Plotting the Future
Staten Island, N.Y.-based Key Food banner Olive Tree Marketplace, Progressive Grocer’s March 2015 Store of the Month, prides itself on being a real destination for prepared foods, with a broad array of offerings ranging from fist-sized meatballs to red quinoa salad, and including many gluten-free, low-sodium and low-sugar options. According to co-owner Dave Shehadeh, the store’s prepared foods are a big hit with area residents, particularly among students at two nearby colleges and a high school, who often drop by to pick up lunch.
Do prepared food-intensive store formats like Olive Tree Marketplace’s and the much-publicized “grocerant” concept herald a long-term trend? Certainly, prepared foods have never been more popular, particularly among a certain demographic.
According to Acosta Sales & Marketing’s July 2014 The Why? Behind The Dine Shopper Survey, conducted in collaboration with Chicago-based market researcher Technomic, 16 percent of total U.S. diners reported eating grocery prepared foods at home more often, compared with a whopping 27 percent of Millennials (eating such items in a grocery store’s dining area was also up, by 10 percent for total diners and by 19 percent for Millennials).
Hotter Than Ever
“Fresh meal solutions continue to be hot,” affirms John Dunne, EVP of fresh foods at Jacksonville, Fla.-based Acosta. “Quality daypart meal solutions are offering busy shoppers restaurant-quality food at modest prices, and their variety is only expanding. We are seeing more better-for-you options — think whole grains and organic salads — that appeal to younger and more health-conscious consumers, new flavor profiles for adventurous eaters seeking diverse global tastes, and more personalized options for individual diners and families alike. Consumers can create new experiential opportunities by purchasing a variety of items to share in a community-dining setting. These types of meal solutions are a real win-win as both consumers and retailers capitalize on quality and convenience.”
“Prepared food departments are becoming more and more important to consumers, especially as they are evolving into an alternative to eating out at restaurants,” says John Becker, director of marketing at Sandridge Food Corp., a Medina, Ohio-based manufacturer of fresh refrigerated prepared foods. “Consumers are looking for high-quality products and recipes that require little to no preparation time. The prepared food department is the perfect solution for those consumers looking for great-tasting food on the run.
“Some of the trends we’re seeing in the foodservice grocery channel revolve around creating an experience for the end consumers,” Becker continues, pointing out that Sandridg works closely with retail customers on developing innovative ideas. “By offering craft beers or a restaurant-style eating area in the store, retailers are allowing customers to enjoy their experience shopping at their store.”
When asked about current sales of prepared foods, Dunne characterizes them in general as “very healthy, outpacing all other segments of the store perimeter, as shoppers recognize relevant value in convenience, food quality and increased options.” This powerful combination adds to the “excitement and experience of the ‘thrill of the hunt’ for shoppers,” he goes on to explain. “Retailers that have invested in labor, service and signage are developing loyal and frequent shoppers. Some retailers have identified daily specials to market appetizers, entrées, sides and desserts; gain trial; and showcase their menu of offerings.”
“Prepared food sales are very strong,” agrees Jeff Skipper, VP, marketing at Montgomery, Ala.-based Wynn’s Grain & Spice, which specializes in breaded items at foodservice. Besides daily specials, Skipper notes, “Other retailers report sales increases by offering an in-stock guarantee during peak hours.”
The undisputed star of the prepared food section is chicken, “with an increase of 9.4 percent in rotisserie sales and 8.9 percent in fried chicken sales over the previous year,” Skipper observes. “Repeat customers often turn to chicken as a tried-and-true favorite.”
Compliments to the Chef
Contributing in a major way to a prepared food program’s success is the chef in charge of it all. At Olive Tree Marketplace, that would be co-owner Hani Qassis, whose experience spans such prestigious posts as the White House and Yankee Stadium, and whose hands-on perfectionism ensures that every item prepared at the store is up to his exacting standards.
“Corporate chefs are huge assets to the prepared foods department,” elaborates Dunne. “They lend credibility and authenticity that make fresh prepared foods even more compelling for consumers. By understanding food trends and flavors and innovating in the kitchen, they’re able to create exclusive recipes, limited-time offers and daily specials unique to specific stores that ultimately drive traffic and loyalty. Retailers can also leverage their expertise in the kitchen as a means to reduce shrink by repurposing foods, for example using unsold rotisserie chickens to make chicken pot pie, chicken noodle soup, chicken salad, etc.”
Brand Boosting
Almost as important as the care taken to produce a wide range of items daily in a small but efficient on-site kitchen is the fact that everything made at Olive Tree Marketplace — gourmet meals to go, soups, sauces, savory stuffed breads, and more — carries the banner’s brand, including a distinctive logo.
A strong brand, whether a store’s own or that of a well-known company, can provide a clear advantage. “Branded prepared food products leverage the benefit of brand essence; consumers know what they like and what to expect,” explains Dunne. “This strategy works best for products like soups, salad dressings, condiments, chicken, macaroni and cheese, and mashed potatoes.”
“There are several benefits to retailers [of] providing branded food in their prepared foods department,” says Sandridge’s Becker. “One of the most important benefits is giving their customers the peace of mind that what they are buying in their store is familiar and trusted. Brand awareness is powerful in the mind of consumers, and it is helpful to have a familiar name available in their prepared foods department.”
