Food Retailers Taking Bite Out of Restaurant Marketshare

Food retailers, including supermarkets, convenience stores, warehouse/club stores, supercenters and various specialty retailers, are working hard to win back consumers' dining-out dollars. Consumers are responding to their efforts with growing interest, according to recent research by foodservice consultants Technomic.

Because convenience remains a top priority for time-pressed consumers, retailers that offer new and appealing meal solutions are proving their ability to grab consumer attention and take back market share lost to restaurants. Sales for retailer meal solutions (excluding beverages) will exceed $25 billion in 2007. The growth opportunity for retailers is magnified by the fact that consumers are interested in a complete meal solution.

The recent opening of several Tesco's Fresh and Easy stores in the U.S. provides one case in point. The UK-based retailer, which focuses on delivering a convenient shopping experience with a strong emphasis on prepared meals, is expected to do well in U.S. markets. Other retailers with winning meal solution programs include Bristol Farms, Central Market, Publix, Ukrop's, Wegmans and Whole Foods.

Ron Paul, president of Technomic, acknowledges that supermarkets and other retailers offering complete meal solutions have seen their customer traffic increase at twice the rate of restaurants over the past five years. "This is clearly a competitive threat to many chain restaurant brands," adds Paul.

Foodservice manufacturers, on the other hand, are well-positioned to assist retailers in growing this area of their business Technomic research indicates. With consumer interest centered on quality and variety, retailers will be eager to work with manufacturers that can help them replicate the restaurant experience through premium ingredients, customization and updated preparation techniques.