C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 2013 23

For many retailers, foodservice promises

higher profi ts and a powerful differentia-

tor, whatever the channel. But it is by no

means foolproof, as two analysts with

Technomic explained at the recent 2013

IRI Summit.

“This is a business that is doing very

well … but in many ways could be doing

a lot better,” said Bob Goldin, executive

vice president and director of the research

& consulting division of Technomic

during an educational session on fresh

prepared foods. “It requires retailers to

sharpen their focus.”

Not surprisingly, the most ambitious

programs are run by upscale grocers.

Wade Hanson, principal and director of

the retailer meal solution practice group

of Technomic, highlighted the example

of Giant Eagle’s Market District concept.

With about a half-dozen sites in Penn-

sylvania and Ohio, the approximately

100,000-square-foot, gourmet-food-

focused store includes crepe, waffl e and

gelato bars, panini and salad stations and

cooking demonstrations.

Wegmans Food Markets, a Mid-

Atlantic chain that is widely respected

by retailers in multiple channels, has a

great understanding of its local markets,

where the voids are and what customers

want, Hanson observed: “Freshness—

they defi ne it.” This is tricky considering

how diluted the term “fresh” has become,

but Wegmans has been able to own the

concept thanks to its impressive product

and prepared-foods offer at the front of

the store, and small touches in messag-

ing such as “fresh-cut and pre-washed.”

Consider that while 3% to 4% of total

supermarket sales typically come from

fresh prepared foods, at Wegmans this

fi gure is more than 20%.

Whole Foods centers its program

on quality, variety and unique items,

although other supermarket chains are

gaining ground on this market leader.

“They’ve gotten much more precise and

targeted about their promotional items,”

said Goldin, citing pizza- and sandwich-

of-the-day specials. But variety has its

cost: Whole Foods’ shrink level is very

high, and Goldin expects the chain will

fi ne-tune the variety going forward.

The Chicago-based chain Mariano’s

gives the impression of a very expansive

offer at the perimeter of its sites, but

actually has a fairly limited assortment.

Hanson highlighted the chain’s smart

practice of offering price tiers on its meal

options—one entrée and two sides for $6,

$8 or $10, depending on the number of

servings required—and keeping the offer

simple with 16 to 18 meal options. “That

is a good way to go—it looks fresh and is

relatively simple,” said Goldin.

Grocery, Drug, Mass Channels

The Grocery Greats

Traffi c Report: Food & DrugFood and drug retailers saw a slight decline in foodservice traffi c last year, after no change in 2011. Compare that to c-stores, which saw 2% traffi c growth last year and 3% the year prior. Of course, grocers still have the market share of fresh prepared food sales at 68%, according to Technomic.

Year ending Traffi c PCYA*

Dec. 2010 –1%

Dec. 2011 0%

Dec. 2012 –1%

Source: The NPD Group/CREST* Percent change from a year ago

C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 201324

Grocery/Drug/Mass

Food/Drug Day-Part DistributionYear ending Dec. 2012

Share of traffi c PCYA*

■ Morning meal 17% –3%

■ Lunch 30% +4%

■ Supper 22% 0%

■ P.M. snack 31% –4%

Source: The NPD Group/CREST * Percent change from a year ago

Approximately how often do you visit/browse each of the following areas?

More than Once Once every Once Less Section once per week per week few weeks per month often/never

Hot prepared foods* 15.9% 21.6% 20.1% 14.7% 27.8%

Cold prepared foods** 14.1% 20.0% 19.5% 14.8% 31.6%

When you visit each of the following deli areas, approximately what percentage

of the time do you actually make a purchase?

Section 75% to 100% 50% to 75% 25% to 50% Less than 25%

Hot prepared foods* 13.3% 19.8% 22.7% 44.2%

Cold prepared foods** 11.7% 18.0% 20.2% 50.0%

How do you generally feel about purchasing items in each of the following areas?

Buy only Prefer items on sale, Buy whether Section items on sale but usually buy what you like on sale or not

Hot prepared foods* 35.4% 37.4% 27.1%

Cold prepared foods** 38.5% 35.4% 26.0%

Source: International Dairy Deli Bakery Association Consumer Shopping Dynamics: The Decision Tree * Includes rotisserie chicken, pizza, hot wings and soups** Includes sushi, custom and pre-made sandwiches and salads

Purchase Frequency and Attitudes in Prepared-Foods DepartmentsAccording to the International Dairy Deli Bakery Association, the deli-meats section attracts the most frequent shoppers of the deli department. Nearly half (49.8%) of the shoppers surveyed visit that section at least once per week, if not more often. Deli cheese pulls in 45.3% of shoppers at least once per week.

