Frozen meals may be the consumers' and retailers' solution to the home meal replacement (HMR) issues of the past. However, in the past ten years, retailers have staged many expensive, false starts targeting the meal replacement category. Recent developments with frozen meals (already a six billion dollar business) deserve a sharp analysis before jumping to market. Despite obvious shifts in brand and merchandising strategies, the same nagging questions remain. Can frozen prepared meals capture a larger share of the convenience meal segment in the future? Or...will the trend to offer restaurant branded, frozen meals simply pass as another round of expensive HMR market testing?
Early Signs-Mostly PositiveManufacturers, retailers and foodservice brands likely will share in prepared meal sales.
Boston Market (and Heinz) sold $130 million of their frozen retail products the first 12 months of the offering (ended May 2001).
Con Agra supplies family dining brand Marie Callender, a leading restaurant brand in retail venues, and signed a brand/product development deal with Wolfgang Puck (a celebrity foodservice brand) for over $25 million.
After successfully developing Tombstone Pizza from a single-unit pub restaurant brand to a national retail (low-price) brand, Kraft adds both California Pizza Kitchen (a premium pizza alternative) and Taco Bell (a low-price Mexican line) to its RBP group.
On the negative side, Taco Bell may exit the retail market after losing “significant” restaurant sales after a public announcement stating retail Taco Bell products contained genetically modified (GM) corn ingredients. None of Taco Bell's approximately 7,000 restaurants carried products containing GM corn. However, foodservice sales apparently suffered because consumers adopted a “better-safe-than-sorry” attitude and didn't differentiate between Taco Bell's branded retail products and foodservice items. The reverse incident could occur with equally disastrous effects. That is, a foodservice brand's restaurants could so deteriorate in key attributes such as service, cleanliness and product quality that consumers' retail brand perceptions suffer by association. The result: the RBP's sales decline.
Competitors Vie for First-Mover StatusA large portion of the current wave of RBPs is positioned as ready-to-thaw, heat-and-eat products from the freezer section, i.e. convenience meal components or home meal replacement items. (See table on p. 28.) Although RBPs could be fresh, pre-packaged or scoop-and-serve deli items, shifting product from fresh to frozen makes sense from a retailer's perspective. After retailers failed to reach profitability with their fresh prepared foods programs, many looked for an alternative. Five years ago, freezer products met consumers' requirements for convenience, but not other parameters, especially taste quality. With few exceptions, frozen meals suffered from the same low-quality perceptions by consumers that grocery store fresh prepared foods did. Enter the restaurant branded products and their halo of “restaurant quality” taste and texture.
The primary expectation for RBPs is “built-in” consumer pull. That is, consumers will be familiar with the restaurant brands, and their promise of taste quality (price-value, etc) will induce consumers to trial. Additional brand “pull” may derive from social attributes as well, especially in the case of consumers who normally do not buy frozen foods, but may be motivated by the allure of a brand name like Puck, California Pizza Kitchen or T.G.I. Friday's. Thus, marketers may expect consumers that are aware of a particular restaurant brand to try the retail products—once. Anyone who has ever built a retail brand position from scratch can appreciate the savings in development, slotting and advertising dollars that an established brand's “pull” provides.
One estimate is that up to 85% of consumers are aware of national restaurant brands, while only 15% are aware of regional restaurant brands outside their area. This 70-point difference represents as much as a five-fold increase in required introductory marketing dollars. And herein lies one of the pitfalls of RBPs in retail venues.
Restaurant brands build brand awareness through positive word-of-mouth. That's how Starbuck's went from 18 to 4,435 stores in 20 years and built a retail product group of three lines and two-dozen SKUs on an advertising expenditure of approximately $20 million.
Convenience attributes alone will not be sufficient to capture the true prize—the convenience meal segment. Unless RBPs meet all consumer and brand expectations, retailers can expect consumers will be less interested in RBPs than in cheaper, national and private label, branded cousins.
Consumer Expectations, the QualifierConsumers who buy the new, premium-priced RBPs (instead of Stouffer's, Banquet or hundreds of other frozen food brands) will do so because they need “restaurant-quality” taste and are willing to pay a premium price. Having been disappointed by frozen foods and supermarket fresh prepared foods in the past, quality motivated consumers will be watching skeptically for brands that promise restaurant quality but do not deliver. Restaurant brands differentiating themselves on taste and texture quality, rather than price, will win a solid following with the primary HMR consumer base. RBPs expecting to deliver faux-restaurant quality may find themselves competing on price against the entrenched frozen food, retail brands.
Tom Miner is the vice president of marketing for the Lettuce Consulting Group, a Chicago-based food industry consulting firm affiliated with Rich Melman's Lettuce Entertain You restaurant group.