I. Executive Summary

The Products
• Two Main Categories: Restaurant and Grocery

The Market
• Overall HMR Sales Surpassed $92 Billion in 1998
• Restaurant HMR Sales Approach $77 Billion
• Supermarket HMRs Top $15 Billion
• Table 1-1: U.S. Retail Sales of Home Meal Replacements
• by Category, 1994-2003
• Several Powerful Factors Drive Growth

The Marketers
• At Least 1,400 Significant HMR Marketers
• Most National HMR Marketers Are Restaurateurs
• New Institutional Outlets Not Deemed Problematic to
• Restaurants and Grocers
• Number of U.S. Restaurants
• Pizzerias Have Highest Share of Sales that Are Takeout
• Number of Supermarket HMR Outlets by Type of HMR Department
• Margins on Individual Grocery HMRs Range from Zero to 200%

The Consumer
• Over 149 Million Takeout/Take-Home Food Purchasers
• Few Demographic Factors Stand Out in Overall
• Takeout/Take-Home Purchase

Scope and Methodology
• Market Definition
• Our Methodology for Estimating Sales Figures

II. The Overall Market

The Scope of This Report
• Market Definition
• HMR Represents a New Marketing Philosophy
• Two Main Categories: Restaurant and Grocery
• Outlets Covered
• Clarification of Terms
• Home Meal Replacement vs. Meal Solutions
• Home Meal Replacement vs. Fast Food
• Ready-to-Eat (R-T-E) vs. Ready-to-Heat (R-T-H)
• Dinner vs. Entree
• Restaurant vs. Foodservice
• Marketer vs. Retailer

The Products
• Restaurant HMR Products Divided into Types from
• Fast Food and Full-Service Outlets
• Grocery HMR's Three Segments: Service Deli, Separate
• Hot Food Counters, Self-Serve Refrigerated
• Grocery HMR Products
• Figure 2-1: U.S. Retail Sales of Home Meal Replacements, 1994-1998

Market Size and Growth
• Overall HMR Sales Surpassed $92 Billion in 1998
• Growth Is Slowing, but Is Still Bullish
• Restaurant HMR Sales Approach $77 Billion
• Supermarket HMRs Top $15 Billion
• Table 2-1: U.S. Retail Sales of Home Meal Replacements
• by Category, 1994-1998
• Restaurant HMR Dominates, but Yields Some Share
• to Supermarket HMR
• In Larger Retail Context, Restaurants Still Dominate HMR
• Figure 2-2: Share of U.S. Retail Sales of Home Meal
• Replacements by Outlet Type, 1998

Factors in Overall Market Growth
• HMR Means Convenience, Freshness, Exciting Taste
• A Good U.S. Economy, but Americans Slave Harder
• at Work—and at Home
• The Effect of America's Age Mix
• Table 2-2: Projection of U.S. Population by Age, 1999-2009
• Competition from Corporate Cafeterias, Schools/Colleges,
• Hospitals, Etc.
• The New Hybrids: Restaurant/Grocery Combos
• Figure 2-3: Projected U.S. Retail Sales of Home
• Meal Replacements, 1998-2003

Projected Sales
• Overall HMR Sales to Hit $116 Billion in 2003
• Restaurant HMR Will Climb to $94 Billion
• Supermarket HMR to Jump to $22 Billion
• Table 2-3: Projected U.S. Retail Sales of Home Meal
• Replacements by Category, 1998-2003

The Marketers
• At Least 1,400 Significant HMR Marketers
• Most National HMR Marketers Are Restaurateurs
• Both Public and Private Players
• Number of Dual-Category Players Is Growing

The Competitive Situation
• Inter-Category Competition a Hard Reality
• New Institutional Outlets Not Deemed Problematic
• to Restaurants and Grocers

