Supermarket Competing With Restaurants for Prepared Foods

The biggest challenge for many supermarket food operators isn't coming from their own stores’ center aisles or the prepared food departments at competing markets, but rather from nearby restaurants, according to a report from Chicago-based foodservice market research firm Datassential.

The in-depth study, Supermarket Prepared Foods: Evolution Toward a True Foodservice Model, surveyed over 2,000 regular supermarket shoppers and 76 operators to provide a comprehensive analysis of how supermarkets can grow their prepared food departments.

Among the study’s findings:

• Forty percent of operators say that nearby restaurants limit the growth of their prepared foods department
• A majority of shoppers consider supermarket prepared foods to be “excellent” or “good”
• One-third of supermarket customers do not shop the prepared foods department
• Even regular prepared foods shoppers say they often don’t know what’s available
• Supermarkets could grow their deli and bakery business by emulating restaurant marketing tactics
• Shoppers want high quality and a greater variety of healthy, interesting offerings
   

"Prepared food departments should almost consider themselves to be separate restaurants," said Brian Darr, managing director at Datassential. "They are really competing with Quick Serve Restaurants (QSR) and fast casuals in areas like quality and value. Unlike restaurants, supermarket shoppers don’t have a menu that lets them know what’s available.”

On the operator side, 86 percent want to create a more premium perception with customers, and 83 percent of operators want to improve consumers' overall perception of food quality so that it's on par with restaurants.

In addition to the market challenges, the report also analyzes visitation and traffic, menu offerings, purchasing habits, pricing and promotions, packaging and branding, venue and equipment, and supplier relationships.

"We asked ourselves questions like, 'How do you motivate snack purchases?' and 'What's the one breakfast item every supermarket should offer?'" said Darr. "We really wanted to provide data and intelligence that operators and suppliers could immediately act on."

With over half of their shoppers not buying prepared foods on regular basis, he continued, "Supermarkets have a significant, opportunity to leverage innovative in-store tactics against the fast-growing, high-margin products in the bakery or deli." Further, Darr added, "Supermarkets have some clear actions to take, some as simple as making it easier for shoppers to see what items are available or on special.”

The complete report can be purchased by contacting Darr at 312 665-0594 or [email protected].