Growth of the ready-to-eat food and cooked food stores market. Preconditions and drivers.

Social and economic changes in society are changing people’s eating behavior, their culinary and gastronomic habits and preferences. Recent trends in urban nutrition indicate that the population is ready to spend more money in food establishments, food delivery restaurants, canteens, and cafés, provided that the following conditions are met:

• the offer is balanced in terms of the price–quality ratio; the price fits into the concept of a “daily food budget”;

• there is trust in a specific brand, food outlet, or “signboard”;

• the food outlet is conveniently located from a logistical standpoint and lies along a person’s usual route of movement;

• the food corresponds to the mental and cultural habits of the individual;

• there is trust in sanitary and hygienic conditions of production and sale, in packaging, and in the level of food freshness;

• the food is varied, and one or several outlets satisfy the need for diversity in nutrition;

• the food corresponds to a person’s dietary restrictions: allergies, diets, principles of separate nutrition, calorie and macronutrient balance, etc.

Compliance with these criteria forms a habit of eating outside the home within a specific geolocation: near the workplace, along the route of daily movement, or by ordering food with home delivery.

The stability and frequency of visits or order conversions depend on the stability of the quality of the offered product. If a person receives a negative experience from consuming a poorly prepared product, food of improper temperature, or stale food, they approach the CPR — the critical point of refusal. At this moment, the consumer makes a psycho-emotional decision to fundamentally and consciously refuse a specific outlet or food operator and to look for an alternative solution.

Eating outside the home is a physiologically necessary but not non-alternative need. For various reasons, people abandon foodservice in favor of industrially produced food (from retail stores) or food brought from home and prepared independently. The main stimulus for refusing to eat outside the home is the desire to save money or to obtain a product of better quality. Unjustifiably high prices in food establishments against the background of economic stagnation in the country force a significant part of the active population to abandon the model of eating outside the home and return to a home-based food model.

Nevertheless, the market for the sale of ready-made food and semi-finished products of full or high degree of readiness continues to grow steadily. In one observed year, the number of deli stores increased by 6.5%, according to data from a national geospatial business directory service (local market analytics platform). This was facilitated by the following factors:

• Generation Z predominantly eats outside the home;

• the population in the 45+ age category has gotten rid of fears and stereotypes about eating in “fashionable” or simply modern food establishments;

• the growth of the food delivery market allowed a significant audience, which had practically not used foodservice outside the home, to try these services first at home and then in cafés, fast-food outlets, and street food points;

• according to data from a national statistical service (official demographic statistics), a high number of divorces per 1,000 registered marriages is observed. After divorce, many women partially or completely abandon cooking at home, while up to 90% of single men do not cook at home at all, limiting themselves to reheating or finishing semi-finished products;

• the level of quality of in-house production in supermarkets and hypermarkets, sold by weight or as individual items, critically declined over a multi-year period;

• prices for industrially produced semi-finished products decreased on average, while the quality of these products deteriorated significantly;

• young people, for the most part, do not like (are not accustomed to) cooking or do not want to spend time preparing food;

• the financial and economic crisis forces the population to work more and have less time for rest and leisure. Intensification of labor leads to greater fatigue among homemakers and knowledge workers. They choose the purchase of semi-finished products or ready-made food as an alternative way to free themselves from exhausting domestic kitchen labor.

The traditional deli store format has undergone significant transformation. This fact is explained by changes in consumer preferences, culinary fashion, food production technologies, changes in the product matrix of the FMCG market, and a reduction in the time allocated for meals by individuals.

The service format through a counter is being replaced by self-service, cash & carry, take-away, and to-go formats. Deli stores are changing their interiors, competing in atmospheric components with cafés and restaurants. Food stores are introducing dining halls, seating areas for customers, and places for self-heating of products. The assortment policy is changing. Chilled semi-finished products and ready-to-eat products increasingly dominate the structure of the assortment.

