Retail Prepared Foods Coming on Strong at Lunchtime

CHICAGO -- Although restaurants compete most heavily with retail stores for prepared food orders at dinnertime and for snacks, the strongest visit growth for retail prepared foods has been at lunch, reported The NPD Group.

Since 2008, visits to retail stores for prepared foods at lunch increased by double digits while restaurant lunch visits declined, according to NPD's new foodservice market research report, The Retail Prepared Foods Market: Assessing the Competition. 

Retail outlets have a competitive advantage over restaurants, particularly quick-service restaurants, because of their availability of healthy options, good variety of foods, light meal offerings, affordability, and one-stop shopping convenience, NPD found. These attributes are the key drivers behind the 29-percent visit growth for retail prepared foods at lunch. Meanwhile, high unemployment and shaky consumer confidence contributed to the 1-percent decline in lunch visits to restaurants since 2008.

Growth in retail prepared foods is part of a broader trend of Americans consuming more meals at home. A recent NPD forecast through 2022 showed that instances of prepared food purchased at retailers for at-home consumption will likely increase by 10 percent over the next decade, compared to a 4-percent increase forecasted for restaurant traffic. Food that is purchased and eaten at home or work for lunch and dinner is the component of the retail prepared food network that is supporting this growth.

"It's fact that retail prepared foods are taking visits away from restaurants and restaurant visits are not expected to grow much over the next decade, but there is also significant opportunity for foodservice operators to meet consumers' needs for prepared foods," said Bonnie Riggs, NPD's restaurant industry analyst. "Learning more about how consumers use retail stores for their foodservice-type meals enable restaurant operators and their supplier partners to understand how to better compete in this area of growing consumer demand."

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