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Prepared Foods and Ready-to-Eat Foods at Retail: The New
Competition to Foodservice
July 1, 2010




Hoping to parlay recession-based foodservice-to-retail migration into long-term gains,
food retailers continue to ratchet up their prepared foods and ready-to-eat programs.
Packaged Facts estimates that grocery stores and supermarkets will grow prepared-
and ready-to-eat foods sales by more than 7% in 2010. Their usage imprint is already
imposing:

According to Packaged Facts’ proprietary consumer research, 64% of adult consumers
have gotten ready-to-eat/heat-and-eat food from a grocery store or supermarket in the
last month. Moreover, in terms of total usage occasions, grocery-related prepared foods
use leads both family and casual restaurant segments and trails only fast food/QSR.

While convenience stores have also relied heavily on prepared foods and foodservice
sales for sales and higher margins, increasing competition extends to supercenters,
warehouse clubs, convenience stores and drug stores. At a time when food value is so
closely associated with low cost and convenience—and when consumers increasingly
perceive private label food retail brands as competitive with name brands on cost and
quality—prepared and ready-to-eat foods programs that deliver on quality, taste and
convenience can not only compete with foodservice fare, but can also help food
retailers adapt to modern consumer lifestyles.

Packaged Facts’ new report, Prepared Food and Ready-to-Eat Foods at Retail: The
New Competition to Foodservice offers the foodservice and retail industries new insight
into the highly competitive prepared and ready-to-eat foods space. Relying heavily on
proprietary consumer research analysis, the report provides “consumer drilldowns” and
psychographic profiling, offering foodservice operators and retailers unique access to
the minds of prepared foods consumers.

And by assessing the relationship between fast food, family, and casual restaurant
attitudes and behavior with that of grocery store and convenience store prepared foods
attitudes and behavior, this report also offers unique competitive analysis to help
players align and differentiate their product offerings.
The report also include in-depth store audits of prepared foods programs at leading
supermarket, supercenter and warehouse/club store players, providing on-the-ground
analysis of store formats, food prices, food types and menu items, placing access to
competitive platforms at participants’ fingertips.

The report also includes segmented sales of supermarket deli prepared foods, as well
as a host of macroeconomic metrics tailored to maximize understanding of how
prepared foods fits into the bigger picture.

Data related to consumer demographics, attitudes and behaviors is derived from two
sources:

Packaged Facts’ proprietary consumer survey, an internet-based survey comprised of
random sample of 1,881 consumers who in aggregate represent a statistically accurate
cross-section of the U.S. adult population (age 18+). The survey was fielded in February
2010.

The Experian Simmons National Consumer Survey, a booklet-based survey of a large
and random sample of consumers who in aggregate represent a statistically accurate
cross-section of the U.S. adult population (age 18+). We analyze results from its Fall
2007, Fall 2008, and Fall 2009 surveys.

Report data is also derived from thorough analysis of a host of sources, including the
following:

      Proprietary company interviews
      The U.S. Census Bureau
      The Bureau of Labor Statistics Consumer Expenditure Survey
      The U.S. Department of Agriculture
      The U.S. Securities and Exchange Commission
      The Bureau of Labor Statistics Retail Trade Survey
      Company earnings calls
      Company presentations
      Trade associations and trade magazines
      Academic journals
      Industry conferences
      Restaurant menus

Our sales analysis features data provided courtesy of the Perishables Group and relies
in part on data provided by the International Deli-Dairy-Bakery Association (IDDBA), in
addition to proprietary analysis and data from other industry sources.

Read an excerpt from this report below.
Additional Information

Market Insights: A Selection From The Report



Momentum lies with grocery

In the near term, we believe that macro-economic trends continue to favor grocery: with
the recession has come a migration of foot traffic—and food sales—from restaurants
into the home, as consumers seek less expensive meal alternatives.

       As detailed in our Consumer Restaurant Outlook Tracker chapter, consumers
       report a strong tendency to boost grocery spending and to save money, and a
       weak tendency to boost a variety of restaurant-related spending and behavior—
       both in comparison to the three months preceding our proprietary February 2010
       survey and for planned behavior and spending during the three months following
       the survey.
       As we note below, food at home has become cheaper than food away from home
       as the recession has worn on.

Packaged Facts’ Consumer Restaurant Tracker: home meal use gains ground

And, as suggested by Packaged Facts’ Consumer Restaurant Tracker, consumers
report continuing to shift their food spending into the home, as illustrated by the graph
below. Data are derived from Packaged Facts’ February 2010 proprietary restaurant
tracking survey.

       Compared to “three months ago,” about 50% of respondent adult (18+)
       restaurant goers say they are more likely to eat dinner at home—with almost
       one-third doing so “a lot more.”
       39% say they are eating breakfast at home more than they were three months
       ago—with almost 3 in 10 doing so “a lot more.”
       Conversely, restaurant goers are less likely to be using or spending on a range of
       restaurant options.

Of course, much of this behavior is related to cost: to save money, consumers are
bringing their food spend back into the home, after decades of doing the opposite.

And one key barometer, the Consumer Price Index, supports the rationale, as it shows
“food at home” prices not only declining during the recession, but also being cheaper
than “food away from home” (see the Food at home gains pricing edge section below).

In the News
Food Retail Sales Gain Momentum as Prepared and Ready-to-Eat Foods Lure
   Recession-Weary Consumers away from Restaurants and into Supermarket
                                  Aisles

New York, June 14, 2010 — When it comes to food, American consumers want it all.
 Particularly, they want the variety and savory flavors of restaurant fare without the hefty
financial commitment typical when dining out. The solution has been to bring food
spending back into the home after decades of doing the opposite by finding lower cost,
delectable cuisine among the prepared and ready-to-eat foods available at local
supermarkets, according to Prepared Foods and Ready-to-Eat Foods at Retail: The
New Competition to Foodservice by market research publisher Packaged Facts.
The market study, which includes data from Packaged Facts’ February 2010 proprietary
survey of 1,881 U.S. adult (18+) consumers, reveals that about 50% of respondent
restaurant goers say they are more likely to eat dinner at home compared to “three
months ago.” Further, 64% of adult consumers have purchased ready-to-eat/heat-and-
eat food from a grocery store or supermarket in the last month.

“With the recession has come a migration of foot traffic and food sales from restaurants
into the home, and in the short-term we believe economic trends favor grocery retailers
as consumers seek less expensive meal alternatives,” says Don Montuori, publisher of
Packaged Facts. “Sustaining this momentum will require food retailers to continue their
transition toward offering higher quality ready-to-eat products. Otherwise customers will
leave as quickly as they arrived.”

Packaged Facts forecasts supermarket/grocery prepared foods will achieve sales of
$13 billion and $14 billion in 2010 and 2011 respectively, due to growth of 7% during
both years. Aggressive prepared food initiatives and expansion from players ranging
from Walmart to BJ’s Whole Club to Kroger’s Fresh Fare to Walgreen’s are expected to
further benefit the food retail landscape by giving consumers more locations and more
choices.

Prepared foods are popular options for two divergent populations. The first are those
that may seek low-cost, quick alternatives out of financial necessity, cooking aversion,
and extreme convenience. The second is a demographic that can likely afford to spend
more on prepared foods, and may choose them as quality alternatives to home cooking
or using restaurants.

As products that allow for simple meal planning, prepared foods are also popular among
older consumers age 55 and above, who the survey found are “more likely” to be
influenced by the “shopping efficiency” of prepared foods. As a result, Packaged Facts
forecasts that helping older consumers plan their purchases and making shopping trips
less stressful through efforts by food retailers to place prepared foods in a central role
will become increasingly important to this market.

As part of Packaged Facts’ Foodservice Market Insights series, Prepared Foods and
Ready-to-Eat Foods at Retail: The New Competition to Foodservice, offers the
foodservice and retail industries new insight into the highly competitive prepared and
ready-to-eat foods space. Relying heavily on proprietary consumer research analysis,
the report provides “consumer drilldowns” and psychographic profiling, offering
foodservice operators and retailers unique access to the minds of prepared foods
consumers. And by assessing the relationship between fast food, family, and casual
restaurant attitudes and behavior with that of grocery store and convenience store
prepared foods attitudes and behavior, this report also offers unique competitive
analysis to help players align and differentiate their product offerings.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com,
publishes market intelligence on a wide range of consumer market topics, including
consumer goods and retailing, foods and beverages, demographics, pet products and
services, and financial products. Packaged Facts also offers a full range of custom
research services.