The reduction in the number of hypermarkets indicates a change in the model of cooking food at home. Now, the majority of the middle-aged and older population is abandoning the model of cooking food in advance and preparing homemade semi-finished products. In an effort to save time and money, consumers have begun to fragment their food consumption basket, refusing large purchases for several days or weeks in advance. The concept of a “wholesale price” has been lost, and discount promotions in stores are short-term and designed to stimulate the frequency of visits to the supermarket by the buyer. A widespread fascination with fitness and weight loss dictates new rules for handling food. A refrigerator “filled to the brim” is an increasingly rare phenomenon.

The time of ready-made food stores has arrived. It has become profitable to buy fresh, relatively inexpensive food with the possibility of a wide choice, without personal labor costs, and, most importantly, in the required quantity, and, if necessary, balanced in calories and macronutrients.

In Western Europe, ready-made food stores are essentially supermarkets. In the assortment matrix of perishable products of large retail chains, ready-made food occupies up to 55% of the total product assortment. Specialized food retail chains focused on ready meals have been growing on average by double-digit percentages annually since the early 2010s.

Cooking food at home has now become the domain of culinary gourmets and foodies. The overwhelming majority of citizens have already switched to semi-finished products and ready-made food, or, at a minimum, are morally ready to do so.

Typology and expectations of the buyer of a Ready Meal Store (RMS)

A buyer of a ready-made food store or deli store can be characterized by various attributes: gender, age, sociocultural factors, and even gastronomic preferences. Let us consider the types of buyers of ready-made food, as well as their expectations and motives for visiting the store.

Young people

This group is predominantly represented by young women aged from 20 to 30 years. Occupation — work or study. Income — from a low to medium monthly level. Motives for visiting:

• coffee to go;

• confectionery products (to treat oneself);

• salad (non-mayonnaise-based) + beverage (a light take-away lunch);

• fitness food (low-carbohydrate dishes, steaming technology, slow cooking, baking, sous-vide);

• baked goods (Danish, French pastries, cupcakes, muffins, small-sized sweet bakery products);

• trendy dishes (lasagna, fresh rolls, sushi, etc.);

• fish dishes and dishes containing seafood and trendy grains (quinoa, couscous, etc.);

• cream soups, smoothies, fresh juices, natural lemonades;

• cottage cheese–based dishes.

Gastronomic preferences of this audience (millennials and Generation Z) include food seen on social media, in youth-oriented and international TV series, glossy magazines, and dishes accepted for consumption within their subcultural environment. They gravitate toward Japanese, Italian, pan-Asian, French, and American cuisines, as well as fitness-oriented nutrition.

Young men

Age from 20 to 30 years. Occupation — work or study. Income — from low to upper-middle monthly levels. Motives for visiting:

• a filling, high-calorie lunch with large portions and a predominance of protein;

• dishes made from minced and whole-cut meat (cutlets, roulades, grilled minced meat, beef stroganoff);

• baked goods, including fried yeast-based bakery with hearty fillings;

• set lunches;

• thick, traditional local soups;

• Eastern soups;

• dishes of traditional and legacy cuisine;

• Eastern dishes — from wraps to grilled meat;

• Eastern and Italian bakery products;

• breaded and battered items (from schnitzels to meat and fish in batter);

• meat-based mayonnaise salads;

• dishes with mayonnaise-and-cheese toppings;

• egg-based products.

Gastronomic preferences include traditional cuisine, Italian cuisine, Japanese, pan-Asian, Balkan, Middle Eastern, and American cuisines (burgers, sandwiches, wraps, etc.), all types of bakery with hearty fillings, rich soups, sauced dishes, and “assembled” dishes (rice-based dishes, baked meat casseroles).

Office workers and students

This group is represented by an age range from 18 to 50 years. Income — from low to medium monthly levels. Gender distribution — approximately equal. There are two primary motives for visiting: the presence of a culinary specialty or the purchase of breakfast, lunch, or fast food at the most favorable price.

For this audience, maximum service speed, variety of dishes, discounted or conditionally advantageous pricing, large portion sizes, or food with “healthy eating” attributes, small portions or half portions, and convenient take-away packaging are important. This audience is extremely loyal to discount and bonus systems. Some have a need to consume food on-site. Feedback from staff is important. Personal contact and recognition by the seller are valued.

