Fresh-Prepped Produce Fuels Foodservice Menus

The lines between foodservice and food retailing continue to blur as consumer demand for quality, freshness and convenience drives grocers to expand into meal kits, ready-to-heat, chef-prepped, restaurant-inspired, fresh-cut and more.

At the same time, the increasingly health-conscious consumer is looking for fresh produce to play a more prominent role in all eating occasions, from on-the-go snacks to sit-down meals.

With above-average annual dollar growth of 3.6%, retailers are looking to foodservice as a potential expansion area, according to The 2018 Power of Foodservice at Retail report by the Food Marketing Institute. And produce is a critical aspect of this trend.

“When I first got into the industry, foodservice and retail were clearly defined. Now there’s more crossover than ever before,” says Mark Munger of 4Earth Farms, a Commerce, Calif.-based grower, shipper, packer and distributor of organic, conventional, specialty and value-added produce. From steam-in bags to washed and ready-to-eat produce, 4Earth Farms has evolved to meet the growing demand for convenience.

“We’re moving more and more to finished products,” says Munger. “We used to sell green beans. Then it was bagged green beans. Now it’s trimmed, washed and ready-to-cook green beans.” The same is true of 4Earth’s Brussels sprouts business. “Foodservice has always wanted products like that, but now retailers are asking for them as well. We continue to sell less and less bulk, and more and more prepared produce,” he says. Increasingly, 4Earth Farms’ retailer partners are looking to source individual packs of vegetables that can be used in meal kits.

As grocers dive into the meal kit game to compete with the proliferation of companies such as Hello Fresh and Blue Apron that offer home-delivered examples, there is ample growth opportunity for fresh-prepped produce innovation. Central Market, owned by San Antonio-based H-E-B Grocery Co., now offers a “restaurant-quality, chef-prepared” Dinner for Two kit. Select stores, such as its Houston location, even offer curbside delivery of the meals. Central Market offers two dinner options each day: one under 700 calories and the other a “standard dinner.” All dinners include more than one vegetable.

Albertsons in Boise, Idaho, purchased meal kit company Plated last year, and Walmart of Bentonville, Ark., recently launched new meal kits set to roll out to more than 2,000 stores this year. The meals, which are made and assembled fresh in-store daily, are currently available in more than 250 stores, as well as through Walmart’s online grocery pickup. “The amount of time the consumer is willing to spend preparing food in the kitchen is dramatically down,” says Munger. “We continue to see retailers get more innovative and offer more meal solutions, as there is an aggressive drive to maintain and/or grow share of consumer stomach space.”

While the majority of meal kits are purchased from online subscription services, according to Nielsen data, in-store meal kit sales experienced rapid growth in 2017, up 26.5% to $154.6 million. 4Earth Farms is ready for the meal kit boom. “Our company is making significant capital investments and continues to invest in equipment and packaging solutions that capitalize on this meal solutions trend,” says Munger. “That’s how much we believe in it.”

Family-owned C&C Produce in Kansas City, Mo., has also seen an increase in demand for fresh-cut and value-added produce. Its Cool Creations line offers foodservice, restaurants and retailers convenient solutions that reduce the need for in-store labor.

Steve May of C&C—formerly director of produce and floral for Balls Food Stores, a Kansas City-based chain with banners that also include Price Chopper, Hen House and Payless Discount Food—sees labor cuts driving the trend in value-added produce. “With the lack of labor in stores nowadays, fresh-cut is absolutely growing,” says May, noting that C&C’s Cool Creations division sells fresh-cut pineapple, cantaloupe and honeydew that stores can repack. It also offers meal solutions including ovenable and steamable bags of cut vegetables to cross-merchandise with proteins.

“Labor has been cut drastically,” says May. “When I started with Balls 30 years ago, labor represented 11% of sales. When I left, labor was 6.5% of sales.” Meanwhile, he watched fresh-cut produce grow from 5% of sales to 13% of sales.

As more and more restaurants from fine dining to fast casual and even fast food introduce and expand their vegetarian and vegan options, supermarkets looking to stay on-trend are offering more plant-based prepared foods. “Last year, jackfruit moved into the mainstream as a meat substitute because of its high protein content, and in response to the consumer trend of eating more plant-based foods or ‘clean’ diet regimens,” says Cathy Burns, CEO of the Produce Marketing Association (PMA) in Newark, Del.

Lisa McNeece, VP of foodservice and industrial sales for Grimmway Farms in Bakersfield, Calif., agrees. “Today, we’re seeing some exciting new trends enter the foodservice sector. Through Grimmway and Cal-Organic produce vegetables, I’ve personally witnessed the evolution of jackfruit being incorporated on many vegan menus. This high-fiber, flavorful fruit is loaded with vitamins and minerals and provides the texture of pulled pork.”

Both Burns and McNeece also see riced cauliflower crossing over from foodservice to retail. Burns says the spiralizing of vegetables into “noodles” is another hot trend at retail inspired by restaurants.

Danny Meyer, CEO of Union Square Hospitality Group and founder of Shake Shack, will deliver the keynote at PMA’s 2018 Foodservice Conference & Expo in Monterey, Calif., this July. The restaurateur has his finger on the plant-based pulse. Last month, Shake Shack rolled out a new Veggie Shack in all 106 of its U.S. locations. The new veggie burger, which is also offered in a vegan option, is the chain’s second vegetarian dish.

Nissa Pierson, a 25-year veteran of the produce industry who manages the organic mango program for Mexico’s Crespo Organic, finds that restaurant trends play an important role in driving sales of the fruit at retail. “In mangos, we have seen considerable growth that is directly related to the foodservice sector,” she says. “We know people want to replicate the meals they have in restaurants, and as more dining establishments put mangos on their menus in various forms, consumers are experimenting with the fruit more at home.”

Pierson also points to a number of fast-food establishments that added mangos to their menus last year. “It made the fruit mainstream for the first time ever,” she says. This year, watch for the increased usage of mangos in cocktails and beverages: “The fresh produce cocktail scene is by far the hottest trend for the upcoming summer.”

As retailers from Amazon to Kroger and Walmart offer home delivery, the pressure on purveyors of produce intensifies. A recent consumer study by the Retail Feedback Group (RFG) found that only 28% of shoppers surveyed reported purchasing produce online.

“The reason given for this is that produce bought online falls short of shoppers’ standards for freshness and quality,” says Cathy Burns of PMA. “This is even more critical for our industry and retail partners to figure out, since the RFG study found 40% of shoppers said they would purchase online groceries more often in the year ahead.”