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How Grocers can take advantage of Ready-to-Eat Meals

The Ultimate Guide to Boosting Profitability With Ready-to-Eat Meals

This post was originally written November 4, 2020 and then updated.

Ready-to-eat meals aren’t just a passing trend—they’re a strategic opportunity for grocers aiming to meet modern consumer needs while simultaneously boosting profitability.

According to recent data, the global market for ready-to-eat meals was valued at USD 143.86 billion in 2021 and is growing at an impressive rate of 5.1% year-over-year. This surge isn’t accidental; it’s fuelled by shifting food preferences and the busy lifestyles of both working individuals and college students.

But what truly makes ready-to-eat meals a win-win for both consumers and retailers?

First, convenience. Time is increasingly scarce, and ready-to-eat meals eliminate the need for consumers to buy and prepare separate ingredients. Our recent pricing research has shown that customers are willing to pay a premium for the convenience of online grocery shopping. Retailers who recognize this, can set their prices at a markup, increasing profitability on existing orders.

Second, personalization. Personalization is another key aspect that customers are coming to expect from retailers. Leveraging a configurable digital commerce platform like Mercatus, grocery retailers can offer customers an array of ready-to-eat meal options with choices of sides, resulting in thousands of possible meal combinations. This level of configurability not only satisfies the consumer’s craving for a unique experience but also builds brand loyalty, thereby increasing customer retention.

Third, profitability. By providing an expedient, personalized solution for prepared meals, grocers have the potential to not only drive sales of high margin items, as well as increase average order values. With the market for prepared meals growing steadily, and consumer willingness to pay for convenience proven, it’s clear that ready-to-eat meals are a profitable long-term strategy for retailers.

Fourth, future growth. With a market already worth billions and consumer behavior increasingly tilting towards convenience and personalization, now is the opportune moment for grocers to invest in this segment. Ensuring that customers have access to this valuable segment through digital commerce is essential. As they say, timing is everything—and the time for ready-to-eat meals is decidedly now.

Now that we understand why ready-to-eat meals can lead to success for your grocery business, let’s explore the benefits and strategic recommendations for maximizing your strategy below.

The Benefits of Ready-to-Eat Meals

Ready-to-eat meals offer a multitude of benefits for grocery retailers, ranging from higher margins and brand differentiation to customer personalization and loyalty. Moreover, they fit seamlessly into existing operational frameworks, making them a low-risk, high-reward venture for those looking to tap into this lucrative market. In this section, we will list those specific gains and expand upon them.

1. Gain higher margins per order

One of the most compelling advantages for retailers is the higher per item margin of ready-to-eat meals. Because these meals are prepared in-house, grocers are positioned to capture a greater slice of the profit pie. This is particularly impactful given the slim margins often associated with traditional grocery items. By controlling the production, retailers can manage costs effectively and set pricing that amplifies both convenience and profitability.

2. Drive brand differentiation

Ready-to-eat meals offer a unique opportunity for brand differentiation. By sourcing fresh and local ingredients for their prepared meals program, grocers can underscore their commitment to quality and value. This not only elevates the retailer’s brand image but also serves as a competitive edge in a crowded marketplace. Consumers are increasingly discerning about food provenance, and this focus on quality ingredients aligns well with that trend.

3. Offer personalization and convenience

Like ordering from a menu at a restaurant, customers want to be able to order their prepared meals the way they like it. Prefer to choose two sides of mashed potato? Or perhaps one upgraded side of sweet potato fries for an additional $2.00 and one side of coleslaw? Customers want to be able to personalize their meal, as they would if they were ordering at a restaurant or buying the ingredients and making it themselves. With the configurability of the Mercatus digital commerce platform, customers can satisfy their needs with the ease of a few clicks and order it alongside their regular online grocery order.

4. Build customer loyalty

In the current retail landscape, customer loyalty is more than just a buzzword—it’s a significant driver of long-term success. When customers experience the convenience and quality of ready-to-eat meals, it builds a strong affinity with the grocery retailer. Customers appreciate when a retailer provides products that align with their lifestyle needs, and loyalty often follows. Over time, this increased loyalty translates into customer retention, as satisfied consumers are likely to return and make additional purchases.