There is high demand for in-house produced snacks, baked goods, sandwich items, soups packaged in trays, lunches, bottled beverages, pre-packaged confectionery products, and any packaged products, provided there is trust in the brand of the food outlet.

Motives for visiting:

• take-away food;

• set lunches to go;

• sushi and rolls to go;

• fast food to go;

• on-site food consumption.

Gastronomic preferences include traditional cuisine, regional cuisines, European cuisine, pan-Asian cuisine, healthy nutrition, fast food, and street food products.

People of the older age group

This group is represented by an age range from 30 to 70 years. Income — from medium to upper-middle monthly levels. Gender distribution — approximately 80% women and 20% men. Motives for visiting:

• purchasing products from the special-order counter (cakes, pies, dishes for festive tables);

• purchasing products for home consumption;

• on-site consumption of products (breakfast, lunch, dinner);

• tea or coffee with baked goods on-site;

• purchasing products for events at work or at home;

• spontaneous visits and unplanned purchases;

• frequent visits to purchase a culinary specialty (in their individual understanding);

• purchasing chilled and frozen semi-finished products for home.

Elderly people

This group is represented by an age range from 50 to 80 years. Gender composition — almost entirely women of retirement or pre-retirement age. Income — low monthly level. Motives for visiting:

• purchasing products from the “children’s” assortment (visits with grandchildren);

• baked goods;

• confectionery products;

• specialty items of the establishment;

• chilled semi-finished products;

• frozen meat-based semi-finished products.

This audience is highly stable and can spend a consistent monthly amount in the store. When multiplied by a group of one hundred people, this represents a substantial sum that deserves attention when forming the assortment policy.

Obviously, the presented buyer groups are highly aggregated. A more detailed and branched typology is possible, depending on the specific location of the establishment, as well as regional gastronomic characteristics of the area.

Nevertheless, the process of forming the assortment list of an RMS, as well as its pricing policy, requires consideration of the interests of different buyer groups. The main tool for stimulating and managing demand, increasing revenue, and raising visit frequency directly depends on fine-tuned targeting of the offered assortment.

 “Golden rules” of customer-oriented policy for a ready-meal store and deli

Emphasis on product quality

A ready-meal store operates in conditions of intense competition, regardless of location. Competing products include:

• street food;

• industrial food products and semi-finished products;

• culinary departments of food retail;

• food courts in shopping malls;

• instant food products;

• food delivery services;

• all foodservice establishments without exception;

• a container with homemade food brought by the consumer.

The issue of product quality is the cornerstone in forming a stable customer audience. Tools for quality management will be discussed in subsequent articles. Here, we will address only the basic aspects.

The launch of a new project or an update of the assortment of an existing one should be accompanied by the introduction of a limited, reduced assortment that is technologically perfected. There is no point in launching a wide range of items until a smaller number of positions has been fully tested and accepted by customers. There is a practice-based rule: if from five “hit” bakery items at least one hundred units of each are not sold per day, expanding the assortment is undesirable. The same principle applies to frozen semi-finished products, soups, salads, and snack groups. Only reproducibility of taste from day to day guarantees stability of visits by an individual consumer.

The assortment of an RMS must consider the needs of all social groups or target audiences visiting the establishment.

The assortment of dishes must undergo strict “casting” for survivability in display cases, serving lines, and on shelves. This means that certain products cannot be included in the assortment due to shelf-life and microbiological risks.

Preference should be given to complex multi-component dishes that are difficult and labor-intensive to prepare at home.

The Pareto principle applies in RMS as follows: 20% of the assortment generates 80% of output volume, while 80% of the assortment generates 20% of output. This means that some dishes may be produced in large volumes daily, while others in very limited quantities. Nevertheless, both must be present, since some items are sales hits, while others are “entry products” that motivate specific customers to visit the store for a particular dish.