Table of Contents

      Scope and Methodology
      Scope
      Methodology
      Prepared foods macroeconomic summary
      Relevant facts and figures
      Prepared Foods: Food Retail Usage & Outlook Tracker
      Relevant facts and figures
      Share of Stomach: Sales Analysis
      Relevant facts and figures
      Trends, Innovations & Strategies
      Relevant facts and figures
      Consumer Prepared Foods Selection Analysis
      Relevant facts and figures
      Prepared Foods: Grocery vs. Convenience Stores: Consumer Use &
      Selection Differentiators
      Prepared Foods: Food Retail vs. Restaurants: Consumer Use & Selection
      Differentiators
      Relevant facts and figures
      RTE Food Retail HH Income & Gender Drill Downs
      Psychographic Profile Analysis
      RTE food retail brand analysis: selected insights
      Casey’s General Stores, Inc
      Costco Wholesale Corporation
      The Kroger Co
      Publix
      Safeway Inc.
      SUPERVALU INC.
Whole Foods Market
      Winn-Dixie Stores, Inc.
      Additional store audits: The Fresh Market, Super Target and Sweetbay
The Big Picture: consumers remain under pressure
      Consumer confidence still in a trough
      Unemployment picture stabilizes
      Personal savings rate: a boon and a bane
      Graph 2-1: Unemployment, Savings Rate and Consumer Confidence: 2007-
      2010
      Unemployment rate not one-size-fits-all
      Disparity in unemployment rates by education level
      Young adults, minorities and men also find harder going
      Graph 2-2: Unemployment Rate, Selected Demographics, 2007-2010
      Graph 2-3: Unemployment Rate, by Race/Ethnicity, 2007-2010
      Unemployment forecast: a little less bleak in 2011, and just a little less
      bleak than that in 2012
      Slow employment rebound to coincide with a slow rebound in consumer
      spending
      Graph 2-4: Unemployment and GDP Forecast, 2010-12
      Stock & housing declines deflate household wealth; rebound to record
      2006 levels a long way off
      $10 trillion less wealthy
      Graph 2-5: Household Net Worth, 2005-09
      Case-Shiller pessimism echoed by FOMC
      Graph 2-6: Wealth Effect: Wilshire 5000 and Case Shiller Index: 2007-2010
The Food Retail Picture: grocery maintains upper hand
      Restaurant Performance Index suggests growth—at last!
      Graph 2-7: Restaurant Performance Index, 2006-2010
      Sales at food services and drinking places tick upward in February and
      March 2010
      Graph 2-8: Non-Adjusted Monthly Sales, 12-Month % Change, Grocery
      Stores & Food Services and Drinking Places, 2009-2010
      Graph 2-9: Adjusted Monthly Sales, 12-Month % Change, Grocery Stores &
      Food Services and Drinking Places, 2009-2010
      Full restaurant industry rebound not yet in cards
      Momentum lies with grocery
      Packaged Facts’ Consumer Restaurant Tracker: home meal use gains
      ground
      Graph 2-10: Consumer Restaurant Tracker: Current Behavior: A Top Line
      View
      Restaurant-goers more likely to spend more on groceries and pack lunch
      than to spend on dining
      Graph 2-11: Consumer Restaurant Tracker: Next 3 Months: A Top Line View
      Food at home gains pricing edge
      Yin and yang of food deflation
      Graph 2-12: CPI: Food at Home vs. Food Away from Home, 2005-2010
Graph 2-13: CPI: Food at Home vs. Food Away from Home, July 2008 -
      March 2010
      Farm value comes back down to earth
      Graph 2-14: Market Basket of Farm Foods, Annual % Change, 2006-2010
      Slight uptick in food inflation expected for 2010
      March 2010 prices
      Proteins
      Other estimates
Food retail traffic and migration trends
      Trading down in food
      Graph 2-15: % of Consumers Shopping in 5+ Channels
      Channel migration: who’s on the winning side of the equation
      CPG shopping trends
      Planning ahead with prepared foods
      Graph 2-16: Average Purchase Occasions per Household, All Channels, %
      Change vs. Prior Year
      Graph 2-17: 2009 Average Purchase Occasions per Household, by Channel,
      % Change vs. Prior Year
      Spending per trip
      Graph 2-18: Average CPG Dollars per Purchase, All Channels, % Change
      vs. Prior Year
      Graph 2-19: 2009 Average CPG Dollar Sales per Purchase, by Channel, %
      Change vs. Prior Year
      Channel share shifts
      Graph 2-20: 2009 CPG Dollar Share, by Channel: Share & % Change vs.
      Prior Year
      Shopping shifts by department
      Graph 2-21: Dollar Share Point Change, by Department, by Channel, 2009
      vs. 2008
      Shifts in convenience meal spending
      Graph 2-22: Convenience Meals: Dollar Share Shift, Grocery vs.
      Supercenters, Point Change, 2009 vs. 2008
      In the end, it’s a margin game
      Graph 2-23: Convenience Store Sales & Margins: Top Five In-Store
      Categories, 2009
      Note on reading charts
      Growing prepared foods use based on consumer need
      Current and intended behavior favors food retail
      Graph 3-1: Consumer Restaurant Tracker: Current Behavior
      Looking ahead three months
      Graph 3-2: Consumer Restaurant Tracker: Future Behavior
      Graph 3-3: Consumer Restaurant Tracker: Event Occurrence Likelihood
      Prepared foods substitute for restaurant meals
      Graph 3-4: Consumer Restaurant Tracker: Current Behavior, RTE Food
      Retail Users
Graph 3-5: Consumer Restaurant Tracker: Current Behavior, Restaurant
     Usage Frequency, by Type
     Graph 3-6: Consumer Restaurant Tracker: Future Behavior, RTE Food
     Retail Users
     Heavy fast food use correlates with saving money
     Graph 3-7: Consumer Restaurant Tracker: Future Behavior, Restaurant
     Usage Frequency, by Type
     Use of restaurants & prepared foods at food retail
     Store-made, precooked meals a frequent option for one-fifth of consumers
     Topline explanation
     Graph 3-8: Adults Who Often Eat Store-Made, Precooked Meals, Any Agree
     vs. Strongly Agree
     Prepared foods serve two key groups
     Walmart entry to benefit lower-income users
     Graph 3-9: Adults Who Often Eat Store-Made, Precooked Meals, Any Agree,
     By HH Income
     Graph 3-10: Adults Who Often Eat Store-Made, Precooked Meals, Strongly
     Agree, By HH Income
     Ready-to-eat/heat-and-eat foods versus restaurant food/drink: use, mean
     use, and usage occasions
     Graph 3-11: Foodservice Use in Last Month, by Foodservice Type, 2010
     Graph 3-12: Foodservice Mean Usage in Last Month, by Foodservice Type,
     2010
     Graph 3-13: Foodservice Use Occasions in Last Month, by Foodservice
     Type, 2010
     Prepared foods at food retail: usage and mean use: key demographics
     Young males a convenience store RTE target
     Graph 3-14: Prepared Foods Usage and Mean Use in Last Month, Gender,
     by Foodservice Type, 2010
     Youth and wisdom
     Graph 3-15: Prepared Foods Usage and Mean Use in Last Month, Age, by
     Foodservice Type, 2010
     HH income is a convenience store RTE determinant
     Graph 3-16: Prepared Foods Usage and Mean Use in Last Month, HH
     Income, by Foodservice Type, 2010
     Kids in tow
     Graph 3-17: Prepared Foods Usage and Mean Use in Last Month,
     Presence/Age of Children, by Foodservice Type, 2010
     An urban favorite
     Graph 3-18: Prepared Foods Usage and Mean Use in Last Month, Rural,
     Suburban & Urban, by Foodservice Type, 2010
     Appendix: Consumer Survey
Growth is on the side of grocery
     Wider competition afoot
     Graph 4-1: Prepared Foods, Deli Section, Supermarkets and Other Grocery
     Stores: 2005-2012
Deli department momentum
     Momentum by segment
     Deli sales at grocery stores and supermarkets
     Graph 4-2: Deli Estimated Sales for Top 75 Supermarket and Grocery
     Chains, 2008
     Supermarket and supercenter service deli sales
     Graph 4-3: Supermarket and Supercenter Service Deli Sales, 2001-08
     Deli-prepared foods
     Analysis: prepared foods share of deli
     Graph 4-4: Total Deli Department and Deli-prepared Foods Sales, Dollars
     per $MM ACV, 2004-09 & Deli Department Food Share, by Food Type, 2009
     Deli-prepared foods share, by food type
     Chicken: sales leader grows sales 1.7%
     Submarines, sushi, and pizza do well
