Expanding consumer choices: Foodservice and retail merge as boundaries blur in a transforming market
European consumers spend €888 billion on food and beverages over the past year
Circana, a leading advisor on the complexity of consumer behaviour, reports key shifts in the foodservice industry, revealing that traditional boundaries between foodservice and retail are becoming increasingly blurred.
The research, based on Circana’s comprehensive CREST data, reveals that European consumers spent €888 billion on food and beverages in the past year, with 37% of that dedicated to ‘immediate consumption’ options across both retail and foodservice channels.
The immediate consumption category includes food and drinks purchased for immediate use, like ready-to-eat meals and snacks such as sandwiches, salads, hot foods, and beverages, requiring no further preparation.
Notably, non-commercial segments within the foodservice industry, are gaining market share in this category, reshaping the competitive landscape as consumers increasingly turn to ready-to-eat options beyond traditional foodservice outlets.
Retail redefines immediate consumption
As consumers increasingly seek convenience, ready-to-eat (RTE) options—ranging from pre-packaged salads and sandwiches to warmed meals like lasagna, paella, and roasted chicken —have expanded beyond restaurants and are now available through channels like supermarkets. convenience stores, and service stations. Circana’s research shows that ready-to-eat meals purchased from retail stores once considered a minor option, have now emerged as significant competitors to commercial restaurants.
This shift is fuelling growth for other channels including retailers, while traditional commercial restaurants (including full and quick-service restaurants) are losing ground, particularly in the post-pandemic environment where convenience and quick access to food are key drivers of consumer behaviour. Commercial restaurants saw their market share decline from 79% in 2021 to 77% by the end of June 2024, while other retail channels experienced growth, increasing from 21% to 23% during the same period.
Edurne Uranga, VP of Foodservice Europe at Circana, explained: “Consumers are no longer bound by traditional categories. They make decisions based on convenience, value, and experience, whether that’s from a quick service restaurant (QSR) or a ready-to-eat section in a supermarket.”
The integration of retail and foodservice is rapidly evolving, with supermarkets now offering restaurant-quality meals in-store. Additionally, partnerships with brands like Starbucks and Costa Coffee are becoming common within retail locations. Other innovations include bakery vending, salad bars, and hot food lines, further blurring the lines between traditional retail and foodservice.
Opportunities for retailers and foodservice operators
The growing demand for RTE options provides significant opportunities for both retailers and foodservice brands. Retailers are capitalising on this trend by expanding their in-store foodservice offerings, with supermarket chains like Tesco and Mercadona leading the way in providing freshly prepared meals. At the same time, commercial restaurants are exploring new ways to engage customers, including partnerships with retailers and the development of their own RTE product lines.
As the lines blur between sectors, competition for consumer spending has intensified. Uranga continued: “Quick service restaurants, like McDonald’s, Burger King, Subway, and O’Tacos, are in a fierce competition, not just against each other, but also with major European supermarkets like Tesco, Mercadona, and Edeka. These grocery giants are becoming formidable rivals, offering convenient meal options that challenge traditional quick service food. It’s a battle for the consumer’s palate, where both sectors are vying to capture the attention of hungry customers looking for convenience, variety, and value”. This shift highlights the need for businesses in both sectors to innovate and respond to changing consumer preferences.
Other research highlights include:
Rising retail – Over the past seven years, retail sales have steadily risen across most European countries. As of June 2024, in the foodservice sector (focussed on immediate consumption), France leads with the highest percentage of consumer spending at 6.8%, reflecting a growth of +17.5%. The UK follows closely with a 6.6% share, while Germany at 5.8%, Spain holds 4.2%, and Italy has 3.5%.
Snack attack – Consumers are embracing the new retail trend of RTE meals, especially for lunch. This segment saw an impressive growth of almost 9% last year. These figures highlight the increasing consumer demand for convenient, ready-to-eat options during both lunch and snack times.
Inflation shift – The situation for consumers has changed. Over the past two years, inflation in the retail industry was significantly higher than in foodservice. However, that trend has now reversed. This shift may alter how consumers perceive current foodservice prices, potentially influencing their purchasing behaviour. As a result, it’s crucial for the foodservice industry to provide the right added value to consumers to maintain their interest and loyalty.
Convenience trend – As the lines between foodservice and retail continue to blur, retailers are working to capture immediate consumption occasions, while commercial restaurants are targeting in-home consumption, a market traditionally dominated by retail. To achieve this, restaurants are expanding their offerings to include takeaway, drive-thru, and food delivery options. This allows them to be a choice not only when consumers dine in but also when they eat at home.
These off-premise options—takeaway, drive-thru, and delivery—now account for 43% of total spending in the foodservice sector, which represents a 6-percentage point increase compared to pre-COVID levels.
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