The assortment must include specialty items that function as unique selling propositions and are not represented by competitors. These items must be brought to technological perfection, preferably using equipment and tools that ensure stable quality.

Step-based price accessibility

The assortment, for example bakery products, must include items of small output weight at a low price point as well as items at higher price points. Any customer with any income level must be able to purchase several items at an affordable total price. Price loyalty is the foundation of the development of any RMS project and the stimulation of word-of-mouth marketing.

All products not sold within the day must be written off for staff meals or disposal. Selling products the next day after production (with the exception of special storage conditions such as vacuum, modified atmosphere, or shock freezing) inevitably leads to a reduction in customer flow and risks closure of the establishment.

Discounting

The assortment must include a discount system, either long-term (discount or bonus cards) or short-term (daily changing discounts on specific items). An RMS is not a foodservice establishment but a food retail business, and retail laws must be strictly observed.

Merchandising

Product display must be carried out strictly in accordance with display plans for showcases, shelves, baskets, and other presentation areas. This is related both to service speed and to sales stimulation through cross-selling and upselling.

Refrigeration equipment in the sales area must consist exclusively of high-quality commercial display units. This is the main capital expenditure item in the project investment budget, as lower-grade refrigeration does not ensure compliance with food safety management system requirements.

Each product unit must be accompanied by sales triggers — emotionally stimulating messages to the customer, informing about nutritional value, calorie content, absence of allergens, method of thermal processing, and other characteristics.

The presence of a dining area occupying at least 30% of the total retail space can provide up to a 40% increase in turnover. These data are based on statistical analysis of a large number of deli stores conducted by industry experts.

Packaging for take-away and on-site consumption must be unified. Sellers must undergo mandatory production practice and possess knowledge about product composition, features, energy value, and production technology.

Sellers must be trained in sales techniques using cross-selling and upselling methods and operate according to approved scripts. This should not be confused with aggressive selling.

Each dish must be accompanied by a legend — a detailed description emphasizing ingredients or preparation methods that create additional value in the customer’s perception.

All products that can be placed in self-service areas must be placed there.

Motives for visiting the store must be verbalized by sellers and visualized in interior design elements.

Enhanced customer loyalty

Immediate refunds in case of customer dissatisfaction, compliments for regular customers, gifts for children, and various loyalty incentives significantly increase customer trust and repeat visits.

Product tastings must be conducted daily regardless of the product’s lifecycle stage. Tastings significantly increase the average check at low cost.

Printed catalogs of discounts and new menu items distributed at checkout areas can increase costs but are highly effective in driving sales growth.

Complimentary items accompanying on-site consumption increase loyalty and pay off in the short term.

Associated goods must meet criteria of relevance, specialization, or rarity and should not duplicate basic convenience store assortments.

Display cases should be multi-tiered, with contrasting colors and enhanced lighting to stimulate sales.

Live production broadcasts or visual access to production areas significantly increase customer trust.

Fresh fruits sold individually, exotic beverages, ergonomic layout principles, aroma marketing, and thoughtful spatial planning further strengthen the emotional perception of the store.

 Technological concept of the project

Why do we speak about the technological concept of a project even before considering the assortment of manufactured products, the preferred location, and the business model of the project? Because all these aspects directly and immediately depend on the chosen technology of food production. Technology is closely linked to equipment, the volume of investments, floor area of the sales hall and kitchen, the amount of electrical power required, and, undoubtedly, the assortment of dishes.

In this section, we will provide a brief overview of food production technologies and indicate a fairly precise volume of investments in equipment. The detailed production features of project implementation will be discussed in subsequent articles.

Thus, there is a conditional division of technological concepts into two types: the classical concept and the innovative concept.

Classical technological concept

The first concept предполагает the use of classical foodservice equipment: electric or induction stoves, combi steam ovens, convection ovens, tilting pans, vegetable cutters, potato peelers, and similar equipment.