     Graph 4-5: Deli-prepared Foods Share, by Food Type, 2009
     Salad bar or no salad bar?
     Graph 4-6: Deli-prepared Foods Salad Share, by Salad Type, 2009
     Subs up; combos down
     Graph 4-7: Deli-prepared Foods Sandwich Share, by Sandwich Type, 2009
     Prepared entrees should comprise higher sales share
     Graph 4-8: Deli-prepared Food Entree Share, by Entree Type, 2009
     Graph 4-9: Deli-prepared Foods Sides Share, by Sides Type, 2009
     Convenience store foodservice sales: thank God for foodservice
     Graph 4-10: Convenience Store Foodservice Sales & % of In-Store Sales,
     2005-2009
     Food prepared on-site
     Commissary/packaged sandwiches
     Hot dispensed beverages
     Cold dispensed beverages
     Frozen dispensed beverages
Beyond mainstream: prepared foods net widens and deepens
     Why we expect prepared foods sales to prosper
     Walmart’s MarketSide prepared foods line cements prepared foods
     ascension
     First came the stores
     Now comes the brand
     SuperTarget creates springboard for prepared foods
     Target borrows from SuperTarget playbook
     Warehouse clubs to push prepared foods envelope
     Costco: significant prepared foods potential
     Sam’s Club and BJ’s report traction
     New food retail concepts continue to grow store footprints
     Tesco’s Fresh & Easy plans to double store count by one-third in 2010
     The Fresh Market packs up Bistro Meals to go—and goes beyond basic
     rotisserie
Growth watchwords: value, convenience, quality, education, and atmosphere
Supermarket chain remains well positioned to meet consumers’ prepared
      food needs
      Convenience is King
      Location, location, location!
      Quick, quick, quick!
      App, app, app!
      Value for the money
      Neighborhood cornerstone: entertainment, socialization, and education
      People and households: older and smaller
      Opportunities abound
      Going beyond
      Creating a more interactive food education experience
Private label progress holds keys to prepared foods success
      Safeway and SUPERVALU strengthens PL hold
      Note on reading charts
      Convenience and ease most prevalent prepared foods selection factors
      Graph 6-1: Prepared Foods Selection Factors, Grocery/Supermarkets vs.
      Convenience Stores, 2010
      Grocery/supermarket prepared foods selection factors
      Factors related to convenience and ease most prevalent
      Need to harness shopping-related factors
      Graph 6-2: Prepared Foods Selection Factors, Grocery/Supermarkets, 2010
      Grocery/supermarket prepared foods selection factors: selected
      demographics
      Convenience selection factors
      Graph 6-3: Grocery/Supermarket Prepared Foods Convenience Selection
      Factors, by Age
      Universal truths: easy pick up and convenient location
      Graph 6-4: Grocery/Supermarket Prepared Foods Convenience Selection
      Factors, by HH Income
      Prepared foods do not succeed on their exclusivity
      Graph 6-5: Grocery/Supermarket Prepared Foods Convenience Selection
      Factors, by Presence/Age of Children
      Taste, quality and cost factors—age and HH income are important
      Graph 6-6: Grocery/Supermarket Prepared Foods Taste, Quality and Cost
      Selection Factors, by Age
      Graph 6-7: Grocery/Supermarket Prepared Foods Taste, Quality and Cost
      Selection Factors, by HH Income
      Shopping-related factors: catering to older consumers
      Graph 6-8: Grocery/Supermarket Prepared Foods Shopping Behavior
      Selection Factors, by Age
      Graph 6-9: Grocery/Supermarket Prepared Foods Shopping Behavior
      Selection Factors, by HH Income
      Graph 6-10: Grocery/Supermarket Prepared Foods Shopping Behavior
      Selection Factors, by Rural/Urban/Suburban
      Convenience store prepared foods selection factors
Ease of procurement, portability, low cost, and hunger rule the day
      Need to step it up
      Graph 6-12: Prepared Foods Selection Factors, Convenience Stores/Gas
      Stations, 2010
      Convenience store prepared foods selection factors: selected
      demographics
      Convenience selection factors
      Graph 6-13: Convenience Store Prepared Foods Convenience Selection
      Factors, by Age
      Taste, quality and cost selection factors
      Graph 6-14: Convenience Store Prepared Foods Taste, Quality and Cost
      Selection Factors, by Age
      Shopping behavior selection factors
      Graph 6-15: Convenience Store Prepared Foods Shopping Behavior
      Selection Factors, by Gender
      Graph 6-16: Convenience Store Prepared Foods Shopping Behavior
      Selection Factors, by Age
      Graph 6-17: Convenience Store Prepared Foods Shopping Behavior
      Selection Factors, by Presence/Age of Children
      Appendix: Consumer Survey
      Note on reading charts
Convenience versus grocery, prepared foods selection factors
      Graph 7-1: Prepared Foods Selection Factors, Grocery/Supermarkets vs.
      Convenience Stores, 2010
      Grocery by convenience, prepared foods usage and frequency cross-
      comparison
      Cross-channel usage is common
      Graph 7-2: Usage Frequency Comparison: Grocery by Convenience
      Convenience by grocery, prepared foods usage and frequency cross-
      comparison
      Expanding platforms?
      Graph 7-3: Usage Frequency Comparison: Convenience by Grocery
Food retail needs to better compete with restaurants
      At grocery stores, prepared foods may lag on price, taste and nutrition
      Leveraging strength
      Grocery prepared foods vs. restaurants: gender, age & HH income
      Graph 8-1: Grocery/Supermarket Prepared Foods Restaurant Comparison
      Selection Factors, by Gender
      Graph 8-2: Grocery/Supermarket Prepared Foods Restaurant Comparison
      Selection Factors, by Age
      Graph 8-3: Grocery/Supermarket Prepared Foods Restaurant Comparison
      Selection Factors, by HH Income
      Convenience store prepared foods vs. restaurants: age, HH income,
      location, & presence/age of children
      Graph 8-4: Convenience Store Prepared Foods Restaurant Comparison
      Selection Factors, by Age
Graph 8-5: Convenience Store Prepared Foods Restaurant Comparison
      Selection Factors, by HH Income
      Urban dwellers are more likely to view prepared food at convenience stores
      as more nutritious than similarly priced restaurant fare.
      Graph 8-6: Convenience Store Prepared Foods Restaurant Comparison
      Selection Factors, by Rural/Urban/Suburban
      Why do low-, medium- and high-frequency fast food users get grocery
      store prepared foods?
      Graph 8-7: Title: Fast Food/QSR Usage Frequency, by RTE Grocery
      Convenience Selection Factors
      Graph 8-8: Title: Fast Food/QSR Usage Frequency, by RTE Grocery Taste,
      Quality and Cost Selection Factors
      Graph 8-9: Title: Fast Food/QSR Usage Frequency, by RTE Grocery
      Shopping Selection Factors
      Usage frequency cross-comparisons
      Usage frequency cross-comparison: prepared foods grocery by restaurant
      type
      Graph 8-10: Usage Frequency Cross-Comparison: RTE Grocery by
      Restaurant Type
      Usage frequency cross-comparison: prepared foods convenience store by
      restaurant type
      Graph 8-11: Usage Frequency Cross-Comparison: RTE Convenience Store
      by Restaurant Type
      Usage frequency cross-comparison: prepared foods convenience store by
      limited-service restaurant type
      Graph 8-12: Usage Frequency Cross-Comparison: Limited-Service
      Restaurant Types by RTE Food Retail Type
      Usage frequency cross-comparison: prepared foods convenience store by
      full-service restaurant type
      Graph 8-13: Usage Frequency Cross-Comparison: Full-Service Restaurant
      Types by RTE Food Retail Type
      Note on reading charts
HH Income Demographic DrillDowns
      Grocery store and convenience store prepared foods use and usage
      frequency in last month
      Graph 9-1: RTE Food Retail Usage in Past Month:
      Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by
      Children in Home
      Prepared foods appeal to two divergent populations
      Graph 9-2: RTE Food Retail Mean Use in Past Month:
      Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by
      Children in Home
