Fast casual may still be a darling of the foodservice world—appropriately enough, given that the category’s top 150 chains grew sales 13.1 percent in 2012—but retail foodservice is a rising and dynamic player that demands attention.
The retailer meal solutions segment grew to $37 billion in sales in 2012 from $35 billion in 2010, according to Technomic’s 2012 Retailer Meal Solutions Consumer Trend Report, and Technomic expects that supermarket foodservice will outperform restaurants and bars through this year and into 2014. (Supermarkets and convenience stores account for $20.0 billion and $10.7 billion, respectively, of that $37 billion RMS industry.)
Supermarkets and c-stores continue to up the ante on their prepared-in-store food and beverage programs, boosting menu variety and creating more-appealing in-store dining areas while emphasizing both quality and convenience. Whereas in the past their efforts may have been focused on grabbing business from quick-service restaurants, the focus on higher-quality fare—even the addition of alcohol service in some in-store concepts—puts the fast-casual segment squarely in retailers’ sights.
The approach seems to be resonating: Nearly one-third (32 percent) of consumers who said in November that they’re buying prepared meals from traditional supermarkets more often than they were in 2011 reported doing so at the expense of fast-casual restaurant visits. Thirty percent of those buying more prepared foods from c-stores said the same.
In addition, one in five fast-casual restaurant patrons surveyed last summer for Technomic’s Future of LSR Fast-Food & Fast-Casual Restaurant Consumer Trend Report identified grocery-store prepared-foods areas as a top alternative to a fast-casual restaurant.
In Technomic’s hometown of Chicago, a flagship location of Austin, TX-based Whole Foods has a veritable food court of fast-casual concepts, offering distinct deli, barbecue, Asian, Mexican, Italian and home-style dining concepts as well a coffee bar, a wine bar and a regular bar. In Urbandale, IA, Hy-Vee last summer opened the first location of its “flex-casual” Market Fresh Grille concept, which offers fast-casual service during the day and converts into a full-service restaurant serving wine and craft beer at 4 p.m.
And in the convenience-store segment, Pilot Flying J, a Knoxville, TN-based operator of travel centers and convenience stores, is set this week to open its second travel center to feature the company’s new fast-casual concept. Called PJ Fresh Marketplace, the concept features hot menu items (such as a chicken pot pie), freshly made salads and sandwiches, a frozen-yogurt bar, premium coffee and cappuccino, and grab-and-go items.
As reported by Convenience Store News, Pilot Flying J CEO Jimmy Haslam said PJ Fresh Marketplace “delivers more food options that are fresh, healthy and quick.”
Fresh, healthy and quick—that’s a message around which a great number of fast-casual restaurant brands are built. So how do consumers compare these attributes in restaurants vs. retail foodservice outlets?
Among consumers who buy retail prepared foods at least once a month, retailers fare at least as well on these quality markers as limited-service restaurants (including fast-food and fast-casual concepts) do, according to Technomic’s Retailer Meal Solutions report.
Looking separately at food quality, food freshness, availability of better-for-you choices and overall convenience, a majority of RMS consumers rated both supermarkets and c-stores equal to or better than limited-service restaurants. For example, 53 percent of consumers say the freshness of prepared foods at convenience stores is on par with that of limited-service restaurant fare—and 28 percent say c-store prepared offerings are fresher. Supermarket RMS patrons expressed similar sentiments: 54 percent said food freshness is comparable at supermarkets and LSRs; 24 percent said supermarkets’ prepared foods are fresher.
Consumers turn to retailers for prepared foods most often in the evenings—a daypart in which sales are slow for many fast-casual concepts. And if fast-casual restaurants lose out to retailers at dinner, they may risk losing dining dollars again for other occasions, such as catering. Recognizing that the competition for dining dollars comes increasingly from retail as well as from other restaurant segments will be critical to fast casual’s future success.