Grocery foodservice trending up, but visibility still low

FMI’s Power of Foodservice at Retail report sees huge opportunities for grocery chains to grow their foodservice business but just over a third of consumers still view retailers as foodservice options.
Dan Ochwat
Executive Editor
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As pandemic conditions across the country drove more shoppers to cook at home, it also spiked interest in grocery foodservice options, and grocers are poised to continue growing its share of foodservice, according to the sixth annual 2021 Power of Foodservice at Retail report from FMI — The Food Industry Association.

“Grocery foodservice is at a competitive inflection point when we look at the state of the U.S. food dollar and the fact that 59% of Americans expect to cook as many meals at home as they do now,” said Rick Stein, FMI vice president, fresh food. “The analysis suggests grocers are positioned to be the ultimate mealtime solution in that 39% of consumers view retail foodservice as a substitute for a both a home-cooked meal and a restaurant meal."

a bunch of food on a plate on a table
The Fresh Market introduced high-quality dinners during the pandemic.

Early in the pandemic, retailers like The Fresh Market were putting out restaurant-quality meals and ShopRite tested enhanced meal solution centers.

The FMI report highlighted three significant themes that could further impact grocery foodservice.

Visibility at retail: More than one-third of consumers, up slightly from 2019, “do not recognize their local grocer as a foodservice option due to a lack of menu choices,” the report highlighted, identifying continued work by grocers to increase visibility of its options.

Hybrid Meals Support Shoppers: The report found that shoppers are looking for comprehensive meal solutions, not just prepared items. In fact, 55% of those surveyed note a desire for hybrid meal options — or foods that include a  mix of semi-and-fully-prepared items. It is noteworthy that 64% of consumers who typically prepare hybrid meals say they plan their dinners a few days at a time.

Convenience Enabled by Technology: Technology supports shoppers’ strong desire for convenience with more than half of consumers expressing a desire to order deli-prepared items with a smartphone. The survey also points out significant disparities among generations in how they want to engage in retail foodservice ordering. For example, 20% of Gen Z customers prefer ordering from a person versus using their own phone (49%) or a kiosk (31%), compared with 89% of Boomers who prefer ordering from a person.

In regards to the report, Stein added, “Grocers confidently acknowledge the power in convenience-driven retail foodservice, as these programs continue to serve as differentiation strategies for their businesses. As evidenced in this analysis, with the right formula that caters to the customer with supportive technology, food retailers can increase their significance as a destination for health, well-being and meal solutions.”

The 2021 Power of Foodservice at Retail is prepared by 210 Analytics and made possible by Hussmann Corporation and Produce Marketing Association.