      Grocery store prepared foods selections factors
      Graph 9-3: RTE Grocery/Supermarket Convenience Selection Factors:
      Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by
      Children in Home
Graph 9-4: RTE Grocery/Supermarket Taste, Quality & Cost Selection
      Factors:
      Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by
      Children in Home
      Graph 9-5: RTE Grocery/Supermarket Shopping Selection Factors:
      Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by
      Children in Home
Gender Demographic Drilldowns
      Grocery store and convenience store prepared foods use and usage
      frequency in last month
      Graph 9-6: RTE Food Retail Mean Usage: Male and Females Employed Full
      Time, by Children in Home
      Graph 9-7: RTE Food Retail Use: Male and Females Employed Full Time, by
      Children in Home
      Grocery store prepared foods selections factors
      Men with children: ideal candidates?
      Graph 9-8: RTE Grocery/Supermarket Convenience Selection Factors:
      Male and Females Employed Full Time, by Children in Home
      Graph 9-9: RTE Grocery/Supermarket Taste, Quality & Cost Selection
      Factors:
      Male and Females Employed Full Time, by Children in Home
      Graph 9-10: RTE Grocery/Supermarket Shopping Selection Factors:
      Male and Females Employed Full Time, by Children in Home
      Note on reading charts
Meet the psychographic groups
      Budgeters
      Healthy Eaters
      Big Eaters
      Deal Seekers
      Deal Seekers and Healthy Eaters heavier prepared foods users
      Graph 10-1: RTE Food Retail Mean Use, by Psychographic Group
      Graph 10-2: RTE Food Retail Use, by Psychographic Group
      Graph 10-3: RTE Grocery/Supermarket Convenience-Related Selection
      Factors, by Psychographic Group
      Graph 10-4: RTE Grocery/Supermarket Taste, Quality and Cost Selection
      Factors, by Psychographic Group
      Graph 10-5: RTE Grocery/Supermarket Restaurant-Related Selection
      Factors, by Psychographic Group
      Note on food lifestyle segmentation charts
Casey’s General Stores, Inc
      Products offered
      Prepared foods growth
      Prepared food growth reflects strategy to promote high-margin products
      Current momentum
      Casey’s store menu
      Casey’s by the numbers
Graph 11-1: Casey’s by the numbers
      Graph 11-2: Casey’s Same-Store Sales Trends
      Graph 11-3: Casey’s Locations
Costco Wholesale Corporation
      Membership structure
      Costco category sales
      Prepared foods audits & observations: Costco
      Snack bar
      Graph 11-4: Costco: Snack Bar, Snack Bar Items & Prices, May 2010
      Refrigerated offerings
      Graph 11-5: Costco Refrigerated Section: Menu Items & Prices, May 2010
      Costco by the numbers
      Graph 11-6: Costco net sales
      Graph 11-7: Costco by the numbers
The Kroger Co
      Store formats
      Fresh Fare breaks 100
      Marketplace growth
      Convenience stores
      Private label powerhouse
      Sales trends
      Prepared foods audits & observations: Ralph’s
      Soup kiosk
      Restaurant-like kiosk
      Hot foods
      Deli
      Graph 11-8: Food 4 Less: Prepared Food Counter, Items & Prices, May 2010
      Prepared foods audits & observations: Food 4 Less
      Restaurant-like kiosk
      Hot foods
      Deli
      Graph 11-9: Food 4 Less: Prepared Food Counter, Items & Prices, May 2010
      Kroger by the numbers
      Graph 11-10: Kroger by the numbers
Publix Super Markets, Inc
      Graph 11-11: Publix Retail Food Locations
      Whole Foods? No, Publix’s GreenWise Market
      GreenWise Market Magazine
      Prepared foods with international flair and fast casual/casual restaurant
      appeal
      Prepared foods audits & observations: Publix
      Deli section
      Graph 11-12: Publix: Deli Section, Items & Prices, May 2010
      Refrigerated casings
      Graph 11-13: Publix: Refrigerated Casings, Items & Prices, May 2010
      Hot bar
Graph 11-14: Publix: Hot Bar, Items & Prices, May 2010
     Publix prepared foods user analysis
     Graph 11-15: Publix Store-Made, Precooked Meals Demographic Analysis
     A nexus between Publix, prepared foods and True Foodies?
     Graph 11-16: Publix Store-Made, Precooked Meals Food Lifestyle
     Segmentation & Grocery Spend
     Publix by the numbers
     Graph 11-17: Publix by the numbers
Safeway Inc.
     Macro moves
     Store formats
     Own brand developments
     Recent product launches
     Prepared foods initiatives
     Recession impact
     Going forward
     Company strategy
     Prospects
     Prepared foods audits & observations: Dominick’s
     Prepared food counter
     Graph 11-18: Dominick’s: Prepared Food Counter, Items & Prices, May 2010
     Hot bar
     Salad bar
     Soup bar
     Graph 11-19: Dominick’s: Soup Bar, Items & Prices, May 2010
     Refrigerated casings
     Graph 11-20: Dominick’s: Refrigerated Casings, Items & Prices, May 2010
     Ambient temperature casings
     Graph 11-21: Dominick’s: Ambient Temperature Casings, Items & Prices,
     May 2010
     Hot casings
     Graph 11-22: Dominick’s: Hot Casings, Items & Prices, May 2010
     Deli counter
     Graph 11-23: Dominick’s: Deli Counter, Items & Prices, May 2010
     Starbucks
     Safeway prepared foods usage analysis
     Graph 11-24: Safeway Store-Made, Precooked Meals Demographic Analysis
     Reformed Traditionalist prepared foods users
     Graph 11-25: Safeway Store-Made, Precooked Meals Food Lifestyle
     Segmentation & Grocery Spend
     Safeway by the numbers
     Graph 11-26: Safeway by the numbers
SUPERVALU INC.
     Retail food operations
     Private label
     Prepared foods audits & observations: Albertson’s
Sarasota location
     Hot bar
     Graph 11-27: Albertson’s: Hot Bar, Items & Prices, May 2010
     Other prepared foods offerings
     Graph 11-28: Albertson’s: Other Prepared Food Offerings, Items & Prices,
     May 2010
     Los Angeles location
     Deli
     Hot foods
     Hot & chilled soup kiosk
     Restaurant-like kiosk
     Graph 11-29: Albertson’s: Kiosks, May 2010
     Graph 11-30: Albertson’s: Hot Foods & Deli, May 2010
     SUPERVALU by the numbers
     Graph 11-31: SUPERVALU Retail Food Locations
     Graph 11-32: SUPERVALU by the numbers
Whole Foods Market
     Good deeds
     Healthy eating education
     Product selection
     Private label strength
     Store size shift
     Store atmosphere: a third place
     A new value twist
     Sales trends
     Prepared foods audits & observations: Whole Foods
     Restaurants/kiosks
     Graph 11-33: Whole Foods: Restaurants/Kiosks, Items & Prices, May 2010
     Salad bars
     Hot bar
     Soup bar
     Graph 11-34: Whole Foods: Soup Bar, Items & Prices, May 2010
     Refrigerated casings
     Whole Foods prepared foods usage analysis
     Graph 11-35: Whole Foods Store-Made, Precooked Meals Demographic
     Analysis
     True Foodie prepared foods users
     Graph 11-36: Whole Foods Store-Made, Precooked Meals Food Lifestyle
     Segmentation & Grocery Spend
     Whole Foods by the numbers
     Graph 11-37: Whole Foods by the numbers
     Graph 11-38: Whole Foods comparable sales trends
     Graph 11-39: Whole Foods Retail Food Locations
WinnDixie Stores, Inc.
     Strategic initiatives
     Merchandising
Outlook and trends
      Prepared foods audits & observations: Winn Dixie
      Refrigerated casings
      Graph 11-40: Winn Dixie: Deli Section, Items & Prices, May 2010
      Hot bar
      Graph 11-41: Winn Dixie: Hot Bar, Items & Prices, May 2010
      Winn-Dixie by the numbers
      Graph 11-42: Winn-Dixie by the numbers
Additional prepared foods audits & observations
      The Fresh Market
      Deli section
      Graph 11-44: Fresh Market: Deli Section, Items & Prices, May 2010
      Refrigerated casings
      Graph 11-45: Fresh Market: Refrigerated Casings, Items & Prices, May 2010
      Hot bar
      Graph 11-46: Fresh Market: Hot Bar, Items & Prices, May 2010
      Super Target
      Deli section
      Graph 11-47: Super Target: Deli Section Items & Prices, May 2010
      Sweetbay
      Deli section
      Graph 11-48: Sweetbay: Deli Counter, Items & Prices, May 2010
      Refrigerated casings
      Graph 11-49: Sweetbay: Refrigerated Casings, Items & Prices, May 2010



