How grocers can satisfy the growing appetite for meal solutions
When the world shut down (including our favourite eateries), so many of us turned to grocery stores for meal solutions, whether for add-ons to our own recipes or full meals when home-cooking fatigue set in. But now that things have mostly returned to normal, meal solutions are still booming – with good reason. Be it the freshly made Napoli-style, hand-stretched pizza at Save-On-Foods' Sunwood flagship in B.C., or Longo’s meal kits using locally-sourced ingredients from Ontario farmers, customers realize there are prepared foods at their grocery stores that fit their budget and offer great taste.
“As [consumers] returned to work, school and entertaining, we have seen an increased interest in our prepared meals, which are restaurant quality, good value and require little to no preparation time for home or on-the-go,” says Mike Longo, chief operating officer at Longo’s. “We continue to innovate new recipes and prepare delicious main course meals with meat and vegetarian options, sides and recipe starters, in different sized formats to help our guests with their family meals.”
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He says for Longo’s stores in urban locations, in particular, there are lots of shoppers choosing prepared foods, with the younger demographic looking for “healthier options or meals reminiscent of home-cooked meal classics.”
Indeed, the latest 2022 statistics from Mintel show that almost two-thirds of Canadians (62%) purchased prepared meals at the grocery store in the last three months, and of those 49% did so on a weekly basis.
Yet, further research indicates there is still room for grocers to do better if they desire to be top of mind with consumers when it comes to meal solutions. While a quarter of U.S. shoppers are purchasing more deli-prepared foods than a year ago and feel they are a good value, when asked why they would buy restaurant versus grocery meals, 43% of consumers said they just didn’t think about it, according to the Power of Foodservice at Retail 2022 report from the Food Industry Association (FMI).
A focus on meal options
Rick Stein, FMI’s vice-president of fresh foods, says consumers – especially the younger set – are looking for diverse meal options and grocers don’t always deliver. “People get fatigued, and they don’t want to eat the same thing every time, so it’s about allowing them to make choices,” he says. Recognizing that it’s harder for larger retailers to frequently change up their menus like restaurants can, he says offering daily specials or other limited-time options may be a good solution. “Maybe it’s Greek salads on Monday and Mediterranean on Wednesdays,” he says. “It’s about having choice and allowing [shoppers] to customize, whether that’s the size of [portions] or some of the ingredients.”
Stein says grocers who try diverse options and don’t see the uptake immediately need to be thinking longer term. Rotisserie chicken and sandwiches may still make up the bulk of sales in prepared food departments, but he says that’s because those are the items grocers carry most. “[Grocery retailers] don’t have the reputation for having that diverse cultural cuisine, but if they would stick to the course that would improve,” he says.
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Now that more people have a hybrid work environment, Stein says there are also opportunities for grocers to extend meal solutions beyond dinner. According to the 2022 FMI report, 17% purchase deli-prepared foods for breakfast more than once a week (up 6% from the year prior) and 21% opt for prepared lunches (an increase of 8%). “Where retailers had traditionally given up on breakfast foods, we’re seeing some of them offering breakfast burritos and sandwiches in the morning,” he explains, noting that this trend is most successful in urban areas with a lot of foot traffic.
While dinner remains an important meal for customers, Justin McGregor, general manager of Urban Fare and the restaurant division at Pattison Food Group, says his team has been working hard to improve breakfast and lunch offerings to make Save-On a destination for all prepared foods. “The improvements and new additions have certainly brought growth to the breakfast and lunch categories as well as our new coffee program,” he says. In fact, with the success of programs like the full hot breakfast menu at Save-On’s Sunwood location in Coquitlam, B.C., he says the plan is to extend some of these offerings throughout the company.
Adopting a foodservice mindset
If grocers want to be a top go-to place for prepared foods, they need to start thinking and operating like full-service eateries. Nicolo' Dagnino, managing director, North region and digital at Eataly (a chain of 41 Italian markets globally offering authentic Italian products and prepared foods), says customers are looking for high-quality foods and convenience, which means having good options available during all parts of the day. “[Your inventory] can’t look tired at 6 p.m., or not ready at 9 a.m., so that dialogue in the front of the house and back of the house is extremely critical,” he says. “We created a good culture and support each other, which allows us to elevate our service and variety.”
