December 26, 2009

"Grocerants!" Your Billion Dollar Opportunity with Steven Johnson

Are you picking-up dinner on the way home from work? Lately, our family has been purchasing our take-out meals from grocery stores and club as compared to the neighborhood restaurant or pizza shop. Others are picking-up dinner from restaurants like Cheesecake Factory and Magginos and convenience stores then headed home to eat. This growing trend represents billions in opportunity for manufacturers and retailers.

The blurring of the lines between traditional grocery retailers, restaurants, and take-out from restaurants and convenience stores continues to offer the consumer more choices as he finds convenient meal solutions for himself and family. The smart operators, retailers, and restaurants are working hard to offer the service and answer to this need.

We asked Steven Johnson publisher of site Grocerant about these changes and insight into the world of take-out meal solutions in grocery stores and restaurants. read more, click button

Tim: Can you help us understand the term 'Grocerant' for those not familiar?

Steve: Grocerant refers to prepared food that is portable, ready-to-eat or ready-to-heat. The consumer can find grocerant food in Grocery stores deli sections most notably sector leaders like Wegmans, Central Market or Safeway Lifestyle stores, Convenience stores as both ready-to-eat and ready-to-heat with sector leaders like Sheetz, Wawa and Quick Chek also restaurants ranging from Quick service restaurants with a drive-thru or as to-go or take-away from restaurants like Ruby Tuesday, Maggiano’s Little Italy or Chili’s. An example of the blurring, the pic on the right was taken in grocery retailer Publix and not in a restaurant.
Tim: What trends are you seeing in the Grocerant arena?

Steve: Portion size in being reduced and many entrée’s and side dishes are packaged for one or two people. Menu labeling is becoming much more important with calories posted at multiple locations from menus to menu boards.

Tim: What can you tell us about changes with the drive thru?

One of the most important is the visceral imaging. The meal is being projected with a very high color graphic interface. In addition we are seeing Drive-Thru’s now showing up in the convenience store sector more and more and even some regional grocery companies are providing a drive-thru.

Tim: What is working with menu bundling?

Good question Tim, This just might be one of the most exciting area’s with manufactures and all operators, grocery, restaurant and convenience stores all offering small portions and many times in a “Mix & Match offering. One very good example in the restaurant sector was the offer late summer by Dairy Queen. They offered a consumer a 3,4, 5 item Mix & Match for price points of $3, $4, $5 and the selection was from 7 different items including entrée, side dish and desert. Menu bundling empowers the consumer. The same at Eatzi’s you can select from two different ready-to-eat entrée’s and from three or four sides for the same price.

Tim: What’s happening with foodservice takeout?
Steve: Another very interesting question. The quick and simple answer is more new product is being introduced. Companies are testing food products for each meal period / daypart and snack time. Each sector is undergoing a change. The best example here would be 7 Eleven has rolled out fresh sandwiches at 1,500 US locations with pizza and they are testing new lines of coffee and fresh breakfast. Grocery stores are testing breakfast and fresh coffee as well.
Tim: Are Americans eating out now in this economy?
Steve: Tim this is the million dollar question and another good one. All reports show that not only are consumers trading down but they are in-fact eating out less. There is a bright spot, Clarence Otis Chairman of Darden restaurant, group recently reported that they are starting to see a return of the consumer. What other restaurant companies are reporting is that frequency of dinning out is stronger now than 6 months ago. I for one think we will have to wait until the end of Q-1, 2010 to confirm this. I must also add that the consumer shift in spending on food began in 2005. That is the year the percentage of income spent on food grew on the grocery side and began to slip on the restaurant side. This trend continues today so all restaurants are not out of the “woods” yet.
Tim: What is happening at the family dinner table?

Steve: Tim, you notice another one of the big trends that is driving the grocerant sector, great question. They are eating more meals at home. The noted difference is they are not all eating the same food, even if they are eating at the same time.
Here are three examples I have witnessed first hand:
1. Family dinner occasions with meal components from McDonalds & Taco Time for children 14 & 12 years olds and dinner for adults from Whole foods prepared meal section. This is dinner, is it a family meal. We say yes since they all eat together just not the same food.

2. During a recent visit to NYC after a client meeting we went to a business associates home ordered food-in. His wife, myself and my client we ordered from three separate companies (Italian Chinese, Greek) one was pickup next door. I was assured this was not unusual in their household this is a family dinner again.

3. Studies on Take & Bake pizza show it is the sole food item only 60% of the time. Generally complemented with prepared food from other outlets, who can we find out what and from where? This is part of a family meal. What else should Take & Bake pizza companies be offering?

I’m sure you can add an example or two of your own on what is happening. I do know this new family meal paradigm includes lots and lots of Grocerant meal components.
Tim: Can you offer guidance to food manufactures and packaging companies that supply retailers and foodservice in the Grocerant area?

Steve: Tim, let me take that in two parts. First packaging, what we have found is that consumers believe that less packaging is more. Visceral attractiveness continues to be important however three layers of packaging could be a bit much. They should focus on easy to open as well. We have heard that easy to grab tab’s to open are very important.
Manufactures must be aware that differentiation does not mean different it means familiar with a twist. Labeling is important and the manufactures must continue to focus on bold flavors with attention to the “better for you” categories.
Tim: Where are we headed with food in America?
Steve: Ok, Tim let me get out my glass ball and take a look. The trends that I see developing over the next 4 years are some that we have all been witnessing. They include regional flavor favorites utilizing local sustainable products and sold in by regional chain restaurants, grocery stores and convenience stores. The new twist will be portion size, menu labeling and calories. All companies that are concerned about brand loyalty will not worry so much about “check or basket size” they will begin to focus on customer frequency. It’s frequency that will drive top line revenue while creating street level buzz. That is why the Grocerant sector is doing so well.
Tim: How do you assist companies?

We assist companies in the demystifying of the food channel points of distribution and menu opportunity. Many companies peg their brand to a niche or product and a specific channel. In industry terms it called channel blurring. Food marketers are the only people who believe in protecting the niche or channel of distribution. This is simply not the case for the consumer. The Grocerant niche has opened the door of opportunity for the consumer and companies are now flooding into the space.
The first thing requested from our clients is our “OUTSIDE EYES”. They want our view of their niche, brand or product. Our perspective from a different view point outside the companies 4 walls, many times a review of a company’s proprietary research or sales numbers provides a vastly different set of opportunities. We view a product or brand from the consumer view utilizing well established but different set of consumer metrics.

We specialize in Grocerant program strategy development and rollout with consumer relevant contemporized components. Product positioning and brand re-positioning all within the Grocerant niche is something we have been getting calls for of late. Grocerant emersion tours are a top requested item as well.

Thank you, Steve! We appreciate your expertise and quick overview of the Grocerant Sector. Steven publishes the site Grocerants and leads the company he founded in 1991 Foodservice Solutions which specializes in quantifying and qualifying foodservice opportunities around the globe for top companies. He can be reached at or his site Grocerants!
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