Should grocers back away from prepared meals?

Discussion
Photo: RetailWire
Sep 14, 2016
Matthew Stern

Customers are hitting prepared food bars at grocery stores like never before. But the increased demand for meals that are fresh, complicated and fast has started to create problems for grocers. At an increasing rate, fresh offerings are making people sick.

Difficulties in maintaining reliable food safety recently caused Whole Foods to temporarily close down one of its kitchens that prepares fresh meals for stores, according to The Wall Street Journal. In the wake of the shutdown, which Whole Foods undertook after the U.S. Food and Drug Administration warned about food safety gaps, the retailer has stopped processing meat, raw poultry and seafood in that and two other facilities.

Employee turnover in grocery and increased cooking demands can create an environment in which grocers have difficulty maintaining safety standards, the Journal observes. According to the CDC, incidences of foodborne illnesses tied to U.S. supermarkets more than doubled between 2014 and 2015.

Consumer demand for minimally processed, healthy foods has put other parts of the foodservice world on shaky ground. Fast-casual Mexican restaurant Chipotle, most notably, was responsible for a rash of norovirus and E. coli outbreaks this year and last. Despite its attempts to win back customers with free burritos and even free or discounted alcoholic beverages, the chain — once at the forefront of providing fresh ingredients for fast-casual diners — is still reeling from the PR nightmare.

The demand for fresh food options has inspired foodservice initiatives from convenience stores as well, according to a blog by The Food Institute. A study indicated that around 93 percent of c-store operators saw foodservice sales increase in 2015. The blog noted that some c-stores are refocusing on food as they shift away from tobacco.

DISCUSSION QUESTIONS: How can grocers safely meet the demand for high-end, fresh prepared meals? Do some grocers need to back away from more complicated fresh items, despite their popularity?

Braintrust
"Prepared foods should be left to those who watch over the preparation as their very own business."
"The only reason to back away from this problem is if you do not know what you are doing, plain and simple."
"Let’s not sell short grocers as they adapt to the changing needs and demands of their customer base."

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20 Comments on "Should grocers back away from prepared meals?"

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Frank Riso
BrainTrust

I am not sure grocers can or should meet the demand for high-end and fresh prepared meals. Since many restaurants do not sell groceries why should grocery stores sell prepared meals? Grocers should do what they do best; provide good quality food at reasonable prices. Unless they want to make the investment of well-trained chefs they should only prepare a limited variety of items in their deli department. So yes, many grocers need to back away from HMR departments since the standards are too high, the cost too high and the lack of trained staff is also a risk.

Bob Amster
BrainTrust

Agree. See my commentary, below.

Max Goldberg
BrainTrust

With the demand for fresh prepared foods rising, grocers now face the same potential dilemmas as restaurants and need to take precautions to protect consumers. These include: carefully monitoring the fresh food supply chain, safe handling, sanitary preparation facilities, proper storage and intensive employee training. This means that costs will be incurred. Grocers need to meet consumer demand, but in the quest for profits cannot sacrifice safety.

Bob Amster
BrainTrust

Prepared foods should be left to those who watch over the preparation as their very own business. Some years ago, Korean salad bars spread like wildfire in New York City and offered prepared foods which sold by the pound. (They eventually had a buying cooperative larger than the now-defunct A&P.) Each store is run by its owner. In my home town, there is at least one country market that sells prepared foods without health incidents. Its clientele ranges from hourly lawn caretakers for lunch to 2-percenters for dinner meals. But it is run by the owners. Therein lies the secret to the success of prepared foods: the people who make them and serve them own the joint.

Ken Lonyai
BrainTrust

Prepared meals are a great value-add item for grocers. The days of packaged food products only are long passed. Shoppers that are weary of traversing aisles and that dread having to head home and prepare some food or spend more time at a restaurant are a ready-made market for this service. The issue is simply that grocers need to treat the service as a sub-business run by qualified/experienced food prep management that has the authority and the means to safeguard and control the end-to-end process. Paying workers fairly wouldn’t hurt the end product either.

Gene Detroyer
BrainTrust

They better figure out how to do this safely. This is where their future is.