Where Shoppers Purchase Deli ItemsFemales prefer most channels to shop for deli items more than males, except c-stores and stand-alone delicatessens, according to Mintel. Mass merchandisers are more popular among 25- to 34-year-olds and families with at least one child under the age of 18. As household income increases, interest in club stores follows, but takes a slight dip as income hits $150,000.

Supermarkets 70%

Mass merchandisers 29%

Club stores 21%

Delicatessens 18%

Natural supermarkets 15%

C-stores 9%

Specialty/gourmet supermarkets 9%

Other 1%

Source: Mintel

C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 201326

Grocery/Drug/Mass

Grocery Deli Prepared-Foods ShareYear ending Dec. 2012

It’s no surprise prepared chicken reigns, but snacks and sushi posted strong gains for the second year in a row.

Category Dollar Share PCYA*

Prepared chicken 28.0% +8.3%

Salads 16.9% +8.2%

Entrées 11.4% +7.6%

Sandwiches 11.0% +5.4%

Dips/spreads/toppings 7.4% +10.1%

Pizza 5.5% +0.4%

Sushi 4.8% +14.4%

Snacks 3.8% +21.2%

Platters 3.4% +4.8%

Sides 2.1% +5.0%

Soups 2.0% +8.8%

Other 3.8% +11.5%

Total 100% +8.2%

Source: Perishables Group FreshFacts * Percent change from a year ago

Trend Tracker: SnacksNielsen Perishables Group reported that snacks grew its share of grocery deli prepared foods sales 21% last year, after strong growth in 2011 as well. What’s making snacks sizzle?

• Nielsen analysts attribute most of the snack category growth to crackers, citing a 27% increase in sales. Grocers are merchandising high-quality, specialty crackers near specialty meats and cheeses, dips and spreads. Smaller snack categories such as pretzels and popcorn also saw double-digit growth.

• A 2012 National Association for the Specialty Food Trade report found that gourmet chips, pretzels and snacks saw sales of $1.8 billion in 2011, making it the third-largest specialty-food category. Meanwhile, IRI data shows nearly twice as many consumers are willing to pay more for gourmet snacks compared to 2009.

• Packaged snacks aside, according to Technomic’s Appetizer Con-sumer Trend Report, trendy appetizers include egg rolls, nachos, quesadillas, spring rolls and hummus.

• Also expected to grow in prevalence on full-service restaurant menus are house-cured meats/charcuterie; vegetarian appetizers; ethnic/street-food-inspired appetizers, amuse-bouche/bite-size hors d’oeuvres; and fl atbread appetizers, according to The Na-tional Restaurant Association’s annual “What’s Hot” survey of chefs.

Top Meal Items Ordered at Food & Drug StoresYear ending Dec. 2012

Main dishes and the smaller categories of burgers and breakfast foods increased their menu importance in the food and drug

channels. Beverages, meanwhile, struggled.

Dollars

Food Menu importance* PCYA**

Breakfast Foods 7.8% +4%

Burgers 2.0% +6%

Sandwiches 17.2% –7%

Main Dish/Entrees 42.3% +7%

Sides/Appetizers 50.3% 0%

Breads/Sweet Rolls 18.1% –3%

Desserts/Snacks 20.4% –8%

Beverages 64.4% –4%

Source: The NPD Group/CREST* Percent of meals/snacks that include item** Percent change from a year ago

C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 2013 29

Non-Commercial

While colleges and universities have recently

taken on a reputation as a pioneer of food-

service trends, its non-commercial brethren

in health care and business & industry can

anticipate a solid year ahead.

In 2013, Technomic expects strong

nominal growth in the health-care

(4.5%) and business & industry (4.0%)

channels. As a whole, non-commercial

foodservice operations are forecast to

grow 3.7%, representing opportunities

for operators and suppliers alike.

“Whether they are traveling, attending

school or work or just concerned about

their children’s school lunches, [consum-

ers have] come to expect better options

and operators need to deliver it,” Dar-

ren Tristano, executive vice president of

Technomic, said in a statement released

with the new report.

The National Restaurant Association

is likewise anticipating strong gains for

health-care foodservice. It forecasts 5.5%

growth for managed services in hospitals

and nursing homes, and 4.5% growth for

self-operated hospitals. It is anticipating

3% growth change for managed-services

in colleges in universities this year, and

2.9% growth for self-operated institutions.

What operators are worth watching

for cutting-edge menu and operational

ideas? Look to the award winners.

This year’s FARE Leaders in Retail

Foodservice honorees include Camp

Howard, director of campus dining, and

his operations at Vanderbilt University in

Nashville, Tenn. What set Vanderbilt apart

is its balance of convenience that today’s

consumer demands, with a strong sense

of community. Foodservice is not just a

transaction at Vanderbilt, it’s an experience.

All that is matched with a high attention to

quality ingredients and unique concepts.