Dagnino says Eataly’s model of providing ready to eat, ready to heat, ready to cook and ready to impress options (think large meat and cheese boards and larger sizes of tiramisu), means there is something to fit the needs of all customers. “We’re also coming from a restaurant angle to prepared foods, which allows us to think differently and be bold in our attempts,” he says.
Customer feedback to Eataly’s Toronto store at the lively intersection of Bay and Bloor has been so positive, the retailer is opening a second Canadian location later this year in Etobicoke, Ont.
Elevating the prepared foods section in-store should also extend to a grocer’s online offerings, says Joel Gregoire, associate director, food and drink at Mintel. “Don’t underestimate the importance of delivery and online ordering, even for those shopping in the store,” he says. “With a proprietary grocery app, I could order a customized pizza to be ready on my way out. Don’t forget about the convenience aspect!”
Gregoire says recent research from Mintel shows that online ordering is “persistent” even with most people back to in-person shopping. “What we know from our research is that it’s important to have technology integrated within the shopping experience for younger consumers,” he says. “This is not something I would ignore.”
With 52% of Canadians who use home meal replacement (HMR) saying they’d be interested in a full-service dining experience in grocery stores, according to Mintel, Gregoire says adding sit-down dining is another potential area of opportunity grocers should consider. “It’s about knowing your location and does that make sense,” he says.
Certainly, any grocers keen on offering an in-store experience need to be investing in meal solutions, says Gregoire. “I’m blessed to live near three stores that really value experience and if each of them didn’t have a solid prepared food section in this area they would be at a real competitive disadvantage.”
For Christy McMullen, co-owner of five Summerhill Markets in the Greater Toronto Area, the prepared foods section holds as much clout as the produce or bakery departments at 20% of overall revenue. Since the pandemic, she says there has been a growing demand for salads and sandwiches, along with comfort foods such as chicken pot pie and pasta dinners. “We have seasonal items, too, that we take away and then customers get excited when they come back,” she says. “And a strong Thai and Indian section that we consider our comfort foods, too.”
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With an off-site commissary and 115 kitchen staff preparing meals, she says new ideas are always welcome and come from multiple sources. Sometimes it’s via the chef or customer requests, and sometimes its replications of foods McMullen and her brother (co-owner Brad McMullen) have tried at restaurants or seen on TikTok. “I’ll try new products and if they don’t sell and the feedback isn’t great, we’ll pull it,” she says. Managers are also given leeway to offer free prepared foods to regular customers to try out. “It really helps to have amazing team members, especially in your prepared food sections, that aren’t afraid to talk about new options.”
Some retailers without the space or resources (or expertise) for a dedicated kitchen are turning to outsourcing options such as Tavola Culinary Inc., based in Concord, Ont. Owned by Tony Cammalleri, a former executive chef at Toronto-based Pusateri’s Fine Foods, his team of chefs produce prepared meals six days a week for grocery retailers and cafés and have some 140 SKUs in the lineup. “We push out seasonal items four times a year and do research and development for the companies we sell to,” he says.
Cammalleri says since the onset of COVID, customers have become accustomed to a better quality of prepared foods as restaurants pivoted to takeout. “Just look at frozen pizza at your local grocery store – there are 10 different restaurant-style pizzas in that section now,” he says. “Consumers’ taste buds have changed.”
Those stores where prepared meal programs really thrive are ones where store managers love food and want to sell great-quality products, says Cammalleri. “Ones where they’re not adventurous and don’t really believe in prepared foods don’t do so well – it’s about educating the retailer as much as the consumer on why fresh and local is better.” He points to the European system where there is a “food first” mentality in grocery stores and markets. “You focus on quality first and the profits come.”
As FMI’s Stein says, grocers are still the “best kept secret” in terms of offering nutritious food at a great value. “We have to get the sophistication of [meal offerings] further along in more stores, and then get it on more consumers’ radars,” he says.
This article first appeared in Canadian Grocer’s June/July 2023 issue.
