Progressive Grocer Independent

APR 2016

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Cover Story Deli/Prepared Foods ready-to-eat foods. Supermarket fresh prepared food sales are larger than sales at leading restaurants like Domino's, Dunkin' Donuts, Chili's and Olive Garden, DuBois observed, and are growing faster than sales at Wendy's, Panera Bread and Starbucks. "As short as eight years ago, if you were to ask the average consumer where they were going to eat, depend- ing on the region, you may have seen a grocery store in the top 10," FMI's Stein says. "Ten, all of sudden, these supermarkets started building really nice, restaurant-style departments." Now consumers are just as likely to choose to go out to eat at a supermar- ket as at a restaurant. Model Departments According to Stein, most supermarket fresh prepared foods departments can be segmented into four models: sit-down restaurants that ofer limited table service during multiple dayparts, requiring a commitment of a sig- nifcant amount of space; easy meals that are available as takeout for home meal replacement — the format that a majority of retailers have chosen; sophisticated stations that ofer refned options like sushi or brick-oven pizza; and limited oferings that don't require much space or equipment but still make simple meals available and re- quire less square footage, which is ideal for smaller supermarkets. No matter what option retailers choose to ofer for their fresh prepared foods departments, they must suc- ceed at fve critical factors, according to Henry Pellerin, VP of marketing at Conyers, Ga.-based HillPhoenix, who presented at Progressive Grocer's Grocerant conference last fall. 5 Critical Factors Te frst critical factor is the menu. Retailers need to ensure that ofer- Departments Source: IRI How Much do Fresh Prepared Shoppers Spend in the Store? Total store spend when fresh prepared item is purchased. $0-$10 $10-$20 $20-$40 $40-$100 $100+ 21% 16% 28% 12% 23%

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