The produced products have standard shelf lives corresponding to the requirements of local sanitary regulations and food standards (local sanitary and food safety norms). Production operates in one shift starting early in the morning or in two shifts — daytime and nighttime. Products are portioned into gastronorm containers and placed for storage in refrigeration chambers or directly into display cases. Frozen semi-finished products are frozen in freezer chambers, freezer cabinets, or chest freezers, then portioned into disposable packaging with labeling and the company’s logo.

In this case, a ready-meal store is classified as a foodservice establishment from a regulatory standpoint. No additional permitting documentation is required for the production and sale of products, except for quality certificates for raw materials and veterinary documents provided by food suppliers.

This technological concept is the simplest and fastest to implement. All technological equipment is generally readily available from suppliers. Standard commercial kitchen equipment brands are used, including locally manufactured and imported options. In many cases, suppliers also offer lower-cost equipment of Asian manufacture, which may be cheaper by 10–30%.

It is easy to assemble a production team for such a concept. Any cook over the age of 35–40 is typically familiar with this equipment, has long worked with it, and knows all the subtleties of the technological process of producing a classical assortment of dishes.

Investments in kitchen equipment for such a project may range from a relatively low to a moderate level, depending on configuration.

The sales area of the store is represented by counters, refrigerated display cases, and refrigerated shelves. As a rule, the store operates according to the principle of a classical deli, with products sold by weight from display cases. Part of the products is placed in self-service refrigerated shelves.

This technology is advisable for implementation in the following cases:

• regional specifics dictate the creation of a “clear” and familiar deli format for consumers;

• the project initiator does not have a production team interested in implementing progressive technologies;

• the project budget is limited or deficient;

• the project is oriented toward a mature audience inclined toward conservative service formats;

• the available electrical power exceeds a certain minimum threshold;

• the project initiator subjectively gravitates toward classical cuisine formats and does not associate the project with modern bakery, café, confectionery, or contemporary ready-meal store formats.

Innovative technological concept

The second concept implies a fundamentally different approach to organizing production, building technology, and forming the assortment.

A modern, innovative approach to implementing a technological concept assumes:

• extended shelf life of products, enabling work on stock;

• obtaining regulatory documentation for extended shelf life products — technical specifications, technological instructions, product quality declarations, certification within a food safety management system;

• the presence of a preparation workshop (within the enterprise in the case of a single project) or a dedicated production and logistics center;

• the use of cook & chill technology, vacuum packaging, pasteurization, shock freezing, slow cooking technology, and innovative equipment;

• operation in an energy-saving mode, ensuring up to 50% lower electricity consumption compared to the classical concept;

• the presence of an engaged production team with higher requirements for motivation and level of involvement;

• the possibility of implementing a healthy nutrition concept;

• reduction of kitchen area by approximately 30%.

Modern approaches to production organization assume the presence of a production site that produces ready-made products and semi-finished products with a chilled shelf life of several days and a frozen shelf life of several months, without strict linkage to store orders. This approach allows not only reducing production costs and lowering product cost, but also ensuring the highest quality standards and compliance with food safety management methodology. It also makes it possible to produce a wide assortment of consistently high-quality dishes, unlike the classical approach.

“Ideal assortment” of a deli store and ready-meal shop

There are many varieties of ready-meal stores. Below are only some of them:

·         store with a mini serving line — store–eatery;

·         bakery store;

·         pie shop;

·         coffee shop;

·         confectionery store;

·         tea shop;

·         fresh market store (fresh meat, fish, vegetables).

As a rule, additional “professional orientation” of a project is dictated by the preferences of the business owner or the inclinations of a specific chef or technologist involved in the project. Some gravitate toward bakery products and create an assortment of more than fifty flour-based items. Others focus on confectionery products or fitness nutrition. The choice of a specific format depends on many circumstances:

·         location of the outlet, pedestrian and vehicle traffic, availability of parking;

·         competitive environment of foodservice establishments;

·         size of the premises;

·         available electrical capacity;

·         lease and operational conditions of the premises;

·         gastronomic market conditions of the settlement (degree of market saturation by segments);

·         volume of investments in the project;

·         availability of human resources (level of competence and motivation of the production team);

·         microeconomic situation in the region during the specific launch period;

·         gastronomic trends in the region;

·         technological concept of the enterprise.