Lee Kent
BrainTrust

There are simply not that many folks who want to go to the grocery store for their high-end meal. That tells me that perhaps this is not the best angle for grocery. Other more popular offerings might include more single-serving offerings and packaged meals that you take home and make yourself with all the right ingredients.

But that’s just my 2 cents.

Tony Orlando
BrainTrust
The only reason to back away from this problem is if you do not know what you are doing, plain and simple. I cater for hundreds of people during the year, drop and served, and have never had a problem as we know how to prepare and keep food safe. It takes training and know-how, plus employees that follow safety standards of how to prep food properly and safely. We do not have a hot buffet bar in my store as it is very difficult to monitor, unlike a wedding, where the customers move through the line quickly while we serve them. There is money to be made for sure, but if you are going to venture into homemade foods you must do it right or stay out of it. With pressure on profits from center-store losses, many stores have gotten into prepared foods and quite a few have done amazing jobs of providing this service safely every single day. The few who don’t make all of us look bad. We get inspected randomly several… Read more »
HY Louis
Guest
1 year 3 months ago

I heard Walmart is opening a restaurant. Should I be afraid?

Richard Layman
Guest
1 year 3 months ago

Yes, because it features high fat foods sold at the Texas State Fair and similar venues. Greater access to deep fried Oreos do not a healthy nation make.

Adrian Weidmann
BrainTrust

Healthy, freshly-prepared food choices have been very successful with shoppers because they provide a benefit for time-pressed working parents and singles. Grocers have not kept pace with their responsibilities associated with the success of fresh prepared meals. Just as Target recently figured out that selling groceries required uniquely-trained staff and procedures, so too do grocers need to realize that food preparation requires unique staff training, discipline, processes and procedures. Shortcuts in these disciplines in food service could lead to severe illness or death. It’s these consequences that are forcing brands like Whole Foods to reassess and correct their processes and procedures. Shoppers love them and the commercial rewards of fresh prepared meals is too great. Grocers will definitely address the issues and take responsibility to offer and deliver a safe product as long as shoppers ask for it!

Mohamed Amer
BrainTrust
Driving using the past as model for the future is akin to driving using the rear-view mirror. It’s guaranteed to end up in a disaster — eventually. Start with the consumer in mind. If you believe they value fresh prepared foods and you can deliver on their expectations then you ought to pursue it. Prepared foods represent an adjacent offering that is a natural fit in today’s food shopping. Traditional boundaries in retail segments are melting away. The notion of pure-plays is based on a product view of the world and NOT one that takes the customer as the starting point. Take Palacio de Hierro’s Polanco flagship store in Mexico City. They have a restaurant on every floor combining personalized engagement and differentiated experience in a luxury department store setting. They had a single-minded pursuit of delivering a unique and valued experience for their customers. Let’s not sell short grocers as they adapt to the changing needs and demands of their customer base. I agree that this is hard to execute but that is the… Read more »
Lyle Bunn (Ph.D. Hon)
BrainTrust

Yesterday while traveling in Toronto for meetings I visited a Shoppers Drug Mart (Canada’s version of Walgreens or CVS) to buy lunch. My consideration of a small sushi immediately conjured a range of questions about ingredients, food handling during preparation and the “best before” date a week away offered minimal solace. It was the acceptable risk and the reputation of the retailer that anchored my purchase, and since the sushi was delicious it won my purchase and future visit intent. Consumer confidence is hard won and very easily lost. The breakdown in my food purchase would have called me to question the brand promise overall. Prepared foods are risky business as a line addition. Fruits, veggies and manufacturer-packaged food reduce the brand risk.

