Industry News | June 21, 2012

Restaurants Feeling Heat From Retail Competition

Restaurants and retailers have a long history of competing over consumers' share of stomach. That competition becomes particularly intense late in the day, when busy families must decide what's for dinner. If money is tight, retailers often win the family dinner battle by offering appealing ready-to-eat, center-of-plate options, easily paired with sides. 

"It's true that the economic conditions of the past two years shifted a lot of business away from restaurants," says Ron Paul, president of Technomic, a Chicago-based research and consulting firm that has extensively studied key players and developments in the Retailer Meal Solutions (RMS) segment.

"Many restaurants need to adjust the value equation back in their favor," says Paul. "Even though retailers are increasingly successful at matching the quality of restaurant food, some restaurant chains are aggressively challenging retailers on price." 

Recent examples include:

  • Mimi's Cafe rolled out a Family Meals To Go menu with 10 meal options serving four to five for $24.99. Each meal comes with a choice of soup or salad; additional family-size sides can be added for $3, $4, or $5. 
  • Bob Evans' 10 Under $20 Family Meals To Go include an entree, a large side, and fresh-baked bread for three to four diners. The meals are only available for takeaway. 
  • Wienerschnitzel promoted several Family Combos for $9.99. Initially offered last month, the meals are available at participating locations for a limited time. 
  • In April, Buona Beef invited e-club members to try its new Family Meals for a special limited-time price of $13.95. 

 

In light of the important competitive dynamics between restaurants and retailers, and significant innovations in retail foodservice, Technomic is updating its 2007 landmark study of the segment. Foodservice suppliers will learn the "size of the prize" for their products and critical success factors for effectively targeting opportunities. Restaurants and retailers will gain extensive insights on consumer preferences, behaviors, and needs regarding retailer meal solutions.

Comments

Whos after restaurateurs food dollars and why they should care. While food consumers are a highly fragmented group there are universal commonalities creating channel disruptions. Consumers want what they want when they want it! Today it is all about the consumer buying what the type of food they want, where they buy it and how they buy it is in flux. You can buy food from large format food retailers the ilk of Safeway Lifestyle stores, Krogers Fred Meyer, Walmart Supercenters and, Whole Foods, or Smaller Format retailers like Trader Joe, Fresh & Easy (Tesco), Dollar Stores, Walgreens, and of course restaurants.The line between restaurants and food retailers is growing ever thinner. The fight for America's food dollars continues to intensify as consumers find fresh prepared ready-2-eat food options at a wide and growing array of outlets across almost every channel: convenience stores, chain drug stores, restaurants, grocery stores, club stores, vending and even more non-food retailers like dollar stores. While manufacturers, retailers and restaurants worry about choice overload, consumers have embraced their new choices and show no signs of returning to the old ways. This fight is taking place in what is called the grocerant niche.The restaurant industry is not an industry 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 almost all cases the more slowly they are to adopt something than a smaller chain or independent restaurants will. Chain restaurants goal is simple feed one meal at a time in the restaurant while protecting and edifying the brand.The retail food industry is evolving retailers that embrace the grocerant niche are finding success.

Whos after restaurateurs food dollars and why they should care. While food consumers are a highly fragmented group there are universal commonalities creating channel disruptions. Consumers want what they want when they want it! Today it is all about the consumer buying what the type of food they want, where they buy it and how they buy it is in flux. You can buy food from large format food retailers the ilk of Safeway Lifestyle stores, Krogers Fred Meyer, Walmart Supercenters and, Whole Foods, or Smaller Format retailers like Trader Joe, Fresh & Easy (Tesco), Dollar Stores, Walgreens, and of course restaurants.The line between restaurants and food retailers is growing ever thinner. The fight for America's food dollars continues to intensify as consumers find fresh prepared ready-2-eat food options at a wide and growing array of outlets across almost every channel: convenience stores, chain drug stores, restaurants, grocery stores, club stores, vending and even more non-food retailers like dollar stores. While manufacturers, retailers and restaurants worry about choice overload, consumers have embraced their new choices and show no signs of returning to the old ways. This fight is taking place in what is called the grocerant niche.The restaurant industry is not an industry 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 almost all cases the more slowly they are to adopt something than a smaller chain or independent restaurants will. Chain restaurants goal is simple feed one meal at a time in the restaurant while protecting and edifying the brand.The retail food industry is evolving retailers that embrace the grocerant niche are finding success.

From the diners of the 50's and 60's offering homemade food for the masses we arrive in 2012. The world of home made food is out of reach for the "rest of us" with Morton's, Capital Grille and Chez Bouchard making everything from scratch for $40 a plate and the local "family restaurant" serving soup poured out of a pouch from the freezer.Supermarkets are happy to serve chicken that was cooked a "couple of hours ago" and some cold salads purchased pre made from somewhere far away. Whatever happened to a family priced operation making their own chicken stock? A dinner roll can be made for far less that the ones out of the freezer. Do they taste better? Ask your grandmother.The public became so absorbed with convenience, we restaurant operators couldn't help but join in. Many well known chains now trumpet "made here" in pursuit of a quality statement. Freshly made food tastes better.Start up quick serve Whole Cooking, plans to freshly roast chicken, beef and pork to be served with rice, pasta, organic mashed potatoes and organic vegetables at $6 to $8 for pick up or delivery. They make their own gravy, chicken stock and bread because it tastes better. Nothing ground breaking here, just a traditional family restaurant approach from fifty years ago.The company also plans to license their "Premium branded rotisserie and prepared meals departments" with the above features to US supermarkets in 2013.The best way supermarkets will successfully compete with restaurants is to make food fresh to order.

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