All these factors are extremely important when forming the assortment list of a ready-meal store or deli. Nevertheless, regardless of the listed factors, there exists a conditionally “classical” assortment oriented toward the main target customer groups, which performs well in all regions, regardless of purchasing power, location, or volume of investments.

Assortment groups

Bakery and flour products

·         yeast and yeast-free breads with output up to 400 grams: natural sourdough breads, malt breads, breads with inclusions, fortified breads, gluten-free breads, breads made from alternative flours, with added dietary fiber and vegetables;

·         laminated yeast pastries made with butter (French and Danish pastries);

·         laminated yeast pastries made with margarine (savory and sweet pastries);

·         yeast-free Eastern pies;

·         yeast pies and rolls (savory and sweet, sold by weight);

·         muffins, cupcakes, traditional cakes;

·         high-quality cookies, large cookies;

·         pies and small pies (up to 250 grams), yeast and yeast-free, baked or fried;

·         enriched buns, filled buns, bagels, rolls, donuts, and Berliner-style donuts;

·         national pastries;

·         national pastries such as fried or baked filled flatbreads and turnovers.

Confectionery products

·         sponge and shortcrust cakes with output up to 300 grams;

·         small-portion pastries with creams, mousses, ganache, fondant, velvet coating, yogurt-based, sugar-free, gluten-free, molded and piped;

·         decorated cakes with sculpted elements;

·         macarons, meringues, and other products not requiring refrigeration;

·         cheesecakes (up to several varieties);

·         layered desserts;

·         éclairs;

·         piped layered desserts in cups;

·         classic European cakes;

·         handmade candies;

·         handmade candied fruits;

·         tarts;

·         pies;

·         truffles and chocolate candies.

Sandwiches and fast food

·         fresh rolls made with tortillas, flatbreads, wraps, and non-wheat pancakes;

·         triangular sandwiches on rye and toast bread;

·         sub sandwiches on wheat and rye-wheat baguettes;

·         sandwiches in pita, panini, flatbread, bagels, croissants, pretzels, ciabatta, and round buns;

·         burgers;

·         hot dogs;

·         pita kebabs;

·         wraps;

·         salad rolls;

·         pizza — mini formats and folded pizzas.

Soups

·         creamy blended soups based on potatoes and low-fat milk;

·         traditional thick soups;

·         Eastern soups;

·         pan-Asian soups;

·         fitness soups based on low-fat milk and cauliflower.

Salads

·         fresh vegetable salads and mixed salads;

·         classic European salads;

·         fresh salads with grilled proteins;

·         layered traditional salads;

·         fitness salads with yogurt-based and vinegar-based dressings.

Cold appetizers

·         vegetable spreads;

·         pâtés;

·         terrines;

·         portioned fresh vegetable cuts;

·         portioned fresh fruit mixes;

·         pickled and fermented products.

Hot dishes

·         minced products: cutlets, roulades, meatballs, grilled minced items;

·         meat-and-grain dishes;

·         whole-cut meat: boiled, braised, baked, sous-vide, grilled — sold by weight;

·         breaded and battered products;

·         stewed and sauced dishes;

·         casseroles and layered baked dishes;

·         grilled dishes;

·         side dishes: boiled, baked, fried, vegetable-based and grain-based.

Beverages

·         milk-based, fruit-based, and protein shakes;

·         fruit drinks;

·         compotes and berry beverages;

·         natural lemonades;

·         hot beverages.

The “ideal assortment” is an assortment that satisfies all target groups of the project. Implementing such an assortment with stable quality without a network of stores and a centralized preparation kitchen is practically impossible. Producing such an assortment in a single full-cycle outlet is a guaranteed path to project closure due to quality problems with finished products. Moreover, given that up to 90% of the assortment is manual labor, payroll costs inevitably pull the project’s economics downward — first to break-even and then into losses.

