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Blog
Cleanup on Aisle 4
August 15, 2008
One of the lasting contributions of Boston Market to the restaurant industry was the introduction of the term Home Meal Replacement (HMR). It was coined to describe the business that Boston Market had created--the selling of home-style meals cooked in a restaurant to be eaten at home. Boston Market followed a Roman-candle trajectory, complete with an explosion, as the public's demand for these meals fueled an unprecedented expansion drive. From a public offering in 1993, to a Chapter 11 bankruptcy in 1998, Boston Market had awakened the restaurant industry, and the grocery industry, to the potential for HMR.
The grocery industry responded by fielding their own conferences on the subject. The second annual Meal Solution conference by the Food Marketing Institute (the grocery industry's NRA) in 1997 attracted 4,000 attendees trying to learn how to fight back against Boston Market specifically, and the restaurant industry in general. I attended this conference and was struck by the fact that the grocery industry was declaring war on the restaurant industry, and we didn't seem to notice or care.
11 years later, maybe it is time to pay attention to the actions of the grocery industry, and the results of their unrelenting attack on our business of selling meals to customers to be eaten wherever they choose. Whole Foods is probably the quality leader in prepared meals, and most restaurateurs point out that while their offerings are quite excellent, that there just aren't enough Whole Foods in their trade areas to be too concerned. As we have focused on competing against each other, the grocery industry has broadened its approach and their tactics.
A report by the Cleveland Research Company, one of the premiere producers of investment research, on structural changes in the casual dining industry, points to the grocery industry as a potent and growing threat to restaurant takeout. Using information provided by the Food Marketing Institute (FMI), it is clear that the grocery industry has made tremendous inroads into turf which we have always laid claim to--prepared meals taken away to eat.
According to FMI statistics, from the period 1996-2004 (which probably understates moves made in recent years by leading grocers), the following changes in the sources of takeout meals have occurred:
| 1996 | 2004 | |
| Quick Service | 48% | 35% |
| Restaurants | 25% | 18% |
| Grocery | 12% | 27% |
These are not sales percentages, but traffic percentages. Cleveland Research estimates that every 1% increase in foodservice mix at an average grocery store is equal to one new restaurant entering the trade area for takeout sales.
Boston Market, the early leader in HMR, now sees a major growth opportunity in selling its prepared meals through grocery stores. Safeway management say that the Home Meal Replacement (HMR) of the past has become Restaurant Meal Replacement (RMR). How many times do we have to be warned before we start taking this seriously? Let's not become part of the cleanup on Aisle 4.
Posted by Lane Cardwell on August 15, 2008 | Comments (4)
Reader Comments
at 8/15/2008 2:25:00 PM, BenStevens commented:
This is a classic--a brilliant analysis of the industry and our blinders. When all of our sales are down, the analysis can't be: "people must have stopped eating." So, where are they eating if not with us? And, what can we learn from where they are eating to get them back or keep them as guests?
at 8/16/2008 3:13:13 AM, Casey commented:
In June you shared trends and directions that included small plate options and a move toward more takeout. Do all roads lead to "roam"? Which restaurant concepts are making shifts to address these trends? Are they working?
at 8/16/2008 7:57:06 AM, Lane commented:
The shifts are coming slowly. Instead of naming names, let's name what is being done to break down the the barriers to using a sit-down restaurant for a takeout experience. According to Technomic, 96% of full-service restaurants will let you order by phone, but only 6% will let you order online. The 6% that let you order online also make it easy to reorder by letting you set up a customer profile. 78% have a dedicated takeout counter/register to keep you from having to track down the bartender or host/hostess. 42% have dedicated takeout parking. All it takes to improve is to shop the best grocery takeout in your area and then look at ways to improve the experience. The one thing that helps is that buying takeout from a large grocery store, unless you are also buying groceries, is a time consuming experience with parking, size of store, and checkout.
at 8/24/2008 11:08:07 PM, Erle - MonkeyMedia Software commented:
To me, this represents a HUGE opportunity for QSR as well as full service restaurants. What consumers are looking for is a high quality experience (Restaurant Level), but in the convenience of when they want it. The QSR and Restaurant industry can cash in on this growing opportunity by offering an HMR experience using their own brands. This leads to more of a "manufacturing"mindset as it is really about preserving the brand and the quality, but essentially taking away the dine-in experience. Distribution opportunities for these products exist in each local market. Using call centers and commissaries is the only infrastructure required to leverage these opportunities. New channels can be opened such as Direct to Consumer Selling over the web and/or wholesale manufacturing, either private label or using an already well established brand. Instead of fighting grocers like Whole Foods, why not help them by selling them your products for their HMR programs.