5. Enable private label promotion

Private label products often offer higher margins for retailers, and ready-to-eat meals provide an excellent opportunity to promote these. For example, grocers can creatively integrate private label items into their ready-to-eat meal offerings, perhaps by featuring different seasonal flavors for a rotisserie chicken meal, pizza or sandwich and pairing a private label seasoning or sauce. This creates a synergistic relationship that can be leveraged for seasonal promotions, new private label product innovation and marketing initiatives.

6. Increase operational efficiencies

Ready-to-eat meals are likely already a part of the operational strategy for many grocery retailers. By leveraging the sale of ready-to-eat-meals through online channels, it allows grocery retailers to make the most of the operations that they have in place to serve the in store customers. Backend configurability allows grocery retailers to make adjustments to time to prepare, timeslots and general availability based on operational requirements.

These benefits are all powerful levers to help drive greater profitability for your grocery business. In the next section, we will discuss differentiation and evolving the ready-to-eat-meal service to capture as much opportunity as possible.

Going Beyond Regular Ready-to-Eat Meals

By expanding your ready-to-eat meal offerings to include specialized options, grocery retailers can cater to a broader customer base, increase their profit margins, and solidify their brand as a one-stop-shop for diverse dietary needs. Here are a few ideas to evolve your service:

Specialized Diets

The growing demand for specialized diets—gluten-free, nut-free, vegan, and vegetarian meals—provides grocery retailers a great opportunity to diversify their ready-to-eat meal offerings. Consumers who once had to prepare specialized meals themselves or place custom orders at restaurants can now easily order these ready-to-eat options through a grocer’s web or mobile platforms. This not only makes life easier for the consumer but also establishes the grocer as the go-to local source for specialized dietary needs. However, retailers must exercise caution, particularly when it comes to potential allergen cross-contamination, especially for gluten or nut allergies. One way to potentially mitigate this risk is through meal kits that customers can assemble in their own kitchens.

Gluten-Free Options

For consumers seeking gluten-free options, grocery stores can effectively compete with meal delivery and meal kit services. The advantage here is that grocers can offer lower prices since they don’t have to factor in shipping costs. For context, most specialized meal services price their offerings starting from $11.99 per portion. By offering in-store, ready-to-eat gluten-free meals, grocers can attract a wider customer base without the added logistical costs.

Vegan and Vegetarian Meals

When it comes to vegan and vegetarian meals, most competitors in the market are local prepared meal delivery services. These services often also offer keto, low-carb, and paleo diet options. However, these meals are usually delivered in bulk, meaning consumers can’t order a single serving of a specific recipe. This limitation provides grocery stores an advantage, as they can offer individual servings, giving customers greater flexibility and choice.

Healthy Lifestyle Meals

The trend towards health-conscious eating also presents an opportunity for grocers to offer meals tailored to specific medical conditions. Beyond simply offering low-carb or low-calorie options for weight loss, grocers can expand their offerings to include meals suitable for diabetics, which would be similar to their low-carb recipes. This allows grocers to serve a broader demographic and provide a more comprehensive health-focused product line.

Child-Friendly Options

Busy parents often struggle to prepare meals for their children, especially when it comes to school lunches. Grocers can step in to fill this gap by offering prepackaged, child-friendly meals. These meals eliminate the need for additional lunch boxes and offer a variety of options to cater to picky eaters. Grocers can further differentiate their product range by offering fresh, ready-to-eat meals suitable for all age ranges, from toddlers to teens. For instance, emphasizing that fresh baby food options are healthier than canned or packaged alternatives can be a compelling selling point.

If deployed properly, the aforementioned ready-to-eat-meal expanded service offerings can attract new customers and more orders in general. Next, we will discuss how to maintain a profitable service by managing the expenses associated with fulfilling the program.

How to Make Ready-to-Eat Meals Cost Effective

In this section we clarify multiple ready-to-eat-meal strategies that grocery retailers can utilize to significantly enhance the cost-effectiveness of their offerings, leading to increased sales and greater profitability.

Leverage Buying Power

Regional grocers often have significant buying power when it comes to sourcing ingredients for ready-to-eat meals. By regularly working with vendors, they can negotiate discounts and deals that make the meals more cost-effective to produce. This bulk purchasing capability provides a crucial competitive advantage, allowing grocers to offer high-quality meals at attractive prices, thereby driving greater profitability.