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Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice

  • 1. Get more info on this report! Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice July 1, 2010 Hoping to parlay recession-based foodservice-to-retail migration into long-term gains, food retailers continue to ratchet up their prepared foods and ready-to-eat programs. Packaged Facts estimates that grocery stores and supermarkets will grow prepared- and ready-to-eat foods sales by more than 7% in 2010. Their usage imprint is already imposing: According to Packaged Facts’ proprietary consumer research, 64% of adult consumers have gotten ready-to-eat/heat-and-eat food from a grocery store or supermarket in the last month. Moreover, in terms of total usage occasions, grocery-related prepared foods use leads both family and casual restaurant segments and trails only fast food/QSR. While convenience stores have also relied heavily on prepared foods and foodservice sales for sales and higher margins, increasing competition extends to supercenters, warehouse clubs, convenience stores and drug stores. At a time when food value is so closely associated with low cost and convenience—and when consumers increasingly perceive private label food retail brands as competitive with name brands on cost and quality—prepared and ready-to-eat foods programs that deliver on quality, taste and convenience can not only compete with foodservice fare, but can also help food retailers adapt to modern consumer lifestyles. Packaged Facts’ new report, Prepared Food and Ready-to-Eat Foods at Retail: The New Competition to Foodservice offers the foodservice and retail industries new insight into the highly competitive prepared and ready-to-eat foods space. Relying heavily on proprietary consumer research analysis, the report provides “consumer drilldowns” and psychographic profiling, offering foodservice operators and retailers unique access to the minds of prepared foods consumers. And by assessing the relationship between fast food, family, and casual restaurant attitudes and behavior with that of grocery store and convenience store prepared foods attitudes and behavior, this report also offers unique competitive analysis to help players align and differentiate their product offerings.
  • 2. The report also include in-depth store audits of prepared foods programs at leading supermarket, supercenter and warehouse/club store players, providing on-the-ground analysis of store formats, food prices, food types and menu items, placing access to competitive platforms at participants’ fingertips. The report also includes segmented sales of supermarket deli prepared foods, as well as a host of macroeconomic metrics tailored to maximize understanding of how prepared foods fits into the bigger picture. Data related to consumer demographics, attitudes and behaviors is derived from two sources: Packaged Facts’ proprietary consumer survey, an internet-based survey comprised of random sample of 1,881 consumers who in aggregate represent a statistically accurate cross-section of the U.S. adult population (age 18+). The survey was fielded in February 2010. The Experian Simmons National Consumer Survey, a booklet-based survey of a large and random sample of consumers who in aggregate represent a statistically accurate cross-section of the U.S. adult population (age 18+). We analyze results from its Fall 2007, Fall 2008, and Fall 2009 surveys. Report data is also derived from thorough analysis of a host of sources, including the following: Proprietary company interviews The U.S. Census Bureau The Bureau of Labor Statistics Consumer Expenditure Survey The U.S. Department of Agriculture The U.S. Securities and Exchange Commission The Bureau of Labor Statistics Retail Trade Survey Company earnings calls Company presentations Trade associations and trade magazines Academic journals Industry conferences Restaurant menus Our sales analysis features data provided courtesy of the Perishables Group and relies in part on data provided by the International Deli-Dairy-Bakery Association (IDDBA), in addition to proprietary analysis and data from other industry sources. Read an excerpt from this report below.
  • 3. Additional Information Market Insights: A Selection From The Report Momentum lies with grocery In the near term, we believe that macro-economic trends continue to favor grocery: with the recession has come a migration of foot traffic—and food sales—from restaurants into the home, as consumers seek less expensive meal alternatives. As detailed in our Consumer Restaurant Outlook Tracker chapter, consumers report a strong tendency to boost grocery spending and to save money, and a weak tendency to boost a variety of restaurant-related spending and behavior— both in comparison to the three months preceding our proprietary February 2010 survey and for planned behavior and spending during the three months following the survey. As we note below, food at home has become cheaper than food away from home as the recession has worn on. Packaged Facts’ Consumer Restaurant Tracker: home meal use gains ground And, as suggested by Packaged Facts’ Consumer Restaurant Tracker, consumers report continuing to shift their food spending into the home, as illustrated by the graph below. Data are derived from Packaged Facts’ February 2010 proprietary restaurant tracking survey. Compared to “three months ago,” about 50% of respondent adult (18+) restaurant goers say they are more likely to eat dinner at home—with almost one-third doing so “a lot more.” 39% say they are eating breakfast at home more than they were three months ago—with almost 3 in 10 doing so “a lot more.” Conversely, restaurant goers are less likely to be using or spending on a range of restaurant options. Of course, much of this behavior is related to cost: to save money, consumers are bringing their food spend back into the home, after decades of doing the opposite. And one key barometer, the Consumer Price Index, supports the rationale, as it shows “food at home” prices not only declining during the recession, but also being cheaper than “food away from home” (see the Food at home gains pricing edge section below). In the News
  • 4. Food Retail Sales Gain Momentum as Prepared and Ready-to-Eat Foods Lure Recession-Weary Consumers away from Restaurants and into Supermarket Aisles New York, June 14, 2010 — When it comes to food, American consumers want it all. Particularly, they want the variety and savory flavors of restaurant fare without the hefty financial commitment typical when dining out. The solution has been to bring food spending back into the home after decades of doing the opposite by finding lower cost, delectable cuisine among the prepared and ready-to-eat foods available at local supermarkets, according to Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice by market research publisher Packaged Facts. The market study, which includes data from Packaged Facts’ February 2010 proprietary survey of 1,881 U.S. adult (18+) consumers, reveals that about 50% of respondent restaurant goers say they are more likely to eat dinner at home compared to “three months ago.” Further, 64% of adult consumers have purchased ready-to-eat/heat-and- eat food from a grocery store or supermarket in the last month. “With the recession has come a migration of foot traffic and food sales from restaurants into the home, and in the short-term we believe economic trends favor grocery retailers as consumers seek less expensive meal alternatives,” says Don Montuori, publisher of Packaged Facts. “Sustaining this momentum will require food retailers to continue their transition toward offering higher quality ready-to-eat products. Otherwise customers will leave as quickly as they arrived.” Packaged Facts forecasts supermarket/grocery prepared foods will achieve sales of $13 billion and $14 billion in 2010 and 2011 respectively, due to growth of 7% during both years. Aggressive prepared food initiatives and expansion from players ranging from Walmart to BJ’s Whole Club to Kroger’s Fresh Fare to Walgreen’s are expected to further benefit the food retail landscape by giving consumers more locations and more choices. Prepared foods are popular options for two divergent populations. The first are those that may seek low-cost, quick alternatives out of financial necessity, cooking aversion, and extreme convenience. The second is a demographic that can likely afford to spend more on prepared foods, and may choose them as quality alternatives to home cooking or using restaurants. As products that allow for simple meal planning, prepared foods are also popular among older consumers age 55 and above, who the survey found are “more likely” to be influenced by the “shopping efficiency” of prepared foods. As a result, Packaged Facts forecasts that helping older consumers plan their purchases and making shopping trips less stressful through efforts by food retailers to place prepared foods in a central role will become increasingly important to this market. As part of Packaged Facts’ Foodservice Market Insights series, Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice, offers the