Consumer Advertising Expenditures
• Much of HMR Ad Support Is Indirect or Hidden

The Consumer
• The Simmons Survey System
• Other Sources of Data
• Over 149 Million Takeout/Take-Home Food Purchasers
• Table 2-4: Gender of Takeout/Take-Home Food Purchasers, 1998
• Cooking at Home Is Still King
• Table 2-5: How Dinner is Always/Often Purchased
• or Prepared, 1993 vs. 1998
• Most Consumers Still Eat Their Main Meal at Home
• Americans Consuming HMRs at Record Rate
• Most Consumers Do Takeout Once Per Week
• Table 2-6: Weekly Frequency of Takeout Dinner Purchases, 1998
• Daily Takeout Users Account for Half of Takeout Occasions
• Table 2-7: Share of Purchasers and Occasions by
• Weekly Frequency of Takeout Food Purchases, 1997
• Consumers Choose Quality and Cleanliness over Convenience
• Table 2-8: Most Important Factors in Choice of Takeout Source, 1998
• In Another Study, Six Factors Have Equal Weight
• Takeout for Two Is Most Popular
• Table 2-9: Number of People for Whom Takeout
• Meals Are Purchased, 1998
• Few Demographic Factors Stand Out in Overall
• Takeout/Take-Home Purchase
• Table 2-10: Demographic Characteristics Favoring
• Purchase of Any Takeout/Take-Home Foods, 1998
• "I Often Buy Takeout Meals to Eat at Home"
• Table 2-11: Demographic Characteristics Favoring Agreement/
• Disagreement With Statement, "I Often Buy Takeout
• Meals to Eat at Home", 1998

III. The Restaurant HMR Category

The Products
• Two Broad Restaurant HMR Segments: Fast Food
• versus Full-Service
• Chain Fast Food HMRs Branded, Full-Service HMRs Often Not
• Enormous Ready-to-Eat Variety, but Popular Foods,
• Formats Stand Out
• Outlet Ambiance Is a Product, Too
• Free Delivery Is Common
• Figure 3-1: U.S. Retail Sales of Restaurant Home
• Meal Replacements, 1994-1998

Restaurant HMR Size and Growth
• Methodology for Estimating Restaurant HMR Sales
• Restaurant HMR Sales Climb to $77 Billion in 1998
• Steady Growth Maintained by Societal Conditions
• Fast Food HMR Pushes Past $65 Billion
• Tableservice HMR Approaches the $12 Billion Mark
• Table 3-1: U.S. Retail Sales of Restaurant Home Meal
• Replacements by Segment, 1994-1998

Market Composition: By Product Segment/Outlet
• Fast food Rules Restaurant HMR
• Figure 3-2: Share of Restaurant Home Meal Replacement
• Retail Dollar Sales by Product Segment/Outlet, 1998
• Hamburger Chains Account for Largest Share of Restaurant HMR
• Evening Daypart Accounts for Two-Thirds of Restaurant HMR Dollars
• Figure 3-3: Share of Fast Food Home Meal Replacement
• Retail Dollar Sales by Restaurant Type, 1996 vs. 1998

Market Composition: Regionality
• Special Note about Regionality Data
• Fast Food HMR Purchase Most Common in Midwest and West
• Per Stereotype, Southerners Are Best HMR Patrons
• of Chicken Restaurants
• Northeasterners Love Chinese Food HMRs
• West Is Mexican Foods HMR Bastion
• Northeasterners Have Taste for Pizzeria HMRs
• Southerners Support "Other" Restaurants' HMRs
• Table 3-2: Regionality of Restaurant HMR Purchase
• by Type of Restaurant, 1998

Factors in Restaurant HMR Growth
• Restaurant HMR Offers Supreme Convenience and Quality
• Restaurant Overstoring Brings Problems, but Does
• Not Affect HMR Demand
• Empty Nesters Starting to Dampen Growth
• Price-Competition Is Hurting
• Mounting Threat from Grocery HMR
• Dual-Branded and Limited-Menu Outlets Enhance Chain Penetration
• Severe Weather Keeps People from Venturing to Restaurants
• Figure 3-4: Projected U.S. Retail Sales of Restaurant
• Home Meal Replacements, 1998-2003

Projected Restaurant HMR Sales
• Almost $94 Billion in Restaurant HMR in 2003
• Fast Food HMR to Top $79 Billion
• Tableservice HMR to Surpass $14 Billion
• Table 3-3: Projected U.S. Retail Sales of Restaurant
• Home Meal Replacements by Segment, 1998-2003

The Marketers
• Hundreds of Thousands of Restaurant HMR Marketers
• Perhaps 200 Important Chains
• Chain Units May Be Company-Owned or Franchised