In-House Labor Efficiency

Another way grocers can make ready-to-eat meals more cost-effective is by utilizing in-store associates for meal preparation and service. By assigning these tasks to existing staff, grocers eliminate the need to outsource labor to third parties. This in-house approach not only reduces costs but also ensures better control over meal quality and customer service. Store associates can be involved in all aspects of the meal process, from preparation and cooking to servicing the counter.

Cross-Selling Opportunities

Ready-to-eat meals also offer ample opportunities for cross-selling. For example, a rotisserie chicken meal could be enhanced with a lower-selling prepared food item , encouraging customers to try new products. This tactic not only elevates the meal experience but also introduces customers to other products in the store, increasing the chances of additional purchases and a higher order value.

Seasonal and Event-Based Promotions

Grocers can capitalize on seasonal trends and events to offer specific promotions, such as BBQ seasonings during the summer or special meal packages for Thanksgiving. These limited-time offers can create a sense of urgency and excitement among customers, driving increased sales. Beyond seasonal promotions, ready-to-eat meals can also be catered for special events like office parties or birthdays, creating additional revenue streams.

Efficient Inventory Management

Keeping track of customer purchases online can also contribute to cost-effectiveness. By monitoring what meals are frequently bought, grocers can better manage their ingredient inventories, thus reducing food waste. Effective inventory management not only minimizes costs but also ensures that meals are always fresh and available, enhancing customer satisfaction and loyalty.

Mercatus Retailer Spotlight

Weis Markets offers a compelling example of how to execute the ready-to-meal strategy successfully. Their Weis2go brand of ready-to-eat meals includes a wide variety of options such as rotisserie chickens, sandwich variations, pastas, salads, and cakes. By offering a diverse range of choices, they cater to a broad customer base, increasing the likelihood of repeat purchases and sustained profitability.

While implementing any one of these strategies can positively impact the bottom line, leveraging multiple approaches in tandem can create an exponential increase in the profitability of your ready-to-eat meal program. Each strategy complements the others, creating a holistic approach that maximizes both customer satisfaction and revenue generation.

How Grocers Can Leverage their Owned eCommerce Channels to Offer Ready-to-Eat Meals

The trajectory of grocery app usage tells a compelling story. In 2017, a modest 12 million people were using grocery apps, but by 2022, that number had soared nearly 3x to 30.4 million. This dramatic rise underscores the importance of online platforms in modern grocery retailing. But what exactly are the benefits of using your eCommerce channel for the ready-to-eat meals offer?

A Seamless Brand Experience

First party online platforms allow grocers the opportunity to replicate more of their unique in-store brand experience in the digital realm. Grocery ecommerce platforms like Mercatus enable retailers to make planning for special occasions both easy and convenient for customers. Within the same online grocery order, customers can include a customized ready-to-eat meal or side dish, all set for pickup at curbside or doorstep delivery.

Ready-to-eat meals

Streamlined Order Fulfillment

One of the major challenges in scaling up ready-to-eat meal offerings is ensuring consistent quality in both products and service. Mercatus’ Enhanced Fulfillment solution is custom-built for grocery retailers, enabling them to scale their meal and grocery order fulfillment services seamlessly. The system is configurable and is able to take into account the unique timing required for each order, allowing your team to assemble, pack, and dispatch orders efficiently.

Flexibility and Customization

The Mercatus platform not only offers a wide range of ready-to-eat meal products like rotisserie chicken, pizza, stew, and sandwiches but also adds another layer of convenience for customers. For instance, the rotisserie chicken meal allows customers to choose from a variety of sides, and the sandwich option provides multiple topping selections. This adaptability caters to customers looking for quick, fresh, and healthy meals.

Special Celebrations and Custom Orders

For special occasions, Mercatus goes above and beyond by allowing customers to fully customize their own cakes, including flavor, icing, filling, photos, and size. On the backend, retailers can set up a limited number of topping options and specify different preparation times. If a cake takes six hours to prepare, that prep time can be included in the order, aiding in the scheduling of pickup and delivery times.

Backend Coordination

The Mercatus platform is not just customer-facing; it also provides robust backend support. The mobile and web platforms are tightly integrated with the backend console and prep app. This ensures that the retailers’ department teams are always in sync, receiving incoming orders in real-time and preparing the ready-to-eat meal orders according to the customers’ pickup and delivery times.

By fully leveraging their owned eCommerce channels in these ways, grocers can offer a robust range of ready-to-eat meal options, driving greater profitability and customer satisfaction.

