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Restaurants feeling the heat from retail competition

Channel Migration is a trend to watch in food

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Mimis Cafe To Go Meals under $25. Competing for Share of Stomach against Retail Meal solutions

Mimis Cafe To Go Meals under $25. Competing for Share of Stomach against Retail Meal solutions

Mimis Cafe

Channel Migration is a trend to watch for retailers and foodservice brands. What is channel migration? This is where brands entrenched in foodservice launch new products in retail and vice versa. Julie Hall of Schneider Associates was recently interviewed for Foodservice Brands & Migration Marketing - Launching products at the supermarket , where we see that Olive Garden is launching salad dressings and IHop is launching syrups.

Restaurants and retailers have a long history of competing over consumers' share of stomach.

That competition becomes particularly intense late in the day, when busy families must decide what's for dinner. If money is tight, retailers often win the family dinner battle by offering appealing ready-to-eat center-of-plate options, easily paired with sides.

Ron Paul, President of Technomic said "It's true that the economic conditions of the past two years shifted a lot of business away from restaurants," Technomic is a research and consulting firm that has extensively studied key players and developments in the Retailer Meal Solutions (RMS) segment.

"Many restaurants need to adjust the value equation back in their favor," says Paul. "Even though retailers are increasingly successful at matching the quality of restaurant food, some restaurant chains are aggressively challenging retailers on price."

Retailer Meal Solutions (RMS) Examples

In Technomic's Retailer Meal Solutions Segment Study - 2012 Update here are several examples of restaurants launching menu options to compete with supermarket meal solutions offerings:

- Mimi's Cafe rolled out a Family Meals To Go menu with 10 meal options serving four to five for $24.99. Each meal comes with a choice of soup or salad; additional family-size sides can be added for $3, $4 or $5.

- Bob Evans' 10 Under $20 Family Meals To Go include an entree, a large side and fresh-baked bread for three to four diners. The meals are only available for takeaway.

- Wienerschnitzel promoted several Family Combos for $9.99. Initially offered last month, the meals are available at participating locations for a limited time.

- In April, Buona Beef invited e-club members to try its new Family Meals for a special limited-time price of $13.95.

Channel Migration Blurs the Lines of Grocery and Restaurant

Steve Johnson, our Grocerant Guru recently wrote an article for me where he points to
the line between restaurants and food retailers is growing ever thinner . The fight for America's food dollars continues to intensify as consumers find fresh prepared ready-2-eat food options at a wide and growing array of outlets"

Today food is everywhere: WaWa and Sheetz convenience stores have product offerings that rival and exceed those at their QSR competitors. Chain drug stores, such as CVS and Walgreens want to be your C-Store and are adding significant space to fresh prepared foods and perishables . Restaurants, grocery stores, club stores, vending and now dollar stores want to get their share of stomach.

Steve says " While manufacturers, retailers and restaurants worry about choice overload, consumers have embraced their new choices and show no signs of returning to the old ways. This fight is taking place in what is called the grocerant niche."

Why is Channel Migration in Food Important to Food Entrepreneurs?

Steve sums it up better than I can: "Why should you care if Walgreens is selling fresh prepared ready-2-eat and made-2-order sandwiches ? Why should you care if Whole Foods, Trader Joe's, Safeway and Wegmans are selling ready-2-eat and or heat-N-eat fresh pizza? Why should you care if Coinstar is selling Seattle Best Coffee at 1,000 locations for $1.00? You should care because they are selling it, and you are not!"

I hate to use the overused phrase… the new normal. Having been in the food business for over 30 years, today's food business is far more complex than it was just 10 years ago. Big players with lots of money of resources are more nimble and innovative than ever. There is only so much space on the shelf and only such much "stomach" you can achieve.

Remember… if you are NOT selling IT… someone will!

About Technomic

Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. Its services include numerous publications and digital products, as well as proprietary studies and ongoing research on all aspects of the food industry.

More Food Trends to Watch - Technomic Explores Pizza Consumers

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