Prepared foods—time to step up

September 25, 2012

Supermarkets can turn the tables on restaurants to win mealtime tabs.

Where can supermarkets beat restaurant operators with prepared foods?

The Lempert Report sees multiple ways:
First, they sell the broadest diversity of foods, so they can develop rotating specials that are simply beyond the repertoire of any single restaurant competitor.

Second, food-store chefs can manipulate their recipes to be healthier versions (less sodium, lower fat) that appeal to households where someone has a dietary restriction or desire. This can help avoid a veto vote, which can doom a restaurant. 

Third, their menu boards can show lower calorie counts than restaurants.

Fourth, they can incentivize shoppers by cross-promoting wines, desserts, bagged salads, fruit trays and more with prepared-foods purchases.

Fifth, prices overall that are about on par with casual eateries like Applebee’s and Olive Garden represent value.

Fifth, a prepared-foods pick up is convenient when it is also part of a larger shopping trip.

Moreover, distinctive prepared-foods offerings—such as Albertsons’ Simply Good Meals, or Target’s opening of a Pret A Manger in Chicago, which sells handmade natural food without typical amounts of chemicals, additives and preservatives—enhance the store’s overall food and wellness image.

So while families balk at hefty restaurant tabs today, we feel supermarkets have a timely opportunity to market their prepared foods aggressively, and refine their offers to show price and nutritional advantages over local restaurant competitors on a store-by-store basis. This would include improving the professional feel of the deli counter with signage that goes beyond item/price to show sourcing, ingredients, calories, and companion-purchase suggestions. Stores could promote limited-time windows of barbecue ribs and chicken, for instance, for Sunday football tailgates and parties—and pursue other opportunities year-round.

Prepared foods are not only profitable—they are a way to draw traffic from Walmart, drug and dollar stores, and help stem the erosion that has Wall Street arching its eyebrows at the supermarket channel.