How to Leverage Home-Meal Replacements Category for Foodservice

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The term home-meal replacement sounds a bit technical. So, what does it mean anyway? Coined by savvy retailers and grocers in the mid-’90s, the term home-meal replacement (or HMR) refers to pre-cooked, ready-to-eat meals purchased from a grocery store (and now some restaurants) and packaged in take-out containers. HMR was created so grocers could tap into increased consumer spending at restaurants, while catering to the growing demand for convenient meal solutions.

The Growth of HMR

And, consumers are responding. According to NPD’s CREST foodservice tracking, Canadians made more than 243-million visits to grocers with an HMR program in 2012, which is a 17-per-cent increase compared to 2007. Today, Canadians spend an average of $1.9 billion on HMR, representing more than four per cent of food spending at restaurants. It seems HMR is addressing a need for today’s consumer, but will the category continue to experience the same growth over the next five years as it has in the past five? It may, but the scene is changing. The good news is an increasing number of quick-service (QSR) and full-service restaurant (FSR) chains are capturing a piece of the HMR pie by attracting consumers with enhanced take-out and drive-thru offerings. And, recent promotions, from both QSR and FSR operators, have focused on the convenience of restaurant meals, be it a drive-thru open-late campaign or the encouragement of online ordering; the idea is to address the growing demand for convenient, on-the-go meals.

How to Win at HMR

The top-selling HMR food items are fairly mundane — think rotisserie chicken, chicken wings, chicken fingers, potato wedges, sandwiches, soups and salads. And, the majority of HMR menus are geared toward the lunch and supper dayparts, which represent 63 per cent of visits. Few HMR
programs are expanding beyond the traditional menu offerings to create a true point of difference. Unlike the platform of menu improvement and enhanced customer service that has increased quick-service restaurant visits during the past five years, typically the HMR category is not perceived to be as innovative. According to NPD’s Customer Satisfaction tracking survey, 46 per cent of HMR customers score their overall HMR experience as less than satisfactory. Canadians cite factors such as inconstant quality across a grocery chain, poor customer satisfaction and product knowledge as well as food quality as the reasons for low overall satisfaction scores. The opportunity is for grocery operators to understand the factors that drive customer visits at QSR and FSR and consider partnering with branded restaurant concepts, a popular strategy at leading grocery chains.

Keep in mind, that tomorrow’s HMR programs will become more innovative and strategic, providing many opportunities for grocers, QSR and FSR operators to capitalize on the growing demand for convenience.

 

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