  • 5. foodservice and retail industries new insight into the highly competitive prepared and ready-to-eat foods space. Relying heavily on proprietary consumer research analysis, the report provides “consumer drilldowns” and psychographic profiling, offering foodservice operators and retailers unique access to the minds of prepared foods consumers. And by assessing the relationship between fast food, family, and casual restaurant attitudes and behavior with that of grocery store and convenience store prepared foods attitudes and behavior, this report also offers unique competitive analysis to help players align and differentiate their product offerings. About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products. Packaged Facts also offers a full range of custom research services. Table of Contents Scope and Methodology Scope Methodology Prepared foods macroeconomic summary Relevant facts and figures Prepared Foods: Food Retail Usage & Outlook Tracker Relevant facts and figures Share of Stomach: Sales Analysis Relevant facts and figures Trends, Innovations & Strategies Relevant facts and figures Consumer Prepared Foods Selection Analysis Relevant facts and figures Prepared Foods: Grocery vs. Convenience Stores: Consumer Use & Selection Differentiators Prepared Foods: Food Retail vs. Restaurants: Consumer Use & Selection Differentiators Relevant facts and figures RTE Food Retail HH Income & Gender Drill Downs Psychographic Profile Analysis RTE food retail brand analysis: selected insights Casey’s General Stores, Inc Costco Wholesale Corporation The Kroger Co Publix Safeway Inc. SUPERVALU INC.
  • 6. Whole Foods Market Winn-Dixie Stores, Inc. Additional store audits: The Fresh Market, Super Target and Sweetbay The Big Picture: consumers remain under pressure Consumer confidence still in a trough Unemployment picture stabilizes Personal savings rate: a boon and a bane Graph 2-1: Unemployment, Savings Rate and Consumer Confidence: 2007- 2010 Unemployment rate not one-size-fits-all Disparity in unemployment rates by education level Young adults, minorities and men also find harder going Graph 2-2: Unemployment Rate, Selected Demographics, 2007-2010 Graph 2-3: Unemployment Rate, by Race/Ethnicity, 2007-2010 Unemployment forecast: a little less bleak in 2011, and just a little less bleak than that in 2012 Slow employment rebound to coincide with a slow rebound in consumer spending Graph 2-4: Unemployment and GDP Forecast, 2010-12 Stock & housing declines deflate household wealth; rebound to record 2006 levels a long way off $10 trillion less wealthy Graph 2-5: Household Net Worth, 2005-09 Case-Shiller pessimism echoed by FOMC Graph 2-6: Wealth Effect: Wilshire 5000 and Case Shiller Index: 2007-2010 The Food Retail Picture: grocery maintains upper hand Restaurant Performance Index suggests growth—at last! Graph 2-7: Restaurant Performance Index, 2006-2010 Sales at food services and drinking places tick upward in February and March 2010 Graph 2-8: Non-Adjusted Monthly Sales, 12-Month % Change, Grocery Stores & Food Services and Drinking Places, 2009-2010 Graph 2-9: Adjusted Monthly Sales, 12-Month % Change, Grocery Stores & Food Services and Drinking Places, 2009-2010 Full restaurant industry rebound not yet in cards Momentum lies with grocery Packaged Facts’ Consumer Restaurant Tracker: home meal use gains ground Graph 2-10: Consumer Restaurant Tracker: Current Behavior: A Top Line View Restaurant-goers more likely to spend more on groceries and pack lunch than to spend on dining Graph 2-11: Consumer Restaurant Tracker: Next 3 Months: A Top Line View Food at home gains pricing edge Yin and yang of food deflation Graph 2-12: CPI: Food at Home vs. Food Away from Home, 2005-2010
  • 7. Graph 2-13: CPI: Food at Home vs. Food Away from Home, July 2008 - March 2010 Farm value comes back down to earth Graph 2-14: Market Basket of Farm Foods, Annual % Change, 2006-2010 Slight uptick in food inflation expected for 2010 March 2010 prices Proteins Other estimates Food retail traffic and migration trends Trading down in food Graph 2-15: % of Consumers Shopping in 5+ Channels Channel migration: who’s on the winning side of the equation CPG shopping trends Planning ahead with prepared foods Graph 2-16: Average Purchase Occasions per Household, All Channels, % Change vs. Prior Year Graph 2-17: 2009 Average Purchase Occasions per Household, by Channel, % Change vs. Prior Year Spending per trip Graph 2-18: Average CPG Dollars per Purchase, All Channels, % Change vs. Prior Year Graph 2-19: 2009 Average CPG Dollar Sales per Purchase, by Channel, % Change vs. Prior Year Channel share shifts Graph 2-20: 2009 CPG Dollar Share, by Channel: Share & % Change vs. Prior Year Shopping shifts by department Graph 2-21: Dollar Share Point Change, by Department, by Channel, 2009 vs. 2008 Shifts in convenience meal spending Graph 2-22: Convenience Meals: Dollar Share Shift, Grocery vs. Supercenters, Point Change, 2009 vs. 2008 In the end, it’s a margin game Graph 2-23: Convenience Store Sales & Margins: Top Five In-Store Categories, 2009 Note on reading charts Growing prepared foods use based on consumer need Current and intended behavior favors food retail Graph 3-1: Consumer Restaurant Tracker: Current Behavior Looking ahead three months Graph 3-2: Consumer Restaurant Tracker: Future Behavior Graph 3-3: Consumer Restaurant Tracker: Event Occurrence Likelihood Prepared foods substitute for restaurant meals Graph 3-4: Consumer Restaurant Tracker: Current Behavior, RTE Food Retail Users
  • 8. Graph 3-5: Consumer Restaurant Tracker: Current Behavior, Restaurant Usage Frequency, by Type Graph 3-6: Consumer Restaurant Tracker: Future Behavior, RTE Food Retail Users Heavy fast food use correlates with saving money Graph 3-7: Consumer Restaurant Tracker: Future Behavior, Restaurant Usage Frequency, by Type Use of restaurants & prepared foods at food retail Store-made, precooked meals a frequent option for one-fifth of consumers Topline explanation Graph 3-8: Adults Who Often Eat Store-Made, Precooked Meals, Any Agree vs. Strongly Agree Prepared foods serve two key groups Walmart entry to benefit lower-income users Graph 3-9: Adults Who Often Eat Store-Made, Precooked Meals, Any Agree, By HH Income Graph 3-10: Adults Who Often Eat Store-Made, Precooked Meals, Strongly Agree, By HH Income Ready-to-eat/heat-and-eat foods versus restaurant food/drink: use, mean use, and usage occasions Graph 3-11: Foodservice Use in Last Month, by Foodservice Type, 2010 Graph 3-12: Foodservice Mean Usage in Last Month, by Foodservice Type, 2010 Graph 3-13: Foodservice Use Occasions in Last Month, by Foodservice Type, 2010 Prepared foods at food retail: usage and mean use: key demographics Young males a convenience store RTE target Graph 3-14: Prepared Foods Usage and Mean Use in Last Month, Gender, by Foodservice Type, 2010 Youth and wisdom Graph 3-15: Prepared Foods Usage and Mean Use in Last Month, Age, by Foodservice Type, 2010 HH income is a convenience store RTE determinant Graph 3-16: Prepared Foods Usage and Mean Use in Last Month, HH Income, by Foodservice Type, 2010 Kids in tow Graph 3-17: Prepared Foods Usage and Mean Use in Last Month, Presence/Age of Children, by Foodservice Type, 2010 An urban favorite Graph 3-18: Prepared Foods Usage and Mean Use in Last Month, Rural, Suburban & Urban, by Foodservice Type, 2010 Appendix: Consumer Survey Growth is on the side of grocery Wider competition afoot Graph 4-1: Prepared Foods, Deli Section, Supermarkets and Other Grocery Stores: 2005-2012