Marketer/Chain Rankings
• McDonald's Is the Fast Food Takeout Leader
• Table 3-4: Ranking of Fast Food Restaurant Chains by
• U.S. Takeout Sales, 1996
• Advantica Leads in Tableservice Takeout
• Table 3-5: Ranking of Tableservice Restaurant Chains by
• U.S. Takeout Sales, 1996

The Competitive Situation
• Heavy Cross-Competition between Menu—But Not Price—Segments
• Price Competition Is Fierce
• The Dual-Branding Trend: Marketers Share Sites

Competitive Focus: Advantica Restaurant Group
• Advantica to Be a More Viable Competitor in Future
• An Expert Targeter of the American Family
• Two More Family-Dining Operations
• Advantica's Fast Feeder: El Pollo Loco

Competitive Focus: Boston Chicken, Inc.
• Upscale HMR in a Fast Food Setting
• Misguided Strategies
• Management Issues Play Key Role
• Becoming a Company-Owned System
• A New Focus
• Boston Chicken Expands into Grocery HMR
• Some Are Skeptical about Boston Chicken's Future
• Updating the Boston Market Menu and Format

Competitive Focus: Diageo PLC
• Diageo Likely to Continue Grand Met's Strategy of Classic Brands
• Burger King Continues to Expand
• Relatively Few Company-Owned Units
• Burger King in Good Shape, Despite Health Scare
• Big King Big Hit
• Video Confirmation Installed at Burger King Drive-Thrus

Competitive Focus: McDonald's Corporation
• "Mickey D" Is the World's Largest Chain
• Expansion Shifted Away from United States
• McDonald's Fine-Tunes Approach to U.S. Market
• Efforts to Improve Cash Flow
• Efficiency Means Faster and Faster Food
• New Cooking System
• Emotional Appeal

Competitive Focus: Tricon Global Restaurants, Inc.
• Tricon a Spin-Off from PepsiCo
• Healthier Finances Allowing Tricon to Better Compete
• Tricon Seeks Greater Operating Efficiency
• New Parent Has Marketing Power
• Tricon's Underdeveloped Dayparts
• New Products and Improved Delivery Spur Pizza Hut Sales
• Pizza Hut Kitchens Updated for More Competitive
• Delivery and Lunchtime Strategies
• Taco Bell Hurt by Deep-Discounting
• Taco Bell Image Is Overhauled
• New Advertising and Tie-Ins Gain Taco Bell Attention
• KFC Not Hurt by Roast Chicken Chains
• Delivery, New Products Boost KFC Sales

Marketing and Product Trends
• More of a Meals Emphasis
• Dual-Branding
• A Fast Food Price-War
• Some Healthier Products
• Improved Crispiness
• Restaurant Use of Third-Party Delivery on the Increase
• Table 3-6: Selected New Restaurant Home Meal
• Replacements, 1997-1998

Consumer Advertising Positioning
• Typical Restaurant Industry Ad Themes
• To Push HMR, a Shift from Humor to the Direct Sell
• Price, Price, Price
• Taste and Quality
• Family Togetherness
• Nostalgia
• A Pizza Delivered Hot
• A Cute Pup
• Low-Fat Heros Go Head-to-Head with Burgers
• An Executive Defects

Consumer Promotions
• Constant Price Promotions
• Couponing
• Twofers and Bonus Product
• Movie, TV, Book Tie-Ins
• Original Character Premiums
• Sweepstakes
• Examples of Restaurant HMR Promotional Advertising

At the Retail Level
• Restaurant HMR Supply Paths Vary
• Number of U.S. Restaurants
• Pizzerias Have Highest Share of Sales that Are Takeout
• Table 3-7: Estimated Average Share of Retail Dollar Sales
• Derived From Takeout by Six Fast Food Restaurant Types, 1998
• Drive-Thrus Account for Half of Fast Food Sales

