State of Foodservice@Retail 2017 - MMI Business Advisors · QuikTrip —seasonal milkshake flavored with maple and bacon H-E-B —bacon-wrapped ... and customer feedback How important

© 2017 Technomic Inc.

State of Foodservice@Retail 2017


Today’s agenda

Retail foodservice performance in 2016

Consumer attitudes and behaviors

Retail foodservice menu trends

Emerging channels: opportunity or threat?

What’s next?

2


Retail Foodservice

Performance

3


Foodservice segment performance

(2016)

8.6%

7.9%

7.8%

7.5%

5.3%

5.2%

4.8%

4.8%

3.9%

3.9%

3.5%

Supermarket foodservice

Senior living

Catering

Fast casual

Lodging

Fine dining

Hospitals

Recreation

C-store foodservice

Fast food

Full service restaurants


Supermarket FS performance by tier

Tier Definition CAGR (‘14-16)

1 Foodservice specialists blur the line between supermarkets andrestaurants. Gourmet menu items, limited table service, a warmatmosphere, and restaurant-type amenities likely exist.

11.3%

2 Destination supermarkets have a comprehensive perimeter that offersextensive choice across cuisine types. The perimeter often containsMTO stations, café seating, and well-trained service.

10.5%

3 Prepared Foods Departments have generally shifted focus away frommeats and cheeses and to ready-to-eat or ready-to-heat meals. In mostcases, shoppers have the ability to customize orders and there may besome basic in-store seating.

7.6%

4 Extended Delis, while still emphasizing sliced meats and cheeses,typically offer customers several hot meal alternatives as well as aready-to-eat cooler selection.

6.5%


Tier descriptions: c-store FS

6

BASIC • Traditional hot/cold beverages

• Limited roller grill, grab-and-go,

condiments

• Limited merchandising/signage

PREMIUM • Some specialty beverages

• Broader roller grill, grab-and-

go, condiment offerings

• Prominent FS merchandising

SUPER-PREMIUM• Made-to-order, on site

preparation

• Fresh, quality ingredients

• FS a focal point of store design



Convenience store FS evolution

88% 9% 3%

Basic PremiumSuper-

premium

7© 2016 Technomic Inc.

-2 +2 -Year over Year Change


Consumer Attitudes and

Behavior

8

Retail FS attribute importance

92%Store is

clean

91%Taste/flavor

of the food

88%Convenient location/

access

88% Good value through

low prices

90%Food

quality

What else is important to heavy users?

Good value

through prepared

foods’ deals

Handles

payment in

timely fashion

Convenient

store hoursConvenient

parking

Knowledgeable

staff

Supermarket FS – food perceptions

Item Primary

Rotisserie chicken 48%

Fried chicken 28

Sandwich (cold) 20

Potato salad 16

Salad bar 14

Pasta salad 13

Pizza (by the slice) 12

Chicken wings 11

Soup (station) 11

Sushi 10

Baked goods 10

Prepared green salad 9

Pizza (take and bake) 8

Baked pasta 7

Baked chicken 7

Item Primary

Potato sides (mashed, baked) 7%

Sandwich wrap 7

Soup (grab-n-go) 7

Sandwich (hot) 6

Fruit salad 6

Mexican entrees 5

Mediterranean foods 4

Chicken fingers 4

Asian foods 3

Beef/steak 3

Breakfast entrees 3

Fish/shrimp/shellfish 3

Antipasto salad 2

Pork 1

“When you think of supermarket prepared foods, which of the following first

come to mind?”

Supermarket FS – food needs

22%

17%

16%

16%

16%

14%

13%

12%

11%

11%

Mexican foods

Asian dishes

Pasta

Fish/shrimp/shellfish

Pizza by the slice

Breakfast entrees

Mediterranean foods

Chicken wings

Beef/steak

Baked goods

“In which of the following would you like to see more variety in

what prepared foods department offer?”

Top 10

Supermarket FS - purchase behavior

31%

33%

19%

9%

9%

My prepared foods purchase wascompletely unplanned

I planned to buy an item but didn’t know exactly what I was going to get

I planned to buy a specific item andthat is all that I bought

I planned to buy a specific preparedentrée but my purchase of additionalside item(s) was unplanned

I planned to buy a specific preparedfoods meal (I knew the entrée and thesides I wanted)

“How would you BEST describe your MOST RECENT prepared foods

purchase from a supermarket?”

27%

55%

13%

5% Earlier in the week

Early in the day

On my way to the storebut before I arrived

On my way into thestore

“When had you decided that you were going to purchase that

specific item(s) from the prepared foods department?”


1

5

18%

14%

13%

11%

11%

11%

I was in the mood for that type of food

Looked like it would taste really good

It looked freshly made

It is my usual purchase

The price was right

It was grab-n-go; I didn't have to ask for help

“On this most recent prepared foods purchase occasion, what was

the top reason you purchased the main item that you did?”


Fresh perceptions - consumers

1

6

80%

20%

Appearance

Menudescription

“Is your perception of ‘fresh’ based more on the appearance of the

food or any description provided”

C-store FS - purchase behavior

How would the following descriptors influence your decision to purchase a prepared food item at c-stores?

