Retail foodservice has become a major competitor to traditional restaurants, especially during the holidays. In the mid-2000s, grocery chains like Whole Foods began offering ready-to-eat options, and regional stores such as Central Market and Lunds & Byerly’s soon followed, transforming supermarket delis into go-to spots for quality meals.
Convenience stores like Sheetz and Wawa gained similar popularity with fresh, prepared food offerings. Today, retail foodservice is a core part of the food landscape, with grocery and convenience stores increasingly competing with fast-casual dining by providing convenient, affordable meal solutions that appeal to busy, cost-conscious consumers.
Convenience and affordability continue to drive demand for retail foodservice. Inflationary pressures have pushed many families to explore alternatives to restaurant dining, especially for special occasions.
Outsourcing the Holiday Dinner
For Thanksgiving this year, major retailers have designed meal packages that deliver holiday staples at competitive prices. Target offers a Thanksgiving meal bundle for $20 that includes a turkey, russet potatoes, green beans, and other essentials. This affordability appeals to families looking for budget-friendly options, making it likely that some consumers will choose this type of option over a pricier restaurant meal.
Other retailers have introduced similar offerings. Walmart, for instance, is advertising an “inflation-free” Thanksgiving meal for under $7 per person, designed to serve up to eight guests and featuring a full selection of sides and desserts. Aldi and Ralphs have also expanded their prepared meal options, offering pre-cooked dinners and meal kits that consumers can pick up and reheat, adding flexibility to the Thanksgiving celebration.
These pre-made meal bundles and ready-to-serve options illustrate how retail foodservice has successfully positioned itself as a flexible, accessible choice for the holiday season. With familiar grocery names offering traditional Thanksgiving foods at competitive prices, retailers are poised to capture even more of the holiday market.
This shift also aligns with evolving consumer habits: a recent survey indicated that up to 69% of respondents would consider purchasing a Thanksgiving meal from a retailer rather than cooking at home.
Food Manufacturers’ Response: Embracing Retail Foodservice Demand
For food manufacturers, retail foodservice has become a high-value customer segment but demands nuanced strategies. Unlike traditional restaurant accounts, which might operate with streamlined menus, retail foodservice spans a broad array of formats, from self-serve bars and meal kits to stand-alone in-store restaurants.
Each format requires a unique understanding of consumer demands in regional markets, as food trends can vary significantly. For example, while Texas-based H-E-B may focus on barbecue, a Midwest retailer like Hy-Vee might prioritize fresh salads and sandwiches. Manufacturers working with these chains must develop tailored offerings that resonate with local preferences, a shift from the one-size-fits-all model that some manufacturers are used to.
To capitalize on this opportunity, food manufacturers should focus on the following strategies:
- Localized Product Development: Manufacturers that understand regional food preferences can better meet the demands of retail foodservice operators. This might mean offering specific ingredients, such as locally sourced meats or specialty seasonings that resonate with each region’s consumers.
- Insights-Driven Partnerships: Retailers are data-rich environments, and the best supplier relationships often involve sharing insights into consumer demand and preferences. With holiday meals, for instance, data on preferences for Thanksgiving meal kits or Friendsgiving-inspired bundles can drive sales, especially as consumers are increasingly considering convenience and cost savings during the holiday season.
- Flexible and Scalable Production: Retail foodservice has a unique seasonality, with holidays like Thanksgiving presenting a peak in demand. Manufacturers should be prepared to provide scalable solutions for these periods, from complete meal kits to single-ingredient options that can serve both in-store and take-home dining needs.
Ultimately, the rise of retail foodservice presents both challenges and opportunities for food manufacturers. By staying adaptable and aligning closely with the priorities of retail and restaurant foodservice operators, manufacturers can effectively navigate this changing landscape and position themselves as valuable partners in both sectors.
Tim Powell is a Principal with Foodservice IP, a professional services firm aimed at delivering ideas for managers to guide informed business decisions.
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