The Consumer: Restaurant Takeout/Take-Home
• Over Half of Restaurant Meals Are Taken Out
• Fast Feeders and Pizzerias Are Leading Primary
• Takeout/Take-Home Sources
• Ranking of Secondary Takeout/Take-Home Sources
• Reflects Consumers' Indulgence
• Table 3-8: Restaurant Takeout/Take-Home Purchasing
• by Outlet Type Patronized, 1998
• Gender Has Little Effect on Restaurant Takeout/
• Take-Home Purchasing
• Table 3-9: Share of Restaurant Takeout/Take-Home Purchasing
• by Gender, 1998
• In Fast Food Takeout/Take-Home, Parents, Kids, and
• Singles Are Notable
• Chicken Takeout/Take-Home Skews to Older Persons
• and African Americans
• For Chinese Takeout/Take-Home, Affluence, Race, Families Are Key
• Mexican Takeout/Take-Home also Favored by Affluence,
• Race, Families
• Pizza Takeout/Take-Home Purchasers Marked by
• Affluence and Families
• Other Restaurant Takeout/Take-Home Purchasers
• Distinguished by Education, Age, Race, Region
• Table 3-10: Demographic Characteristics Favoring Purchase
• of Restaurant Takeout/Take-Home Food, by Outlet Type, 1998

IV. The Grocery HMR Catergory

The Products
• Grocery HMR Segmented into Service Deli, Separate
• Hot Foods Counter, Self-Serve Cooler
• Typical Grocery HMR Dishes
• Full-Service Deli
• Self-Serve Refrigerated Case
• Separate Hot Foods Counter
• Upscale or Gourmet Variations
• Ethnic Dishes in Grocery HMR
• Grocery HMR Perceived to Be Fresher and Healthier
• Packaging
• Vacuum-Packs
• MAP Packaging
• CAP Packaging
• Films
• Upscale Shopping Bags for HMR
• Freshness Dating
• Figure 4-1: U.S. Retail Sales of Supermarket Home
• Meal Replacements, 1994-1998

Supermarket HMR Size and Composition
• Note on Supermarket HMR Sales Estimates
• Supermarket HMRs in Strong Push to $15.5 Billion in 1998
• Convenience of One-Stop Shopping, Plus Retailers'
• Strategies Drive Supermarket HMR Sales
• Service Deli HMRs, in Slower Growth Pattern, Reach $7.7 Billion
• Self-Service Refrigerator Case HMRs Charge Ahead to $5.9 Billion
• Hot Foods Counter HMRs, the Fastest-Growing Segment,
• Attain $1.9 Billion Mark
• Table 4-1: U.S. Retail Sales of Supermarket Home Meal
• Replacements by Segment, 1994-1998
• Service Deli HMRs Yield Share to Both Hot and Chilled HMRs
• Table 4-2: Share of Retail Sales of Supermarket Home
• Meal Replacements by Product Segment, 1994-1998
• Pizza, Chicken, Sandwiches Lead Prepared Foods in Supermarkets
• Table 4-3: Share of Retail Dollar Sales of Prepared Foods
• Sold in Supermarkets by Type of Food, 1997
• Another Note about Regionality Data
• For Supermarket HMR, Southern and Midwestern
• Purchasers Are Most Important
• South, Northeast Key to Deli HMR Purchasing
• Variation by Region Not Strong for Convenience Store HMRs
• Northeasterners and Westerners Most Favor Gourmet HMRs
• HMRs from Other Grocery Outlets Sell Best in South
• Table 4-4: Regionality of Grocery HMR Sales by Type of Outlet, 1998

Factors in Grocery HMR Growth
• Restaurant Quality at Grocery Prices
• The One-Stop Shopping Factor
• A Wider Selection of Grocery HMRs
• Grocery HMR Still Perceived to Be Inferior to Restaurant HMR
• Older Shoppers More Numerous
• Further Evolution of the Grocery HMR Category
• Figure 4-2: U.S. Retail Sales of Supermarket Home
• Meal Replacements, 1998-2003

Projected Supermarket HMR Sales
• Supermarkets to Retail $22.0 Billion in HMRs in 2003
• Service Deli HMRs to Hit $9.7 Billion
• Coolers to Yield $9.1 Billion in HMR Sales
• Hot Foods Counter HMRs to Be Worth $3.2 Billion
• Table 4-5: Projected U.S. Retail Sales of Supermarket
• HMRs by Segment, 1998-2003

The Marketers
• Grocery HMR Marketers Include Grocers and Marketers
• of Branded Chilled Meals
• Tens of Thousands of Grocery HMR Retailer-Marketers
• Hundreds of Marketers of Branded Chilled HMRs