  • 9. Deli department momentum Momentum by segment Deli sales at grocery stores and supermarkets Graph 4-2: Deli Estimated Sales for Top 75 Supermarket and Grocery Chains, 2008 Supermarket and supercenter service deli sales Graph 4-3: Supermarket and Supercenter Service Deli Sales, 2001-08 Deli-prepared foods Analysis: prepared foods share of deli Graph 4-4: Total Deli Department and Deli-prepared Foods Sales, Dollars per $MM ACV, 2004-09 & Deli Department Food Share, by Food Type, 2009 Deli-prepared foods share, by food type Chicken: sales leader grows sales 1.7% Submarines, sushi, and pizza do well Graph 4-5: Deli-prepared Foods Share, by Food Type, 2009 Salad bar or no salad bar? Graph 4-6: Deli-prepared Foods Salad Share, by Salad Type, 2009 Subs up; combos down Graph 4-7: Deli-prepared Foods Sandwich Share, by Sandwich Type, 2009 Prepared entrees should comprise higher sales share Graph 4-8: Deli-prepared Food Entree Share, by Entree Type, 2009 Graph 4-9: Deli-prepared Foods Sides Share, by Sides Type, 2009 Convenience store foodservice sales: thank God for foodservice Graph 4-10: Convenience Store Foodservice Sales & % of In-Store Sales, 2005-2009 Food prepared on-site Commissary/packaged sandwiches Hot dispensed beverages Cold dispensed beverages Frozen dispensed beverages Beyond mainstream: prepared foods net widens and deepens Why we expect prepared foods sales to prosper Walmart’s MarketSide prepared foods line cements prepared foods ascension First came the stores Now comes the brand SuperTarget creates springboard for prepared foods Target borrows from SuperTarget playbook Warehouse clubs to push prepared foods envelope Costco: significant prepared foods potential Sam’s Club and BJ’s report traction New food retail concepts continue to grow store footprints Tesco’s Fresh & Easy plans to double store count by one-third in 2010 The Fresh Market packs up Bistro Meals to go—and goes beyond basic rotisserie Growth watchwords: value, convenience, quality, education, and atmosphere
  • 10. Supermarket chain remains well positioned to meet consumers’ prepared food needs Convenience is King Location, location, location! Quick, quick, quick! App, app, app! Value for the money Neighborhood cornerstone: entertainment, socialization, and education People and households: older and smaller Opportunities abound Going beyond Creating a more interactive food education experience Private label progress holds keys to prepared foods success Safeway and SUPERVALU strengthens PL hold Note on reading charts Convenience and ease most prevalent prepared foods selection factors Graph 6-1: Prepared Foods Selection Factors, Grocery/Supermarkets vs. Convenience Stores, 2010 Grocery/supermarket prepared foods selection factors Factors related to convenience and ease most prevalent Need to harness shopping-related factors Graph 6-2: Prepared Foods Selection Factors, Grocery/Supermarkets, 2010 Grocery/supermarket prepared foods selection factors: selected demographics Convenience selection factors Graph 6-3: Grocery/Supermarket Prepared Foods Convenience Selection Factors, by Age Universal truths: easy pick up and convenient location Graph 6-4: Grocery/Supermarket Prepared Foods Convenience Selection Factors, by HH Income Prepared foods do not succeed on their exclusivity Graph 6-5: Grocery/Supermarket Prepared Foods Convenience Selection Factors, by Presence/Age of Children Taste, quality and cost factors—age and HH income are important Graph 6-6: Grocery/Supermarket Prepared Foods Taste, Quality and Cost Selection Factors, by Age Graph 6-7: Grocery/Supermarket Prepared Foods Taste, Quality and Cost Selection Factors, by HH Income Shopping-related factors: catering to older consumers Graph 6-8: Grocery/Supermarket Prepared Foods Shopping Behavior Selection Factors, by Age Graph 6-9: Grocery/Supermarket Prepared Foods Shopping Behavior Selection Factors, by HH Income Graph 6-10: Grocery/Supermarket Prepared Foods Shopping Behavior Selection Factors, by Rural/Urban/Suburban Convenience store prepared foods selection factors
  • 11. Ease of procurement, portability, low cost, and hunger rule the day Need to step it up Graph 6-12: Prepared Foods Selection Factors, Convenience Stores/Gas Stations, 2010 Convenience store prepared foods selection factors: selected demographics Convenience selection factors Graph 6-13: Convenience Store Prepared Foods Convenience Selection Factors, by Age Taste, quality and cost selection factors Graph 6-14: Convenience Store Prepared Foods Taste, Quality and Cost Selection Factors, by Age Shopping behavior selection factors Graph 6-15: Convenience Store Prepared Foods Shopping Behavior Selection Factors, by Gender Graph 6-16: Convenience Store Prepared Foods Shopping Behavior Selection Factors, by Age Graph 6-17: Convenience Store Prepared Foods Shopping Behavior Selection Factors, by Presence/Age of Children Appendix: Consumer Survey Note on reading charts Convenience versus grocery, prepared foods selection factors Graph 7-1: Prepared Foods Selection Factors, Grocery/Supermarkets vs. Convenience Stores, 2010 Grocery by convenience, prepared foods usage and frequency cross- comparison Cross-channel usage is common Graph 7-2: Usage Frequency Comparison: Grocery by Convenience Convenience by grocery, prepared foods usage and frequency cross- comparison Expanding platforms? Graph 7-3: Usage Frequency Comparison: Convenience by Grocery Food retail needs to better compete with restaurants At grocery stores, prepared foods may lag on price, taste and nutrition Leveraging strength Grocery prepared foods vs. restaurants: gender, age & HH income Graph 8-1: Grocery/Supermarket Prepared Foods Restaurant Comparison Selection Factors, by Gender Graph 8-2: Grocery/Supermarket Prepared Foods Restaurant Comparison Selection Factors, by Age Graph 8-3: Grocery/Supermarket Prepared Foods Restaurant Comparison Selection Factors, by HH Income Convenience store prepared foods vs. restaurants: age, HH income, location, & presence/age of children Graph 8-4: Convenience Store Prepared Foods Restaurant Comparison Selection Factors, by Age
  • 12. Graph 8-5: Convenience Store Prepared Foods Restaurant Comparison Selection Factors, by HH Income Urban dwellers are more likely to view prepared food at convenience stores as more nutritious than similarly priced restaurant fare. Graph 8-6: Convenience Store Prepared Foods Restaurant Comparison Selection Factors, by Rural/Urban/Suburban Why do low-, medium- and high-frequency fast food users get grocery store prepared foods? Graph 8-7: Title: Fast Food/QSR Usage Frequency, by RTE Grocery Convenience Selection Factors Graph 8-8: Title: Fast Food/QSR Usage Frequency, by RTE Grocery Taste, Quality and Cost Selection Factors Graph 8-9: Title: Fast Food/QSR Usage Frequency, by RTE Grocery Shopping Selection Factors Usage frequency cross-comparisons Usage frequency cross-comparison: prepared foods grocery by restaurant type Graph 8-10: Usage Frequency Cross-Comparison: RTE Grocery by Restaurant Type Usage frequency cross-comparison: prepared foods convenience store by restaurant type Graph 8-11: Usage Frequency Cross-Comparison: RTE Convenience Store by Restaurant Type Usage frequency cross-comparison: prepared foods convenience store by limited-service restaurant type Graph 8-12: Usage Frequency Cross-Comparison: Limited-Service Restaurant Types by RTE Food Retail Type Usage frequency cross-comparison: prepared foods convenience store by full-service restaurant type Graph 8-13: Usage Frequency Cross-Comparison: Full-Service Restaurant Types by RTE Food Retail Type Note on reading charts HH Income Demographic DrillDowns Grocery store and convenience store prepared foods use and usage frequency in last month Graph 9-1: RTE Food Retail Usage in Past Month: Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by Children in Home Prepared foods appeal to two divergent populations Graph 9-2: RTE Food Retail Mean Use in Past Month: Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by Children in Home Grocery store prepared foods selections factors Graph 9-3: RTE Grocery/Supermarket Convenience Selection Factors: Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by Children in Home