Two large dining centers anchor the

program. In the Commons Center, which

features a chef ’s table, wok station and

brick-oven pizza, students must dine in

and all food is served on china. Rand

Dining Center, meanwhile, caters to the

harried, on-the-fl y student. Special events

occur in both centers, and Howard relies

on the word-of-mouth buzz of social

media to draw crowds.

Meanwhile, FoodService Director

magazine recently announced its Gold-

ies Awards, with the college & university

award going to North Carolina State Uni-

versity, Raleigh, and its “My Roots are at

NC State” program.

In an effort to engage students in

the department’s sustainability efforts,

dining services partnered with the state

program Got to Be North Carolina to

track down local businesses that have

an NC State connection. Dining services

then made a list of all the local compa-

nies it was already purchasing from and

looked for areas where it could switch to

a local company. Students became more

engaged in the department’s efforts when

they saw that people in those businesses

had connections to NC State.

Non-Com Sees Growth

C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 201330

Non-Commercial

C&U Day-Part DistributionYear ending Dec. 2012

C&U saw growth at lunch last year, while supper and p.m. snack day-parts suffered.

Share of traffi c PCYA*

■ Morning meal 23% +1%

■ Lunch 43% +2%

■ Supper 26% –2%

■ P.M. snack 8% –5%

Source: The NPD Group/CREST OnSite* Percent change from a year ago

Top Meal Items Ordered at Colleges & Universities Year ending Dec. 2012

Grab-and-go items and sandwiches performed best at colleges and universities, refl ective of the growth in the morning meal and lunch occasions.

Food Menu importance* PCYA**

Beverages 83.6% 0%

Sides/appetizers 78.3% +2%

Main dish/entrées 55.1% –1%

Breakfast foods 28.2% –7%

Sandwiches 24.4% +1%

Desserts/snacks 23.6% +2%

Breads/sweet rolls 19.0% +4%

Burgers 8.7% 0%

Source: The NPD Group/CREST OnSite* Percent of meals/snacks that include item** Percent change from a year ago

Ethnic Cuisine Growth PotentialWhen the same question was asked of college foodservice decision-makers last year, Chinese/Japanese came in fi rst, followed by Mexican/Latin American and regional American.

Which of the following ethnic cuisines do you believe will have the most sales growth potential in the next year?*

Cuisine Percent responding

Mexican/Latin American 51%

Regional American 36%

Chinese 34%

Mediterranean/Greek 26%

Caribbean/Cuban 26%

Indian 26%

Thai 20%

Middle Eastern 18%

Vietnamese 11%

Japanese 9%

Source: FARE State of Foodservice at Retail, Feb. 2013* Up to three options allowed

Perceived Growth Potential

Which of the following foodservice categories do you believe have the highest sales growth potential in your retail-foodservice operations in the next year?*

Food/beverage item Percent responding

Sandwiches 35%

Snack items 33%

Specialty coffee 27%

Entrées/home meal replacements 16%

Pizza 15%

Chicken (fried, rotisserie) 15%

Cut fruit/vegetables 11%

Baked goods/pastries 9%

Roller-grill items 9%

Regular coffee 7%

Salads/salad bars 6%

Source: FARE State of Foodservice at Retail, Feb. 2013* Up to three options allowed

Traffi c Report: College & UniversityThe college & university sector felt a slight decline in foodser-

vice traffi c last year, according to The NPD Group.

Year Ending Traffi c PCYA*

Dec. 2010 –2%

Dec. 2011 –1%

Dec. 2012 –1%

Source: The NPD Group/CREST * Percent change from a year ago

C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 201332

Restaurants

Gains for the JuggernautLimited-service restaurants (QSRs and fast

casual), which weathered the recession by

focusing on value menus and welcoming

customers downgrading from full-service

chains, continue to be strong competition

for c-stores and other foodservice-at-retail

channels. And the segment is expected to

see nice gains this year. The NRA projects it

will post total sales of $225.4 billion in 2013,

a 4.6% increase over its 2012 sales volume

of $215.4 billion.

And yet operators aren’t expecting to

glide through 2013. Health-care and food

costs continue to challenge profi tability,

while government regulations and the

overall economy loom darkly.

QSRs are also experiencing the increased

competition of foodservice at retail. In an

operator study conducted by the NRA, 40%

of operators said competing with c-stores

was more challenging in 2012, compared

with 20% who said it was less challenging.

Meanwhile, 44% of operators said compet-

ing with other QSRs was more challenging,

and 41% stated that grocery stores were

becoming increasingly competitive.

Because lunch and dinner are still fi rmly

in the domain of QSRs, Bonnie Riggs of

The NPD Group advises c-stores to dig in

on the breakfast and late-night day-parts,

which currently make up 76% of their

traffi c.

“It’s really hard to compete with those

[for which lunch and dinner is part] of

their core business,” Riggs says. “I would

put those efforts against growing my core

day-parts.”