Ian Percy
BrainTrust
Maybe Frank is right … perhaps grocers, restaurants, etc., should stay in their own lane. That way you are more likely to have control over your environment and processes. But this foodborne illness issue gets down to two things: a.) What exactly do you mean by “fresh?” And, while we’re at it, what exactly do you mean by “minimally processed?” When it comes to the majority of our food, marketing efforts to the contrary, we are generally feasting on chemical soup. Just because your lettuce was picked yesterday doesn’t mean it isn’t infused with lord-knows-what. 70 percent of the world’s agricultural top soil is either dead, contaminated or has disappeared entirely. And according to National Geographic, only about 11 percent of Earth’s land surface is suitable for farming. The answer I’m seeing is that hydroponic operations will become the major food source especially for the prepared meal category. Every restaurant and grocery store, or co-ops of same, will soon have their own hydroponic facilities. So will schools, senior facilities, hospitals, etc. And b.) we need… Read more »
David Livingston
Guest
1 year 3 months ago

Grocers can meet the safe demand for prepared foods the same way restaurants do. Employee turnover? Seriously? As if restaurant don’t go through employees like crap through goose. All of your top-performing grocers have prepared foods. If you are a low-wage grocer where your front-line is $10 an hour or under then perhaps this is not the hill you want to die on. However if the grocer is a step up in class then prepared foods are a must. When traveling I don’t look for a restaurant to eat at, I look for my favorite grocers like Whole Foods, H-E-B, Hy-Vee and Wegmans. At home some of the best sushi bars are in supermarkets.

Peter Charness
BrainTrust

If you’re concerned about grocers’ ability to manage food safety then you probably don’t want to buy meat,fish or vegetables there either. Baked goods, refrigerated products, deli counters? Grocery stores have a long and usually perfectly fine history of handling food safety in all these areas. Conveniently located, good parking, I’m sure they can manage. If I think of some of the big grocers (and stores) outside of North America they have a long history of preparing all kinds of ready meals, supply a huge percentage of the lunch market and rarely if ever kill off their customers. Part of that is that they have the critical mass of staff in a store to make sure that food safety SOPs are followed day in and day out, unlike some of the quick-serve restaurants populated by fewer staff with less supervision.

Steve Montgomery
BrainTrust

The convenience store industry has long provided a variety of foodservice items to its customers. Today far more are prepared on-site than historically when many of the products were items such as nitrogen-flush sandwiches. NACS (National Association of Convenience Stores) reported in its 2016 State of The Industry (2015 data) that foodservice contributed 20.9 percent of sales and 33.96 percent of the average store’s gross margin. Of this total a growing portion is food prepared on site.

Statements have been made that preparing food should be left to those that concentrate on doing so. We have all read about the incidents in the past experienced by Taco Bell and, more recently, about Chipotle. Concentration on foodservice is no guarantee that incidents will not occur. As other have already pointed out, the key is food safety. It has to start at the beginning of the supply chain and be carried out through the sale.

Craig Sundstrom
Guest

The idea that prepared food should be avoided because something might go wrong seems unduly alarmist. After all, don’t restaurants somehow manage?

But it does bring grocers into an area that they may have limited experience in, and the attendant dangers of making a fatal mistake (figuratively if not, hopefully, literally). Stores need to make sure staff is well trained, carefully follows procedures, and have the whole operation under the hands of someone experienced specifically in food preparation…in short, exhibit the kind of competence and professionalism you would hope any successful business does.

If they aren’t able to do this, or they want to diversify into prepared just because everyone else is, and they don’t have a clue what is needed, then perhaps they are better off leaving it to someone else. But for the able, I think it’s an excellent opportunity and a ready point of differentiation.

Jerry Gelsomino
BrainTrust

They should consult with or hire restaurant management professionals to manage their operations.

Ken Morris
BrainTrust

The genie is already out of the bottle on this one and won’t be put back in. This is a very profitable venture for grocery retailers and it allows them to “convert” what would go to spoilage to big profit. They need to use the same high standards they use in their meat cutting operations within the prepared foods world. Some of my clients have embraced an almost complete conversion of their urban locations to a fresh prepared smorgasbord. It is not an all or nothing proposition and each store should have the assortment that best fits its demographic, ethnic and psychographic profile. It isn’t a question in my mind of if but how much.

wpDiscuz
Braintrust
"Prepared foods should be left to those who watch over the preparation as their very own business."
"The only reason to back away from this problem is if you do not know what you are doing, plain and simple."
"Let’s not sell short grocers as they adapt to the changing needs and demands of their customer base."

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