Marketer Rankings
• Albertson's, Kroger Lead in Grocery Takeout
• Table 4-6: Rankings of Top 25 Supermarket Chains by
• Takeout Food Sales, 1996
• Southland Commands Convenience Store Takeout
• Table 4-7: Rankings of Convenience Stores by Takeout
• Food Sales, 1996
• Wal-Mart Rules Takeout Sales through Mass Merchandisers
• Table 4-8: Rankings of Mass Merchandiser Chains by
• Takeout Food Sales, 1996

The Competitive Situation
• HMR Retailer-Marketers Still Exploring Strategies and Setups
• Most Marketers of Branded Chilled HMRs Find Potential
• Is Limited Geographically
• A More National Grocery HMR Scene on the Horizon

Competitive Focus: Albertson's, Inc.
• Albertson's Poised to Institute Sophisticated HMR
• Programs at Newly Acquired Chains
• Albertson's HMRs in Larger Context of Meal Solution Program
• Preparation Area Used as Draw
• HMR Menus Reflect Consumer Preferences
• Albertson's Positioned on One-Stop Shopping
• Albertson's Goes On Line

Competitive Focus: Brinker International Corporation
• Long a Restaurateur, Brinker Is Now at Cutting Edge of Grocery HMR
• Eatzi's Targets Upscale
• The Eatzi's Format
• Wide Variety of Dishes Offered
• Emphasis on HMR

Competitive Focus: Celentano Bros.
• Celentano Enters Chilled HMR Arena
• Celentano Can Position Chilled HMRs on Longer Shelf Life

Competitive Focus: Chevron Corporation
• Foodini's HMR Concept at Both Gas Stations and Stand-Alone Sites
• Meals for All Dayparts
• Stand-Alone Foodini's
• Chevron Already Eliminating Hot HMRs at Foodini's

Competitive Focus: The Great Atlantic & Pacific Tea Company, Inc.
• A&P Has Broad Market Stance
• HMR Important Element
• A&P Signs with Cybermeals on Nationwide Basis
• A&P Partners with Nathan's Famous at Three Chains
• Nathan's Provides Widely Recognized HMR Brand

Competitive Focus: The Meal Market/Emily's
• Emily's a Hybrid Being Watched by Grocery HMR Marketers
• Emily's Bought by The Meal Market
• Arizona Being Carpeted
• Emily's Emphasizes HMR—But Eliminates Packaged Grocery Items
• More Takeout Sales
• Emily's Is Further Positioned on Trendy, Tranquil Atmosphere, and Affordability

Competitive Focus: Southland Corporation
• 7-Eleven, Synonymous with "Convenience Store," Gets Makeover
• Southland Introduces Fresh HMRs at 7-Eleven

Competitive Focus: Tyson Foods, Inc.
• Tyson's Cookin' Made Easy a Line of True HMRs
• Chicken is Center of Plate
• New Competition
• Cookin' Made Easy a Litmus Test for National Brands of HMRs

Marketing and Product Trends
• Grocers Showing More Marketing Savvy
• Grocers Also Employing More Sophisticated HMR Merchandising
• More Service, More Self-Service
• Fancier Recipes
• Holiday Dinners Offered by Grocers
• Delivery of Grocery HMRs

Consumer Advertising Positioning
• Quality, Freshness, Taste, Convenience, Price
• Going Head-to-Head with Restaurant HMR
• Selection

Consumer Promotions
• Weekly Specials
• Bonus Product
• In-Store Sampling, Demos, and Roving Staff
• Couponing
• A Tie-In with NASCAR

At the Retail Level
• The Grocery HMR Distribution Path
• The Optimum Grocery HMR Performance Picture
• Table 4-9: Supermarket HMR Departments' Best
• Performance Range, 1997
• Self-Service Expanded at Many Supermarkets
• Over 25,000 Supermarkets Have Service Delis
• Table 4-10: Number and Share of U.S. Supermarkets
• with Service Delicatessens, 1993-1997
• Service Deli Margins Average 43.5%
• Table 4-11: Supermarket Retailers' Average Gross Profit
• Margin on Service Delicatessen Sales, 1997
• Weekly Service Deli Sales Approach $18,000
• Service Deli Product Sources
• Almost 28,000 Supermarkets Sell Refrigerated Entrees
• from Self-Service Cases
• Close to 14,000 Supermarkets Have Steam Tables
• Possibly 56,000 C-Stores with HMRs
• Margins on Individual Grocery HMRs Range from Zero to 200%
• HMR Assortments
• Foodservice Suppliers and Trade Associations Providing
• Recipes, P.O.P. Materials
• A Wholesaler Supplies Indies with Modular HMR System
• Use of Ad Media and Promotion to Support Service Delis
• Table 4-12: Supermarkets Using Advertising and Promotional
• Media on Behalf of Service Delicatessen by Media Type, 1997
• What Consumers Would Like to See in HMR at the Retail Level
• Restaurant Chefs Defecting to Supermarkets

