Bringing the restaurant experience home

“There’s nothing like eating out to realize the efficiency of eating at home,” said Rick Stein, vice president of fresh foods for FMI – The Food Industry Association. “You order French fries and a milkshake, it costs 10 bucks and you say ‘Wow.’ Consumers are shocked by pricing.”

The numbers of consumers looking for hybrid and other meal solutions from their local grocery fresh departments are some of the highest FMI has seen, Stein said.

While most consumers agree that deli-prepared foods rival restaurant food in quality and taste, many don’t even think about retail foodservice as an option when it’s time to decide what’s for dinner, said Anne-Marie Roerink, principal of 210 Analytics.

“That means the first win has to be awareness to win the trip,” she said. “From there, it’s about freshness, quality, etc.”

When shoppers are in the store, the price of deli prepared is less important than when they’re buying individual items to cook themselves, she added.

“In deli, we see the focus being more on that restaurant food comparison. Convenience combined with cost results in ‘deli math,’ which allows for a little more room on price.”

Deli-prepared meat and poultry, in particular, has had a very good year as a convenient center-of-plate option to mix and match with home-prepared items, Roerink said.

Grocery can still learn a lot from foodservice, though, by optimizing delivery and pick-up business.

That includes the full continuum from grab-and-go to heat-and-eat to ready-to-eat, with a variety of portion sizes as well, Roerink said.

“Portion size variety, especially in grab-and-go, has emerged as a winner, as it helps consumers navigate different price points, prevent food waste, and in the case of something indulgent, also address health.”

The evolution of value

Consumers are making the decision where to shop based on the “value proposition” they think a particular store can deliver, Stein said.

“We’ve done a lot of work digging into what value means. In the past it was about price and quality. It means a lot more now, and it means a lot of different things to different consumers.”

Price, quality and convenience are of course as important as ever, Stein said. But many consumers want to add the word “experience” to their list of ingredients that go into a value proposition. Relevance and health/wellbeing are among the other key needs at the top of many of today’s consumers’ lists.

In the end, though, Stein said, some things never change. There’s no cutting corners on quality.

“Values attract consumers, but you need quality to get the sale.”

To succeed in retail foodservice, Stein said, retailers will need to lean into more variety — something that younger consumers in particular demand.

“Millennials and Gen Z are the largest audience in the US, and they also have the most money, as a group. And it’s the most diverse cohort in the US, a real mixing bowl of different cultures, eating habits. They’re much more experimental.”

Rotisserie and fried chicken and sandwiches isn’t going to cut it anymore, Stein said. One tactic retailers could benefit from is having daily specials emphasizing the diversity of young America.

“Tuesday could be Hispanic night, Friday Mediterranean night. One-time specials, limited-time-offers. You don’t have to have variety 24/7.”

Holistic health 

Health and wellbeing are still major concerns of consumers, and the instore bakery, for so long a punching bag, is faring much better in this department, Stein said.

“For the longest time bakery was fighting anti-carb forces, but now when you think of health, you think of whole grains and mental health and wellbeing. Desserts — single-serve, portion controlled — you can indulge in, and it makes you feel better. And people started to realize that it’s a well-balanced diet that makes you healthy.”

ISBs have enjoyed a “renaissance” in the past five years, Stein said. The pandemic helped, as more people stuck at home suddenly remembered how to make their own sandwiches — bread and deli meat sales soared accordingly.

The only thing getting in the way of that renaissance, Stein said, has been high ingredient costs, driven largely by the cost of wheat going up during the Russia/Ukraine War.

Bakery was hit harder by that inflation than other fresh departments, Stein said, but that should moderate as 2024 progresses. 

This article is an excerpt from the May 2024 issue of Supermarket Perimeter. You can read the entire Moving Forward feature and more in the digital edition here.