How to correctly select the assortment of a Ready Meal Store (RMS)

There are tens of thousands of ready-made food sales points. If one were to build a conditional ranking of attendance of these establishments, culinary departments of grocery retail chains would occupy first place. Why? The answer is obvious — the best price-to-quality ratio. For retail, product margin is not as important as customer attraction. Grocery chains are willing to reduce margins significantly in order to create additional motives for customer visits and to win in competitive struggle. In many cases, product quality leaves much to be desired, but the principle “for such a low price, the consumer forgives everything” comes into effect. Most culinary departments operate according to this principle.

Second place in terms of attendance is occupied by bakeries, pie shops, and confectioneries. Here, the motive for visiting is clear and obvious — to buy bread or to buy a pastry with coffee. The customer clearly identifies the purpose of the visit. The audience knows and is confident that the price is low, the product is “understandable,” and the quality is predictable. Precisely due to clear purchase identification and a low average check, these formats achieve maximum visit frequency by the same customer.

Third place is occupied by deli stores that attempt to combine the first two formats — selling both bakery products and salads and ready-made dishes.

If all entrepreneurs and owners of deli stores and culinary markets knew which assortment was optimal, there would already be hundreds of RMS chains. Today, their number remains limited. The reason for failure in scaling the format lies in incorrectly formed assortments that lead to instability of food quality. Individual standalone delis may succeed due to favorable locations. As soon as the next location proves unsuccessful, the future chain collapses rapidly.

Factors influencing RMS assortment formation

The assortment of an RMS depends on the following factors:

• whether the project is a chain or a single outlet, and whether there are plans for network expansion;

• whether there is an existing or planned factory kitchen or preparation workshop;

• technical capabilities of the premises, equipment, kitchen area, and sales floor;

• investor expectations regarding financial results (profitability and return on investment);

• qualification level of personnel, including cooks, supervisors, technologists, and production managers;

• pricing policy.

Let us consider these aspects in more detail.

Role of the project ideologist

Opening an RMS-format store presupposes the presence of a project ideologist — an owner or manager who understands food, is a gourmet, a foodie, a person “about food.” This role may also be fulfilled by a production manager. Around such a passionate person, a team of like-minded individuals is formed. A careful approach to quality management allows the project to enter the market smoothly, provided pricing is balanced and adequate.

As long as all aspects of quality management are controlled and original recipes are maintained, and as long as specialty items that bring customers back remain in the assortment, the project survives. Opening an RMS without a food director — a person who clearly understands the process and methods of quality management — is meaningless. Launching a project that produces “ordinary,” “standard” food “like everywhere else” is absolutely unpromising. Without a professional kitchen specialist, it is better to choose a different investment niche.

Scaling and the role of a factory kitchen

If the first store proves its financial viability, opening a second outlet and duplicating the assortment proceeds relatively easily. A new team is trained by the old team. Part of the old team becomes the launch team for the new facility. However, the transition from the second outlet to the third is usually crisis-prone and extremely dangerous for the project. Production connections collapse, there is insufficient time and resources to train specialists, and the desire to launch as quickly as possible leads to deformation of the quality system and loss of customers.

Expansion beyond two outlets is rarely successful without opening a preparation workshop or mini factory kitchen.

A factory kitchen or preparation workshop operating under extended shelf-life technology allows virtually unlimited assortment expansion while maintaining stable quality. This is achieved by producing food on stock and ensuring rhythmic production loading. On one day, the factory kitchen produces 10–20 items with a similar raw-material matrix; on the next day, another 10–20 items. Logistics are carried out several times a week rather than daily, which significantly reduces costs.

The factory kitchen ensures quality stability while preserving planned cost levels, making it possible to effectively manage sales through pricing tools.

Pricing as a cornerstone

Pricing is the cornerstone of RMS success. The customer “votes with their wallet” and thinks in terms of a “food budget.” Forming an assortment based on step-based price accessibility allows analysis of sales receipts to identify focus groups, frequently recurring checks, and common dish combinations.

Identifying such patterns makes it possible to stimulate demand through discounting, promotions (such as “dish of the day”), ranking of dishes, identification of internal dish competition, densification of the raw-material matrix, and other tools.

