Foodservice steals market share from grocery aisles as consumer seek convenience, survey reveals

By Elizabeth Crawford contact

- Last updated on GMT

Source: iStock
Source: iStock

Related tags: Food, Restaurant, Catering, Acosta

Consumer demand for convenience and increased access to technology is tilting market share towards food service and away from packaged foods in grocery aisles, according to a recent report.

In the last 30 years, the share of consumer spending on foodservice has grown from about 40% in 1985 to 50.6% in 2015, while retail share has dropped from 56.5% three decades ago to only 49.4%, marketing firm Acosta and consulting firm Technomic Inc. reveal in the 2nd​ Edition of The Why? Behind The Dine,​ published in May.

This is a big shift, and a lot of money, considering that the report found the overall food industry has grown to an estimated $1.4 trillion in 2015 from $434 billion in 1985.

“The convergence of the retail and foodservice shares of food sales further illustrates the growth in available food solutions in consumers’ path to the plate,”​ which are competing with traditional grocery shopping, according to the report.

“The changing food landscape includes many meal solutions that didn’t even exist five or 10 years ago,”​ let alone 30 years ago and many of these options are more convenient that traditional grocery shopping, it explains.

For example, in the three months prior to surveying consumers for the report, Acosta and Technomic found 17% of consumers picked up food at farmer’s markets, which represents triple-digit growth from 15 years ago. In addition, the survey found, 16% of consumers ate meals from food trucks, which explains how the revenue from this option grew from $650 million in 2012 to $2.7 billion in 2017.

Other new options including eating meals from the dining area of convenience stores, which 14% of consumers reported, and ordering meal or ingredient kits online for home deliver, which 8% reported, according to the survey.

While these numbers are still much lower than the 95% of consumers who prepared meals at home during the same period and the 85% or ate restaurant meals, they are still taking an increasing portion of consumer spending.

“As meal solutions continue to expand, foodservice and retail operators need to deliver innovative choices that address consumers’ needs,”​ a major one of which is convenience, the report advises.

One way grocery stores are doing this is by expanding their offering of fresh prepared foods, sales of which are outpacing overall grocery and foodservice growth trends by more than doubling since 2006 to $27.5 billion, the report notes.

Younger diners and those with children are more likely to embrace grocery prepared food, the survey revealed. Specifically, 64% of Millennials and 67% of diners with children bought grocery prepared food in the three months prior to survey, compared to only 57% of consumers overall.

The evolving role of technology

This discovery speaks to the need for convenience that these shoppers are trying to fill, the report suggest. It also notes that foodservice operators, distributors and manufacturers can further meet this demand by engaging more with consumers through time-saving digital tools and social networks.

“Consumers’ desire for more convenient options in today’s fast-paced world is driving new technologies like mobile apps that can be used to track nutrition, find restaurant and retailer promotions and offers, or foodservice and groceries for home delivery,”​ Colin Stewart, senior VP at Acosta said in a release.

For example, the survey found about half of diners 18- to 50-years-old look online for coupons and offers for restaurants and 65% of all diners who use Facebook do so to find coupons, special offers and to learn about new menu items.

As consumers increasingly rely on digital tools to select restaurants, the report suggests competitors step up their game by adding more features to their online presence, including the ability to order and pay ahead for meals so they can skip the line, listing nutritional facts and ingredients, tracking loyalty and reward points and playing games.

Notably, grocery shoppers use different digital tools than restaurant diners – relying more on emails (28% vs 18%) and social networking (20% vs 15%) than other options. Restaurant diners, on the other hand are more likely to use mobile websites (17% vs 11%).

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