  • 13. Graph 9-4: RTE Grocery/Supermarket Taste, Quality & Cost Selection Factors: Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by Children in Home Graph 9-5: RTE Grocery/Supermarket Shopping Selection Factors: Lower-, Middle- and Higher-HH Income Adults Employed Full Time, by Children in Home Gender Demographic Drilldowns Grocery store and convenience store prepared foods use and usage frequency in last month Graph 9-6: RTE Food Retail Mean Usage: Male and Females Employed Full Time, by Children in Home Graph 9-7: RTE Food Retail Use: Male and Females Employed Full Time, by Children in Home Grocery store prepared foods selections factors Men with children: ideal candidates? Graph 9-8: RTE Grocery/Supermarket Convenience Selection Factors: Male and Females Employed Full Time, by Children in Home Graph 9-9: RTE Grocery/Supermarket Taste, Quality & Cost Selection Factors: Male and Females Employed Full Time, by Children in Home Graph 9-10: RTE Grocery/Supermarket Shopping Selection Factors: Male and Females Employed Full Time, by Children in Home Note on reading charts Meet the psychographic groups Budgeters Healthy Eaters Big Eaters Deal Seekers Deal Seekers and Healthy Eaters heavier prepared foods users Graph 10-1: RTE Food Retail Mean Use, by Psychographic Group Graph 10-2: RTE Food Retail Use, by Psychographic Group Graph 10-3: RTE Grocery/Supermarket Convenience-Related Selection Factors, by Psychographic Group Graph 10-4: RTE Grocery/Supermarket Taste, Quality and Cost Selection Factors, by Psychographic Group Graph 10-5: RTE Grocery/Supermarket Restaurant-Related Selection Factors, by Psychographic Group Note on food lifestyle segmentation charts Casey’s General Stores, Inc Products offered Prepared foods growth Prepared food growth reflects strategy to promote high-margin products Current momentum Casey’s store menu Casey’s by the numbers
  • 14. Graph 11-1: Casey’s by the numbers Graph 11-2: Casey’s Same-Store Sales Trends Graph 11-3: Casey’s Locations Costco Wholesale Corporation Membership structure Costco category sales Prepared foods audits & observations: Costco Snack bar Graph 11-4: Costco: Snack Bar, Snack Bar Items & Prices, May 2010 Refrigerated offerings Graph 11-5: Costco Refrigerated Section: Menu Items & Prices, May 2010 Costco by the numbers Graph 11-6: Costco net sales Graph 11-7: Costco by the numbers The Kroger Co Store formats Fresh Fare breaks 100 Marketplace growth Convenience stores Private label powerhouse Sales trends Prepared foods audits & observations: Ralph’s Soup kiosk Restaurant-like kiosk Hot foods Deli Graph 11-8: Food 4 Less: Prepared Food Counter, Items & Prices, May 2010 Prepared foods audits & observations: Food 4 Less Restaurant-like kiosk Hot foods Deli Graph 11-9: Food 4 Less: Prepared Food Counter, Items & Prices, May 2010 Kroger by the numbers Graph 11-10: Kroger by the numbers Publix Super Markets, Inc Graph 11-11: Publix Retail Food Locations Whole Foods? No, Publix’s GreenWise Market GreenWise Market Magazine Prepared foods with international flair and fast casual/casual restaurant appeal Prepared foods audits & observations: Publix Deli section Graph 11-12: Publix: Deli Section, Items & Prices, May 2010 Refrigerated casings Graph 11-13: Publix: Refrigerated Casings, Items & Prices, May 2010 Hot bar
  • 15. Graph 11-14: Publix: Hot Bar, Items & Prices, May 2010 Publix prepared foods user analysis Graph 11-15: Publix Store-Made, Precooked Meals Demographic Analysis A nexus between Publix, prepared foods and True Foodies? Graph 11-16: Publix Store-Made, Precooked Meals Food Lifestyle Segmentation & Grocery Spend Publix by the numbers Graph 11-17: Publix by the numbers Safeway Inc. Macro moves Store formats Own brand developments Recent product launches Prepared foods initiatives Recession impact Going forward Company strategy Prospects Prepared foods audits & observations: Dominick’s Prepared food counter Graph 11-18: Dominick’s: Prepared Food Counter, Items & Prices, May 2010 Hot bar Salad bar Soup bar Graph 11-19: Dominick’s: Soup Bar, Items & Prices, May 2010 Refrigerated casings Graph 11-20: Dominick’s: Refrigerated Casings, Items & Prices, May 2010 Ambient temperature casings Graph 11-21: Dominick’s: Ambient Temperature Casings, Items & Prices, May 2010 Hot casings Graph 11-22: Dominick’s: Hot Casings, Items & Prices, May 2010 Deli counter Graph 11-23: Dominick’s: Deli Counter, Items & Prices, May 2010 Starbucks Safeway prepared foods usage analysis Graph 11-24: Safeway Store-Made, Precooked Meals Demographic Analysis Reformed Traditionalist prepared foods users Graph 11-25: Safeway Store-Made, Precooked Meals Food Lifestyle Segmentation & Grocery Spend Safeway by the numbers Graph 11-26: Safeway by the numbers SUPERVALU INC. Retail food operations Private label Prepared foods audits & observations: Albertson’s
  • 16. Sarasota location Hot bar Graph 11-27: Albertson’s: Hot Bar, Items & Prices, May 2010 Other prepared foods offerings Graph 11-28: Albertson’s: Other Prepared Food Offerings, Items & Prices, May 2010 Los Angeles location Deli Hot foods Hot & chilled soup kiosk Restaurant-like kiosk Graph 11-29: Albertson’s: Kiosks, May 2010 Graph 11-30: Albertson’s: Hot Foods & Deli, May 2010 SUPERVALU by the numbers Graph 11-31: SUPERVALU Retail Food Locations Graph 11-32: SUPERVALU by the numbers Whole Foods Market Good deeds Healthy eating education Product selection Private label strength Store size shift Store atmosphere: a third place A new value twist Sales trends Prepared foods audits & observations: Whole Foods Restaurants/kiosks Graph 11-33: Whole Foods: Restaurants/Kiosks, Items & Prices, May 2010 Salad bars Hot bar Soup bar Graph 11-34: Whole Foods: Soup Bar, Items & Prices, May 2010 Refrigerated casings Whole Foods prepared foods usage analysis Graph 11-35: Whole Foods Store-Made, Precooked Meals Demographic Analysis True Foodie prepared foods users Graph 11-36: Whole Foods Store-Made, Precooked Meals Food Lifestyle Segmentation & Grocery Spend Whole Foods by the numbers Graph 11-37: Whole Foods by the numbers Graph 11-38: Whole Foods comparable sales trends Graph 11-39: Whole Foods Retail Food Locations WinnDixie Stores, Inc. Strategic initiatives Merchandising
  • 17. Outlook and trends Prepared foods audits & observations: Winn Dixie Refrigerated casings Graph 11-40: Winn Dixie: Deli Section, Items & Prices, May 2010 Hot bar Graph 11-41: Winn Dixie: Hot Bar, Items & Prices, May 2010 Winn-Dixie by the numbers Graph 11-42: Winn-Dixie by the numbers Additional prepared foods audits & observations The Fresh Market Deli section Graph 11-44: Fresh Market: Deli Section, Items & Prices, May 2010 Refrigerated casings Graph 11-45: Fresh Market: Refrigerated Casings, Items & Prices, May 2010 Hot bar Graph 11-46: Fresh Market: Hot Bar, Items & Prices, May 2010 Super Target Deli section Graph 11-47: Super Target: Deli Section Items & Prices, May 2010 Sweetbay Deli section Graph 11-48: Sweetbay: Deli Counter, Items & Prices, May 2010 Refrigerated casings Graph 11-49: Sweetbay: Refrigerated Casings, Items & Prices, May 2010 Available immediately for Online Download at http://www.marketresearch.com/product/display.asp?productid=2694891 US: 800.298.5699 UK +44.207.256.3920 Int'l: +1.240.747.3093 Fax: 240.747.3004