So what are the restaurants to observe

for their abilities to please the consumer?

Technomic recently reported the top res-

taurant chains based on consumer ratings

in service and hospitality, unit appear-

ance and ambiance, food and beverage,

convenience/takeout and value attributes.

Papa Murphy’s took the top spot for

quick-service chains for its order accu-

racy, takeout and food taste/flavor, fol-

lowed by Chick-fi l-A, In-N-Out Burger,

Krispy Kreme and Culver’s.

Honors for favorite fast-casual chain

went to McAlister’s Deli, which bested its

peers in the food and beverage and value

categories, as well as friendly service. It

was followed by Firehouse Subs, Panera

Bread, Jimmy John’s Gourmet Sandwich

Shop and Jason’s Deli.

When broken out by subsegment,

consumers ranked Krispy Kreme as their

top beverage/snack chain, followed by

Jamba Juice and Cold Stone Creamery.

Krispy Kreme received strong scores for

craveability, food taste/fl avor, food visual

appeal and order accuracy. The best

burger chain, according to respondents,

was In-N-Out Burger, while Chick-fil-

A was ranked top chicken chain. Moe’s

Southwest Grill beat out Qdoba and

Chipotle in the Mexican category.

What attributes were most important

to consumers? Service and hospitality is

No. 1, followed by convenience and take-

out, food and beverage, and appearance/

ambiance. Compare that with consumers’

c-store attributes on p. 16.

For more on Technomic’s Consumer

Restaurant Brand Metrics study, includ-

ing a 16-page mini report with rankings,

visit www.technomic.com.

34

Restaurants

Top 10 Fast-Food Restaurant Motivators

Among the motivators that didn’t make the top 10 were a food and drink combo/pairing; calorie information on the menu; customer reviews; drive-thru; environmentally friendly practices; food I can eat on the run; convenience; loyalty programs; high-quality coffee/tea.

Would any of the following infl uence your decision to go to a fast-food restaurant?

Motivator Percentage of consumers

Low price 68%

High-quality food 68%

Convenient location 67%

Menu variety 59%

Quick service 56%

Promotion/discount/coupon 55%

Reputation for quality 54%

Better prices than the competition 54%

Healthy menu items 47%

Can pay with credit card/debit card 47%

Source: Packaged Facts, Limited-Service Restaurant Landscape, June 2013Base: 1,683 adults ages 18 and older who had gotten breakfast, lunch, dinner or a snack at a quick-service restaurant, coffeehouse/doughnut shop/smoothie shop or street stand/food truck/mobile food cart

Restaurant Loyalty

The fact that more than 40% of consumers will go to the same restaurant regardless of a special promotion reveals that value means more than price point.

Which of the following best describes you?

■ Go to the same place 42%regardless of promos

■ Switch around based 26%on promos

■ Go where it’s cheapest 9%

■ Seldom eat out 19%

■ None of these 4%

Source: The NPD Group

Foodservice Food & Drink Sales, 2013 Projections

QSRs and full-service restaurants are expected to make sales gains this year of 4.9% and 2.9% respectively. Compare those fi gures to retail-host sales growth projections of 3.5%, or 0.6%

real growth change.

2012 2013 ’12-’13 ’12-’13 real projected projected % change growthSegment sales* sales* change

Quick-service restaurants $179.3 $188.1 +4.9% +1.7%

Full-service restaurants $202.2 $208.1 +2.9% +0.2%

Source: National Restaurant Association * $ billions

Restaurant Usage by Day-Part*

Following are the percentages of adults who bought breakfast, lunch, dinner or a snack from a restaurant in the past seven days.

Day-part Percentage of adults

Breakfast 40%

Lunch 58%

Dinner 66%

Snack 26%

Source: Packaged Facts, Limited-Service Restaurant Landscape, June 2013Base: 2,000 adults aged 18 and older * Includes chain or independent quick-service restaurants, coffeehouse/doughnut/smoothie shops, street stand/food truck/mobile food cart, family restaurants and casual restaurants

Weekly Restaurant Use

Not surprisingly, the most-frequented restaurant segment on a weekly basis is the QSR chain. Street stands, food trucks and mobile food carts received a notable 10%.

Full-service chain 48%

Full-service independent 35%

Limited-service* chain 77%

Limited-service* independent 47%

Quick-service restaurant 70%

Coffeehouse/doughnut shop/smoothie shop 32%

Street stand/food truck/mobile food cart 10%

Source: Packaged Facts, Limited-Service Restaurant Landscape, June 2013Base: 2,000 adults ages 18 and older * Limited-service restaurant is an aggregate for quick-service restaurants; coffeehouse/doughnut shop/smoothie shops; and street stand/food truck/mobile food carts.

C S P F o o d s e r v i c e a t R e t a i l H a n d b o o k 2013