Branding works particularly well for “unique, not easily duplicated products, such as potato salads or fresh grain salads, [which] are great products to offer with a trusted brand,” he adds. “By providing these branded options to customers, it allows retailers to have a more diversified product offering.”
Hoping to capitalize on brand recognition among grocery store shoppers, Chester’s International, a provider of fried chicken and sides like gravy, green beans, cole slaw and baked beans, in April introduced a program tailored specifically to supermarket delis. The program “delivers the product quality and consistency [consumers] are looking for,” notes Laura C. West, emerging projects manager, marketing at Birmingham, Ala.-based Chester’s, a sister company of Wynn’s Grain & Spice. “Our independent supermarkets leverage the Chester’s in-store digital promotions board, local store marketing programs and circular artwork.”
According to Chester’s materials, supermarket operators participating in the program “receive high-quality products, best-in-class training, ongoing operations support and a comprehensive marketing toolkit.” The materials promise “6 Simple Steps to Opening in 60 Days or Less,” with only minimal equipment — the aforementioned digital promo board and a Giles breading and batter table — required. Chester’s program also offers the optional features of in-store branding elements, additional products and a cold chicken sales program.
When it comes to promotion and placement of branded prepared foods, grocers “must offer simple solutions that answer the age-old question of what’s for dinner,” asserts Dunne. “They’re essentially selling convenience and quality, and the benefits of being a one-stop shop need to be communicated in marketing and merchandising. In-store signage should be clean and clever to entice consumers who are shopping for other items to pick up prepared foods.
“Clear communication is key when marketing branded products,” recommends Becker. “An easily recognizable brand, logo and nutritional claims are helpful when marketing products.”
“Bundling programs that pair entrées, side dishes and drinks are also great ways to drive incremental purchases while offering complete meal solutions,” suggests Dunne. As prime examples of such product pairings, West suggests hand-breaded or rotisserie chicken with home-style sides, adding, “Chester’s Combo meals resonate with consumers, as they are easy and delicious home meal replacements.”
“Additionally, brand loyalty rewards programs and digital marketing solutions, especially online ordering for in-store pickup, can make a measurable impact on purchasing decisions,” notes Dunne.
The Breakfast Club
The next big prepared food daypart looks set to be the first meal of the day. As Schaumburg, Ill.-based Nielsen found last year, the $104.7 million deli breakfast category, “driven by the strength and popularity of the breakfast sandwich,” had experienced a combined annual growth rate of 7.9 percent over the previous five years. The company also noted lesser but still significant growth for breakfast-oriented frozen foods, packaged breakfast meals, breakfast sausage and in-store bakery goods. Greater convenience for time-starved consumers is a key reason for these gains.
While some prescient grocers like Bellingham, Wash.-based Haggen already provide a daily store-made array of “breakfast burritos, egg muffins or … cinnamon bread pudding … sure to wake up your inner morning person,” the majority of supermarket operators haven’t yet grasped breakfast’s potential.
“Breakfast is a huge opportunity for retailers to offer quick, easy, and nutritious products to their customers,” notes Becker. “Retailers should consider offering ready-to-eat options such as egg bakes, health-packed oatmeal and nutritious ancient grains in grab-and-go packaging. The hot bar is another area that retailers should consider for these types of breakfast items. Retailers like Whole Foods and Bristol Farms have very appetizing hot bars that serve lunch and dinner dayparts effectively — breakfast is a great opportunity that can be easily realized.”
“It’s essential that retailers offer a healthy variety of breakfast options available through a quick in-and-out experience,” advises Dunne. “Grab-and-go sandwiches, either hot for immediate consumption or refrigerated for taking home, are a winning example of this. Personalization is also key, for example, offering consumers their choice of carrier, such as a biscuit, bagel, roll, flatbread or wrap. Providing a good, quality coffee program establishes the retailer as a destination and drives traffic to create a successful morning program.”
More to Come
Whatever form it will ultimately take, the supermarket prepared food section is on course to expand. “The future of prepared foods is untapped,” notes Dunne. “In today’s fast-paced, health-conscious world, shoppers demand convenience and quality that fresh prepared foods are uniquely able to offer. As this department and its role in the store grow, retailers must strike a careful balance between consistency and innovation to offer diverse, high-quality foods and flavors, and exceptional service.”
To that end, according to Skipper, “Wynn’s has recently developed a comprehensive library of online training resources that are available [to retail customers] on demand. These resources have proven invaluable not only for training new employees, but also for retraining current team members.”
“Prepared food products need to have better-for-you ingredients, ethnic flavors [and] uphold ultimate freshness to be successful in the evolution of this category,” stresses Becker. “The POS, social media, digital coupons, mailers, merchandising, etc., need to focus the communication around these three elements.”
The ultimate aim of all of this prepared food innovation, of course, is to keep customers coming back for more. As Becker puts it, “It’s all about creating a stress-free, enjoyable experience for the customers,” a sentiment echoed by Dunne: “It’s not just about the products — the future of fresh is all about the experience.”
“Meal solutions are a real win-win as both consumers and retailers capitalize on quality and convenience.”
—John Dunne, Acosta Sales & Marketing
“Breakfast is a huge opportunity for retailers … [they] should consider offering ready-to-eat options such as egg bakes, health-packed oatmeal and nutritious ancient grains in grab-and-go packaging.”
—John Becker, Sandridge Food Corp.