The Consumer: Grocery Takeout/Take-Home
• The Supermarket Leads Primary Sources of Grocery
• Takeout/Take-Home
• Supermarkets Also Lead Secondary Sources of Grocery
• Takeout/Take-Home
• Table 4-13: Grocery Takeout/Take-Home Use by
• Where Purchased, 1998
• Women Outnumber Men as Takeout/Take-Home
• Purchasers—Except at Convenience Stores
• Table 4-14: Share of Grocery Takeout/Take-Home
• Purchasing by Gender, 1998
• Over a Third of Consumers Buy Supermarket Takeout
• 1-3 Times per Month
• Table 4-15: Frequency of Purchase of Supermarket
• Takeout Foods, 1996
• Supermarket Takeout Purchasers Feature Seniors, Persons Living Alone
• Among Deli Takeout/Take-Home Purchasers, African Americans, Northeasterners, Youth Stand Out
• Convenience Store Takeout/Take-Home Purchasers Are
• Notably Mothers, African Americans, Singles
• Gourmet Takeout/Take-Home Purchase Favored by
• Affluence and Metropolitan Residency
• Other Grocery Takeout/Take-Home Purchasing Distinguished
• by Low Income, Youth, and Southern Residency
• Table 4-16: Demographic Characteristics Favoring Purchase of
• Grocery Takeout/Take-Home Foods by Outlet Type, 1998
• Over a Third of Consumers Make Special Trips for Supermarket HMR

The Consumer: Supermarket Patronage
• Which Supermarkets Are Covered
• Supermarkets Visited Twice Weekly
• Kroger and Albertson's Are Best Patronized
• Table 4-17: Leading Supermarkets in Terms of Patronage, 1998
• Location, Location, Location
• Chain Patronage Most Marked by Metropolitan Residence,
• Affluence, Minorities, Marital Status
• Table 4-18: Demographic Characteristics Favoring Patronage
• of Supermarkets, 1998

Appendix I: Examples of Consumer and Trade
Advertising and Promotions

Appendix II: Company Profiles

Advantica Restaurant Group, Inc.
• In 1997, Operating Revenue of $2.6 Billion, Under Name of Flagstar
• A Restaurant Specialist with Five Chains
• Hardee's Divested

Albertson's, Inc.
• Albertson's Reports Fiscal 1997 Sales of $14.7 Billion
• Acquires American Stores
• Takeout Represents 3% of Company Sales
• From Two Principal Chains to Eight

Boston Chicken, Inc.
• Total Revenues of $462 Million in 1997
• Boston Chicken Bought and Now Wants to Sell Two Other Chains
• A Grocery HMR Supplier Is Developed
• An Area Development System Is Abandoned

Brinker International Corporation
• Brinker Revenues Brush $1.6 Billion in Fiscal 1998
• Activities Segmented According to Nine Chains
• Eatzi's Sells HMR
• Other Chains Are Not as Interested in HMR

The Great Atlantic & Pacific Tea Company, Inc.
• A&P Nears $10.3 Billion in Fiscal 1997 Sales
• A&P Mainly Supermarkets, But Also Branded Coffee
• A&P Private Labels and Brands

McDonald's Corporation
• Record Sales of $33.6 Billion in 1997
• McDonald's Specializes in McDonald's
• McDonald's Franchising Arrangement

Tricon Global Restaurants, Inc.
• PepsiCo Spin-Off Boasts $20.5 Billion in 1997
• Tricon's Four Operating Companies

Tyson Foods, Inc.
• Sales Approach $6.4 Billion in 1997
• Tyson Breaks Out Four Business Segments
• Some Notable Tyson Acquisitions
• Tyson Brands

Appendix III: Addresses of Selected Marketers