Enter the Grocerant: Grocery Stores Winning at Foodservice
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1 Tweet 6 Competitive Edge A communication featuring information and analysis from The NPD Group's QSR Market Monitor QSR Market Monitor Competitive Edge March 2016 Home Download PDF Previous Issues Enter the Grocerant: Grocery Stores Winning at Foodservice Grocery stores have it all. They compete in every food category and have a great reputation for variety and freshness. The marketing of prepared foods by grocers has expanded with increasing participation, because prepared foods add meaningful sales for top grocers. Our data shows in-store dining and take-out of prepared foods from grocers has grown nearly 30 percent since Estimates of the market size for grocery prepared foods are now nearly $29 billion*. The success of prepared food offerings at grocery has thwarted QSR s traffic growth. Grocers are capturing a bigger share of the foodservice market today and competing with all foodservice operators. Grocery attracts key restaurant consumers For more information about our QSR Market Monitor and other solutions for the foodservice industry, please complete this form. First Name: Last Name: Company: Title: Phone: Over 40 percent of the population purchases prepared foods from grocery stores. From a buyer perspective, grocery is more than half the size of QSR reach. The purchase rate at grocery lags QSR s frequency by nearly ten visits in a four-week period. Yet, this purchase rate is impressive given that grocery stores have far fewer units than QSR. The penetration of purchasing prepared food at a grocery store is three- quarters the size of QSR, with a frequency that is a one-third as often. Grocery and QSR % Penetration and Frequency What s for dinner? Grocery prepared foods peak at dinner. This meal occasion is tied to the types of prepared foods offered by grocers and the convenience of doing other shopping at the same time. QSRs are visited more broadly across all
2 times of the day, with the typical buyer using them for two to three different meal occasions. The greatest vulnerability for QSR in competing with grocery stores is the evening meal and to a lesser extent, lunch. As grocers gain acceptance and offer more alternatives to fast food, their competitive edge will improve. Dinner is more important for grocery stores. The average person is using more dayparts at QSRs compared to grocery. Grocery and QSR % Penetration by Daypart Loyalty the next step for grocery stores Prepared foods purchased at grocery are purchased less frequently than foods purchased at QSRs. The majority of buyers make a purchase just once or twice in a month. However, watch out for growth of a small but solid core of heavy buyers. They account for a substantial 30 percent of grocery visits for a ready-to-eat meal today and are likely to grow in importance. Most purchasers of prepared food at grocery are lighter buyers, purchasing once or twice in a month. Grocery Heavy/Light Buyer Importance Grocery a Trojan horse Those who buy prepared foods at grocery are also above-average users of QSRs. In all cases, grocery prepared food buyers are among the heaviest QSR users. Grocery outlets are building their business on the most
3 important and valuable QSR customer. Grocery stores are appealing to the heaviest QSR customer. QSR Visit Frequency from Grocery Buyers Drivers of demand: variety and healthy options Prepared foods purchased from grocery stores are rated higher than QSRs on variety and healthy options. These attributes are among the most important motivators of purchase and customer satisfaction. Grocery prepared foods are also rated higher on freshness and quality. Restaurant operators have to meet their customers expectations in the food they offer in order to compete effectively. The QSR advantages tend to be operational or price-oriented, with consumers citing speed of service, value/affordability, and convenient location. Grocery stores outperform fast casual QSRs in customer satisfaction Wegmans leads the grocery industry in creating a full range of prepared foods. Today they represent the gold standard, by providing their customers with great food for all occasions. The chain is rated higher on the offering of healthy options, variety of foods, freshness, and food quality than fast casual restaurants. However, fast casual s advantages over Wegmans include affordability, location, convenience, and value for the money. Specific chains, such as Wegmans, win against traditional QSRs and are often rated more like fast casual QSRs. Wegmans vs. Traditional QSRs and Fast Casual
4 What s next? Half of the prepared chicken now purchased away from home is obtained at grocery stores. Nearly 30 percent of sandwiches and Mexican foods are from grocery outlets. One-fifth of hot pizza sources from grocers. Grocery stores have carved out strong positions with many on- the-go prepared foods. As prepared food expands at grocery, expect inroads in other categories. Prepared Foods Purchased at Grocery and QSR Many grocers now offer food in specialty food categories like Asian, seafood, Italian, Mexican, and barbeque, and some offer comfort foods like meat loaf, pastas, pot roast, and more. Grocers are aiming to cater to all dining needs, including hot, custom-prepared grilled meat, food bars, soups, and sushi. A growing number provide comfortable, casual seating for in-store dining. Once again, QSRs are in a battle for market share this time,
5 grocery stores have taken on the foodservice industry. Increasingly, QSRs need to include grocers as competition and monitor these competitors locally in order to track inroads and market against the features that appeal to their customers. This topic will be featured as a session at The NPD Foodservice Summit, to be held April 6 and 7 in Chicago. This year s theme is The Path To Consumption: How Customers Choose. We will address how consumers decide whether to eat away from home rather than at home, what motivates consumers decisions about where and what to eat, how they choose between picking up a prepared meal at retail and sitting down at a restaurant, and more. Get details and registration information and join your industry colleagues and our food and beverage and foodservice experts! To learn more about The NPD Group's solutions for the foodservice market, complete the form above, call us at , or contactnpd@npd.com. npd.com 2016 The NPD Group, Inc Follow us on
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