Getting Your Piece of the (Takeout) Pie

By: Ron Marks

The mid nineties brought with it the discovery that a huge new market was emerging which the industry coined "Home Meal Replacement". Although this phrase never quite had any meaning for the consumer, we all began to realize this term was really just a self-important term for "Takeout Food". Whether we call it HMR or takeout, the assumption that it was a huge and growing market in the nineties was and still is right on target.

A tremendous amount of interest, research and programs were developed in the mid to late nineties across all foodservice and retail segments in an attempt to capitalize on this opportunity. Ironically at this point, the segment which seems to have captured the greatest amount of this market and sales increase has been the convenience stores. In the foodservice segment, QSR restaurants clearly had the lead (as they were positioned from inception to capitalize on takeout) but have struggled with a mature and heavily developed market. The casual dining segment recognized the opportunity, but has struggled to reposition itself with the consumer as a top of mind, convenience oriented option. Over the last few years a number of major players in casual dining have been making serious headway and seeing steady and significant growth in their takeout business.

It seems the most inconsistent and confounding arena to really take advantage of the booming consumer demand for high quality, convenience oriented, fully prepared takeout foods has been in the retail food sector. A quick survey of the market will show a small number of players who have put together very effective and successful programs and lots of other groups putting forth moderate to tremendous effort with little or nothing to show for it. The rest of the segment is still trying to figure it out and not willing to go for the prize.

A cardinal rule for any business to be successful is that you need to know who your customer is and what they want. This is true in spades in the food business and is key to the success of the retail food industry to establish successful new generation takeout food programs. Today's' savvy business operators understand they really have 2 customers they need to satisfy; one their customer who comes in to purchase their wares, and two their employees whose training and satisfaction level are essential for them to provide service and quality products to your customer.

Time and again, research has shown amazing consistency in the attributes the consumer is looking for in their takeout food experience;

Quality
This translates more specifically to food that is perceived to be either of "Restaurant Style" or "Homemade" caliber. The whole perception issue to the consumer is that this is food which is not canned or frozen, is freshly prepared and differentiated from standard supermarket food. For many operators this paradox of not serving supermarket style food in a supermarket is overwhelming. The key here is taking the convenience and prepared food section of your store and turning it more into a restaurant and less of a supermarket.

This starts with the training and orientation of your employees. Successful restaurants operate on the principal of small batches or prepared to order food, which is well garnished, attractively presented with flair and a high level of guest service. Your employees must think of your customers as their guests, which is quite different from the standard perception. Your employees must understand that serving your customers old or tired foods is not doing you or your customers any favors. Your employees must understand that providing service to your customers is every bit as important to them as serving high quality food. Knowing them by name, establishing a sampling policy and being able to recommend and guide your customers through portion sizes and food pairings will translate into repeat business.

This all sounds like a significant burden on your employees, but it is a burden only in relation as to how well you as an operator give them the tools they need for success. Comprehensive and thorough training is a make or break issue here. Many operators will balk at the time and expense required to develop and implement a thorough training program, however it pales in comparison to the cost of lost sales, customers and opportunity which is a certainty with little or no training. Give your employees well thought out products and programs which are realistic for them to prepare and serve. Whether you prepare your food from scratch or incorporate various levels of prepared foods into your program (and there is a growing variety of very high quality prepared product in the market today), set them up for success. Whether you bring a chef on staff or hire external resources, your program needs to be compatible with the capabilities of your facilities and your employees.

Convenience
This includes anything from being on the right side of the street during the commute, to easy in and out parking. Just as important inside of your store are you set up to deliver quick service by virtue of your facility design. This would include the layout and traffic flow within your store. Do you have adequate staffing during peak service hours? Do you have a separate checkout facility dedicated to your prepared foods customers? Do you provide quick easy access to amenities, which are part of the takeout experience, i.e., condiments plastic ware and to go packaging? Do you provide an on premise dining area for customers which has a relaxed ambiance and evokes the feeling of quality and comfort?

Variety
Variety in a sense is a component of convenience. Mom or Dad may be stopping to pick up 5 different entrées for 5 picky eaters, and they are only stopping at 1 place. Variety is also a strategy of really knowing your customer in terms of what they want and what their price points are. Retail food markets need to be extremely sensitive to regional and ethnic food preferences. This represents both a major challenge and a major opportunity. There is not a set rule for how many and how much other than does your customer feel it is a wide variety for ongoing dining without the onset of menu fatigue.

Value vs. "Perceived Value"
Although dollar cost is a critical component of value, it is a common mistake to think that value absolutely equates to cost in the mind of the consumer. "Perceived Value" is what really sticks with the consumer as he walks out the door of your establishment. And while we should not minimize the importance of price to product, the experience of product plus quality plus variety plus service in relation to the price is really what will grow your customer base and your sales. Many aspects of retail food tend to be and respond well to a strictly price driven strategy. This does not hold true for the realm of prepared takeout foods. Prepared foods thrive on points of difference via flavor, presentation service and convenience. The consumer wants and will responds to your efforts to provide an overall experience which is a notch above the competitor and the typical supermarket experience.

The good news is that the takeout market for high quality specialty food products is still burgeoning. Two income families, ethnic population growth (and the resulting impact on middle Americas eating habits), the growing "Cooking Illiteracy" and Americas' demand for speed and convenience will keep driving this market for years to come. The bad news is if you choose to bury your head in the sand and not take advantage of this growth market, you will be left in the dust.

The challenge and the opportunity is to get your head in the right place, commit to a well planned and researched program and find, train and keep the best people. Your customers are your guests, your employees are your customers, your product line is not just food but quality, service, convenience and perceived value. The market and the profits are there for the taking. Got it, now "May I take your order please!"

Ron Marks is a 30 year veteran of the food industry. He is a recognized leader in R&D and Menu/Marketing in the chain restaurant segment. He has addressed audiences at COEX, Women's Foodservice Forum and the Research Chefs Association. He is the founder and President of Focus On Food, The Southeast's Premiere Food Research Center (based in Atlanta) and Ron Marks Associates Inc, working with the food industry in the areas of strategic product development and Menu/Marketing.