom yearsfor the restaurant industry. During that period we witnessed double digitgrowth in new units with most tier one players year after year.
It is important to note that in the past 15 years the average grocery store hasdropped or discontinued carrying 15,000 Sku’s (individual food ingredients)which is equal to two isles in a standard grocery store. They replaced themwith less than 200 ready-2-eat and heat-N-eat fresh prepared food products.They created from those new ready-2-eat and heat-N-eat Sku’s a mix and matchcomponents that consumers bundled into customized family meals. Consumers nowsay most ready-2-eat components are restaurant quality. Those products are driving an increase incustomer frequency and loyalty for Grocery stores, C-stores and Retail Drugstore chains.
On top of that theyhave integrated the ready-2-eat and multi-daypart meal components food productsfoods into national advertising and weekly flyers. YES, an ilk equivalent to arestaurant meal bundled and priced very competitive with a focus on freshbetter for you. Harris Teeter once described its remodeled stores salad bar andready-2-eat foods as CASH COWS. Safewaystock is up sharply over the same period with the proven results from theirongoing remodel prepared food focused lifestyle stores. It must also be noted here that during that25 year period while the US population was booming, grocery stores declined innumber by 25,000 units while the restaurant industry grew by 200,000 plusoutlets.
The grocery preparedfood Industry leadership is being driven by European retailers. Three of specificnote are Marks & Spencer, Morrison’s (M-Local) and Trader Joe’s with“tonight’s dinner” mostly refrigerated or quick chilled food components whichblend their store brands with branded ingredients and simultaneously put theirprepared meals on par with homemade. Today, Walgreens and Duane Reade both US retail drug stores areaggressively expanding into fresh ready-2-eat and heat-N-eat prepared food.
Walgreens initiativecan best be called convenient meal participation. For the consumer it is interactive,participatory and inviting, providing “like” homemade touches via componentbundling creating personal satisfaction. This as extremely compelling becauseWalgreens is an 81 Billion dollar company well financed and that makes thisvery competitive for the restaurant industry. This is not a fad but a trendthat is now 27 years in the making. Thetrend began in 1985 with the food industry focus on Home Meal Replacement (HMR)and has progressed into a full-fledged battle for the consumer’s food dollarand share of stomach by all retail sectors.
The race for theconsumer is transformational with more competitive points of distributionopening up all of the time. The traditional metrics for measuring success atchain restaurants is currently being challenged by the success of chains like;Buffalo Wild Wings, Chipotle, and Papa Murphy’s. These firms have carved outniche’s based on purpose, choice, convenience and price. Realism is reflectedin the customer counts and continued sales numbers for these companies.
The economy is afocus now, however since 2005 clear indicators are now providing a picture ofwhat is important and changing with consumer eating habits particularly HOWTHEY EAT, WHEN THEY EAT, and WHY THEY EAT.
Most notable is thechange in consumer vision and role of food: including social eating, eatingeconomically, environmental eating and eating for personal benefit! Yespersonal benefit, only in America do consumers go on diets to eat their waythin! Ok, ask yourself does that work?If no keep reading.
Recently threechains particularly have addressed these issues and seem to be having success;Domino’s, Starbucks and Cheesecake Factory. Each company has had a dramaticoverhaul of menu and positioning are now recovering building new and additionalloyal customers.
The restaurantindustry has not proved as agile as the Grocery, C-store or Drug Store sectorswhen it comes to attracting new consumer while expanding fresh food offeringssince 2005. The confluence of events may in fact force our industry to look athow we run our business. It will not however force us to stick to outdatedmetrics, methods or models. Yes, “times they are a changing”. The challenge isto recapture share of stomach.
The grocery and drug storesector particularly have spent millions studying restaurant quality food,levels of service, packaging and product positioning. They have a wealth ofknowledge and it is in play. The restaurant industries legacy of innovationcombined with its ability to get products to market faster, places it first inthe mind’s eye of the consumer. Increase success in the Grocerant niche callFoodservice Solutions®
Steven Johnson is Grocerant Guru at Tacoma, WA basedfoodservice consultancy Foodservice Solutions® He can be foundon linkedin at:linkedin.com/in/grocerant,facebook.com/StevenJohnson, Twitter.com/grocerant Email Contact: grocerant@q.com
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