Ready-to-Eat Meals: Critical Thoughts

So, how can grocery retailers better position themselves to succeed in the highly competitive ready-to-eat meals market?

Flexibility and Choice in Fulfillment

When it comes to fulfillment, one size doesn’t fit all. The right fit will depend on your customer base, geographic coverage, and labor models. And let’s not forget the all-important consideration of commission costs. Grocers have the flexibility to use their own associates, gig labor, or a combination of both, depending on what serves their business model best.

The key takeaway here is to select a fulfillment provider that aligns closely with your specific needs and objectives.

The Rise of Curbside Pickup

Curbside pickup is becoming increasingly important. For instance, in October of 2023, Pickup accounted for 42.7% of all online grocery sales. Further, predictions indicate that by 2027, curbside pickup will make up half of the total eGrocery market. Retailers should be proactive in leading this trend by devising a fulfillment strategy that maximizes customer convenience.

The more seamless and reliable you make the curbside pickup experience, the better positioned you will be in capturing a larger share of this expanding consumer behavior trend.

Curbside pickup trends

Customer Convenience and Retention

The data speaks clearly: a 13% net gain in usage occurs when customers have a positive pickup or delivery experience. The implication is clear—invest in providing reliable pickup and last-mile delivery experiences to not only attract but also retain customers. Once again, convenience isn’t merely a nice-to-have; it’s a compelling value proposition that can significantly impact customer loyalty.

Brand Differentiation from Mass Merchants

Mass merchants have already incorporated ready-to-eat meals into their in-store offerings, posing a challenge for grocery retailers.

To stand out, grocers need to differentiate their ready-to-eat meals solution. One effective strategy is to extend these offerings through delivery and pickup services, not just limiting them to in-store availability. While this presents logistical challenges, particularly in how meals need to be delivered, the effort is worthwhile to deliver on the promise of convenience, while having the opportunity to gain more customers and revenue.

It’s crucial to view meals prepared in-house as an extension of your brand. This approach allows you to treat these offerings like a private label product. By infusing unique options into your ready-to-eat meals, you can set your offerings apart from those of generic national chains or mass merchants. This can be a significant point of differentiation, elevating your brand in a crowded marketplace.

Conclusion: The Future of Ready-to-Eat Meals

As we look to the future, it's evident that ready-to-eat meals are not just a passing trend but a growing market set to become even more robust. According to a comprehensive report by Market Research Future (MRFR), the ready-to-eat meals market is on track to exceed USD 188 billion by the end of 2030.

This underlines the immense potential and staying power of this market, strongly arguing for the timely entry or expansion of grocery retailers into this space. Given the trajectory, it's clear that ready-to-eat meals represent not just a short-term opportunity but a long-term investment that can substantially contribute to a retailer's bottom line.

With consumers increasingly prioritizing convenience and quality, the stage is set for grocery retailers to make a significant impact. The value proposition for consumers is strong, and the profitability potential for retailers is even stronger. Those who invest wisely in this area, paying close attention to quality, convenience, and customer preferences, are likely to be the winners in this fast-growing market.

In closing, the future is bright for ready-to-eat meals, and the time is ripe for grocery retailers to not only enter but thrive in this expanding market with a digital commerce offering. Ignoring this growing trend could mean missing out on a critical opportunity to increase profitability and build a more robust, customer-centric strategy for ready-to-eat meals.

Take Action Now: A More Profitable Future Awaits

Leverage the #1 eGrocery platform for regional retailers to expand your profitability. A seamless ready-to-eat meals solution is waiting at your fingertips. Boost your bottom line and provide unparalleled convenience to your customers. Contact us today to get a demo and see firsthand how we can help you elevate your business.

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  • https://www.grandviewresearch.com/industry-analysis/ready-meals-market
  • https://www.statista.com/statistics/1013928/number-of-grocery-app-users-us/
  • https://www.marketresearchfuture.com/reports/ready-to-eat-meals-market-1979
  • https://www.globenewswire.com/en/news-release/2022/05/12/2442309/0/en/Ready-to-Eat-Meals-Market-to-Cross-USD-188-Billion-by-2030-at-10-98-CAGR-Report-by-Market-Research-Future-MRFR.html
  • https://greenly.earth/en-us/blog/ecology-news/global-food-waste-in-2022
Headshot of Emi Takeda

Emi Takeda, Director, Marketing and Brand, is driven to help grocery retailers embrace digital transformation.