52%

38%

28%

11%

9%

19%

26%

33%

27%

30%

30%

36%

38%

62%

61%

Gluten-free

Non-GMO

Type of frying oil

Made-to-order

Freshnessinformation

Not factor into decision

More likely to purchase, but not pay more for

More likely to purchase and pay more for


Retail Foodservice: Menu

Trends

18

Reinventing

chickensparking interest in a legacy category

with health, flavor innovations

Antibiotic-free | free range | all-natural and organic

Fairway Market — now offering antibiotic-free, vegetarian-fed rotisserie chicken

New Seasons Market — now promoting organic whole roasted chicken

2

0

FORECAST:

Spicy chicken sandwiches

Flavor synergyuncommon flavor combinations that

make a surprisingly good mix

QuickChek — sausage, egg and cheese on a honey butter biscuit with grape jelly

QuikTrip — seasonal milkshake flavored with maple and bacon

H-E-B — bacon-wrapped jalapeños filled with barbecue-marinated chicken

bold flavors | ethnic ingredients | mashup appeal

FORECAST:

Multiple flavor callouts

On trend: Wawa’s Wacky Wildwood hoagie with Old Bay seasoning, ranch and chipotle

Outside-the-box

pizzafrom premium to playful, operators

amp up pizza game

Dorothy Lane Market —premium LTO with clams and Calabrese peppers

QuikTrip — breakfast pizza with egg, sausage, bacon, cheese and sausage gravy

Rutter’s Farms Stores — now offering customizable baked-to-order pies

all-day occasions | made-to-order | custom built

FORECAST:

Built for the season

On trend: Kwik Trip’s Oktoberfest-style Bratwurst Pizza with cheese, onions and mustard cream sauce

Meal planningPromoting meal solutions that offer flexibility throughout the week

“I would like more retail stores to offer options that help me plan future meals.”

42% 43% 44%38%

32%

48%56%

51% 47%39%

18–24 25–34 35–44 45–54 55+

2012

2016

47%

39%

FORECAST:

Meal kits

On trend: Whole Foods partnering with plant-based meal solutions company Purple Carrot


Emerging Channels:

Opportunity or Threat?

27

• 1800’sFirst known restaurant

1971Starbucks’

first location

1955Ray Kroc

joins McDonald’s

1921First drive-in restaurants

1993Chipotle founded

TodayOn-demand

gains momentum

2010ishRMS makes

impact

Early

2000Fast casual takes off

1917Snacking takes off

1947 First restaurant

drive-thru

2013Foodservice everywhere

Transformative decade+

29

“Life moves pretty fast. If you don’t stop and look around once in a while, you could

miss it.”


Image credit to answers.com

Meal kit subscription market

Consumer ExpendituresForecast 2015 – 2020

($ million)

$1B +

$8.8B

2015 2020

51% CAGR

1.5%

13%

2015 2020

Household Exposure(households receiving at least one

order per year)

NOT DELIVERED

BY THE RESTAURANT

NOT JUST PIZZA

ORDERED ONLINE OR VIA MOBILE

APP

DRIVERS DON’T WEAR RESTAURANT

UNIFORM

INDUSTRYDISRUPTOR

What is 3rd party delivery?

Meal kits and third party provide

unique differentiators

Third-party delivery Can try new foods

Fresh ingredients

Can try new foods

To satisfy a craving

Allows me to try a restaurant I would not have before

Meal kits

Non-users gravitate to grocery

delivery, though familiarity is a factor

60%58%

56%54%

47%

Grocery Delivery Delivery-OnlyRestaurants

Third-Party Delivery Prepared MealServices

Meal Kits

Would consider using in the future

Emerging alternatives: consumer

response10%

23%

28%

8%

8%

14%

20%

6%

8%

18%

22%

7%

14%

8%

20%

4%

9%

16%

23%

3%

Good fit for my daily life

Way to help me add variety

Good to use sometimes, but not everyday

Good for my long-term diet

Meal kits

Third-party delivery

A prepared meal service

Grocery delivery

Delivery only restaurantkitchen


What’s Next?

35

Supermarkets will ‘double down’ on

foodservice based on performance…

2016

8.6%

…changing shopper behavior…

10+ times

7-9 times

4-6 times

2-3 times

1 time 17% 14%

42%38%

23%

25%

8%12%

9% 11%

2015 2016

+2

+4

+2

-4

-3

Monthly usage


…and customer feedback

How important is the prepared foods department in your choice of supermarket to shop at?

36%

41%

15%

6%

2%

Very important

Important

Neither important orunimportantUnimportant

Very unimportant

Supermarket FS will pursue breakfast

Major supermarket banners will

continue to transform

Traditional departments will transform

Fresh meat

Fresh seafood

Produce

Prepared foods

All departments ‘in it together’/lines blurring

Questions?

Wade Hanson

Principal

[email protected]

State of Foodservice@Retail 2017 - MMI Business Advisors · QuikTrip —seasonal milkshake flavored with maple and bacon H-E-B —bacon-wrapped ... and customer feedback How important

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