Towards a merger of Retail and Hospitality

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The European food sector is undergoing a major transformation, with the boundaries between catering and retail blurring in the face of new consumer expectations for convenience. Supermarkets and restaurants are adapting their offerings to meet a growing demand for fast, high-quality ready-to-eat meals and solutions, redefining the market balance.

The European food sector is undergoing a profound transformation, explains a report by Circana, which estimates that food and beverage purchases in restaurants and retail have amounted to €888 billion over the past year, with restaurant visits on the old continent increasing from 35.2 to 51.5 visits in four years. The analysis based on the CREST panel highlights a trend towards the erosion of the boundaries between RHD and mass distribution. It is in France that the market share of GMS for food purchases of solutions for immediate and personal consumption during the day is the highest (6.8% of the RHD market), which represents a growth of 17.5%. This change is driven by new consumer expectations, who increasingly favour convenience and speed, particularly via ready-to-eat products. According to Circana, Europeans are showing a growing attraction to meal solutions available in convenience stores and petrol stations, thereby reshaping the competitive landscape. In response to these new habits, distribution chains are diversifying their offerings by proposing "ready-to-eat" offers, sometimes developed in collaboration with well-known restaurant brands such as Starbucks and Costa Coffee. Other avenues include automatic bread and sandwich dispensers, salad bars, and the sale of hot dishes, which further blur the boundaries between channels.

"Fast food chains such as McDonald's, Burger King, Subway and O'Tacos are competing fiercely, not only with each other, but also with major European supermarkets such as Tesco, Mercadona and Edeka. These food giants are becoming formidable rivals offering consumers the choice of convenient, tasty, varied, balanced and low-cost meals." Edurne Uranga, Vice President Foodservice Europe at Circana.

This strategy allows supermarkets to compete with fast food restaurants by offering ready-to-eat meals, such as sandwiches and hot dishes, directly on the shelves. The study shows that this trend, minor in the past, is gaining momentum and is posing serious competition to restaurants, including fast food restaurants, particularly in the post-pandemic environment where convenience and quick access to meals have been key drivers of consumer behavior. Restaurants saw their market share decrease from 79% in 2021 to 77% cumulatively at the end of June, while alternative channels such as local shops or supermarkets gained 2 points to 23% over the same period. It is therefore essential, the study emphasizes, for the RHD sector to provide added value to consumers in order to offer new offers and ensure their loyalty. Faced with distributors who are taking "stomach share" from restaurants, the latter is also targeting home consumption, a market dominated by distributors. To achieve this, restaurants are adapting their model and expanding their offering by strengthening VAE, drive-through and delivery options, capturing customers who dine on site but also when they eat at home. These out-of-home options – takeaway, drive-through and home meal delivery – now represent 43% of total spending in the restaurant sector, up 6 points from pre-Covid levels (37%).



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