Grocery, C-stores turn to foodservice to stand out

Supermarkets and convenience stores are turning to foodservice to drive growth and keep pace with multitasking consumers looking for easy meals on the fly. And it's paying off.

On-the-go is no longer an eating occasion, it’s a lifestyle, which means consumers are searching for food solutions beyond restaurants, said Donna Hood Crecca, a principal at Technomic, during a session last week at Restaurants Canada’s annual trade show and conference in Toronto.

"They want prepared food and beverages wherever they happen to be," said Crecca.

Herein lies the opportunity for convenience and grocery store channels, each of which is currently faced with its own set of economic challenges. Convenience is looking for strategic growth opportunities as tobacco sales continue to decline, while grocery stores contend with the ongoing consumer shift to online.

Retail foodservice in the U.S. pulled in $72 billion in sales in 2019, said Crecca. Grocery foodservice accounted for half of that figure ($35.6 billion), convenience stores accounted for approximately one third ($24 billion) while drug stores, warehouse clubs and mass merchandisers made up the balance, she said. And sales will continue to grow.

Total foodservice sales is projected to increase in the U.S. by 3.6% in 2020, said Crecca. "When we look at the growth rates for retail foodservice it's really driven by that grocery or supermarket segment, which actually is the second fastest growing segment of foodservice in the United States, growing at twice the overall rate."

New build convenience stores in the U.S. are now foodservice centric, and many operators are upping their game in terms of the quality of food they're offering and also the restaurant-type equipment they're adopting, said Crecca.

Supermarkets are further along in the process and focusing on the consumer experience, she said. " are getting into open kitchens, they're leveraging the theatre of food to make it inviting, to make it a destination. So, a lot of investment, a lot of excitement, a lot of prioritization, this is what they need to do to grow their business."

The commitment to providing restaurant-quality food is paying off for both sectors. In a recent poll conducted by Technomic, 50% of consumers said C-stores are just as capable as restaurants in offering fresh food and beverages, and 41% said convenience store private-label food items are as high in quality as food from a restaurant.

And with supermarkets, 77% of consumers said the prepared foods department was really important in determining which store would become their primary destination. "Obviously this is where these supermarket operators are going to put their money as it goes to the long term growth and viability of their stores overall," said Crecca.

Though foodservice enhances a store’s relevance, drives visits and spend, it's important to build initiatives around the brand's core competency, said Crecca. "Make sure what you’re offering is something the consumer gives you permission to do," she said. "Play to your strengths--don’t offer full-service menu if you’re good at grab and go."