Consumer behavior has undoubtedly changed in reaction to the tough economic climate, but that’s not to say that opportunities don’t exist in the seafood category. Quite the contrary, a number of trends have opened up in foodservice amid the squeeze on disposable income.
Paul Pendola, client director specializing in UK foodservice for the global market research firm NPD Group, confirmed that clearly defined opportunities have emerged for the seafood category in quick-service catering. But, in order to make the most of these, companies within the category will almost certainly need to step outside of their comfort zones.
Using CREST (Consumer Reports on Eating Share Trends) — NPD’s tool for measuring the purchasing and consumption of pre-prepared meals, snacks and drinks for a UK client base that includes Marks and Spencer (M&S), McDonald’s, Heinz Foodservice, Compass and Seafish — the group has determined that total out-of-home consumption is split into two separate bands: commercial (quick service, pubs, full service, and travel and leisure) and workplace, education and vending.
“In terms of broad trends, quick-service restaurants remain the industry bright spot, propped up in part by the fast-growing retail/supermarket category,” said Pendola at this month’s Seafish-organized Foodservice Forum 2011. “What’s happening with supermarkets is the big chains are opening smaller footprints (outlets) en masse directly on the UK high street and across the road from McDonald’s, and they are offering meals or snacks that are intended for immediate consumption. This is their opportunity to offer more ready-to-eat items like sandwiches, wraps and salads, and they have been successful. Little Waitrose, for example, opened 23 outlets in the London area last year, which is impressive. And there’s a lot of scope for seafood there, and it’s definitely something to watch.”
According to NPD’s data, the retail/supermarket channel experienced foodservice visit gains of 2.6 percent for the year ending September 2011. It now represents more than 13 percent of all out-of-home meal and snack occasions.
To give more context, the UK population (not including Northern Ireland) made 11 billion visits to out-of-home outlets in the 12 months through to September, which is down 1 percent from the previous year.
As well as the success of high-street supermarkets, another sector of foodservice that’s on the up is “fast casual,” which is outpacing the market with sales growth of 9 percent. Pendola described this sector as a half step above quick service and a half-step below full-service, with a slightly more ambitious flavor profile and a higher price point than quick service. Nando’s and Wagamama are two prominent examples.
“There are more U.S. companies looking at the market — we know because we go to look at real estate with them. And there are some already here like the Chipotle Mexican Grill, which is the fastest-growing restaurant in America today. It’s relatively small [in the UK] right now, but it’s definitely something to watch. This is an opportunity to sell more of a premium product and there are a lot of reasons for companies to keep an eye on this,” said Pendola.
“Another area to watch is the coffee segment,” he continued. “Coffee shops are not only growing in terms of outlets but also in sales and volume of traffic. But what’s really growing the coffee shop business is they’re offering food. In fact, some of our coffee shop clients ask us not to refer to them as coffee shops anymore, as 50 percent of what now goes over the counter is food, not drink. This is another great opportunity to get placement for seafood protein and is something seafood companies may not have considered before.”
In terms of sector slumps, Pendola said the year-on-year declines experienced by the full-service restaurant segment suggest its overall recovery will be long and slow.
“The longer we stay away from these restaurants, the less we miss them,” he explained. “Whereas before, visiting three times a month was the norm, now twice or once a month is OK. But the idea that we’ll return to our old full-service dining habits once the economy gets back on track is not going to be the case in my opinion.”
Of the 11 billion out-of-home meal experiences, quick service accounted for 48 percent of all seafood servings, with full-service outlets capturing 42 percent and non-commercial with the remainder.
However, across the total out-of-home meal sector, only seafood sandwiches have posted real gains this year. A gloomier picture comes from the total out-of-home finfish and shellfish servings, which fell from 965 million in the year ending September 2010 to 962 million in the following 12 months.
NPD’s analysis found that only 7.7 percent of UK orders now include a seafood item, which means in just one year there’s one less seafood serving for every 500 visits. “It may not sound a lot but it soon mounts up,” said Pendola.
Sandwiches, however, “are hot right now, and not just at a basic level,” he explained. “There’s scope for some premium, high-level products. For example, one of our clients in Chicago produces a lobster sandwich for USD 13 (EUR 9.70), which is one of its biggest sellers. While sandwiches have been the ‘big food’ of 2011, the market’s main sandwich players like Subway are not driving the growth. It’s driven by retail/supermarkets, coffee shops and other non-traditional sandwich players. So when you’re thinking about where to sell your product, step outside the normal competitive considerations because beyond these there are a lot of operators that are going way outside their comfort zone to attract more consumers.”
Pendola revealed that overall sandwich growth is focused at lunchtime, but the seafood sandwich growth, particularly in full service, is showing up at dinner. “That’s why premium offerings need to be made,” he said. “When you think about consumers right now, they will spend the money, they just need to walk away after a meal and feel as though they ate something special.”
And he believes the sandwich category will continue to grow “as long as the economy continues to wobble.”
Another area of foodservice he feels the seafood channel should be aligning itself with is soup, particularly in terms of “grab-and-go” outlets.
“Quick-service restaurants like Eat have embraced this trend and are adding more ambitious flavor profiles, while Pret A Manger has been working on seasonal menus, promoting health and wellness as well as locally-sourced points of difference. But despite Pret having a huge list of soups in rotation, not one seafood product is included,” said Pendola.
“Seafood should take advantage of these rotating menus, take advantage of the seasonality, the messages of fresh and health — all the things that these operators think consumers want — and use that as a way to get seafood-based soups into market.”