Price depends on the full cost of a dish, which in turn depends on the degree of automation of the production process, technical capabilities of equipment, and correctly structured kitchen technology. The greater the possibilities for mass production of a given item and the lower the costs and overhead expenses for its production, the lower the markup and price. Lower price results in higher demand and a higher customer return coefficient.

The higher the material cost of a dish, the lower the markup while maintaining high margin by weight. For example, a 100% markup on grilled meat may equal a high absolute monetary margin, while a 500% markup on baked goods may yield a much smaller absolute margin. Price and quality corresponding to that price are the basis for demand management in an RMS.

In conditions of intense competition, the customer becomes especially discerning. The level of sensitivity to price and to its planned increase (as a consequence of inflation) is extremely high. Projects opening new outlets often apply discounting of most items during the first months in order to form a returning customer base.

Many investors in RMS projects fear low markups, arguing that this creates a risk of failing to cover fixed costs. Some justify this fear by claiming that customers, seeing low prices, conclude that the food is expired or made from low-quality raw materials. This argument is not without grounds. Nevertheless, based on the analysis of more than one hundred ready-meal stores, the highest revenue indicators were demonstrated by ultra-democratic store formats. These results are also confirmed by the financial performance of large grocery retail chains.

High revenue does not always indicate high operating profit. This is a matter of shareholders’ financial expectations. Most investors expect a return on investment within 10–15 months and target profitability levels of 25–30%. This approach is not correct and is not strategically sound. It dictates an incorrect pricing approach and, in most cases, harms the project.

Qualification level of personnel

The qualification level of personnel is another factor influencing the formation of the assortment matrix. It is meaningless to include complex bakery or confectionery products in the assortment without having professionals with relevant experience. The creation of a preparation production facility managed by experienced supervisors and operating under strict control is intended specifically to address problems related to the influence of the human factor on the quality of the final product.

In simplified terms, the following formula applies: no specialists for a specific segment of dishes — no place for these dishes on the menu.

Below are practical recommendations for forming the RMS assortment that help entrepreneurs correctly validate and approve items that should become stock-keeping units.

Assortment formation recommendations

Bakery products are divided into filled and unfilled items. Preference should be given to unfilled products or products with purchased thermostable fillings. Production output of such items is significantly higher, allowing lower selling prices.

The correlation between savory and sweet bakery items should be approximately 80/20. Savory baked goods sell significantly better.

Simple confectionery products sell many times better than complex ones.

Traditional and familiar pastry formats demonstrate higher sales volumes than elaborate and decorative products.

National and regional pastry formats sell better than classic small pies.

The menu should include bakery products with interesting and “trendy” fillings combining proteins and grains or vegetables.

Sales volume of frozen semi-finished products should account for a significant share of RMS revenue.

The ratio of fresh salads to dressed salads should be balanced. The absence of a sufficient number of fresh salads in the assortment represents lost profit.

Frozen soups and fully prepared frozen meals represent the most promising sales niche.

It is recommended to use heat-resistant packaging for frozen ready-made meals.

One display unit should be fully dedicated to dietary categories such as low-carbohydrate, separate nutrition, fitness nutrition, and therapeutic diets.

The assortment should include several types of soups daily in individual sealed packaging, defrosted in advance and placed in self-service counters.

Cold appetizers should be presented in two types of packaging: small-portion packaging for on-site consumption and larger packaging for home storage.

Cold appetizers should be represented strictly by specialty or fitness-oriented items.

Fresh snack portions should have limited weight to ensure an affordable price point.

It is recommended to include pickled and fermented products, as well as meat and fish delicatessen items in sliced and portioned formats.

High demand is observed for frozen noodle dishes, fresh pasta in vacuum packaging, and various types of dough produced in-house.

The RMS should offer multiple varieties of high-quality cookies, including health-oriented options.

Children’s menu items should be presented in themed shapes appealing to children.

The assortment should include a wide range of fish-based dishes daily.

The cottage cheese product group should be represented by multiple items daily.

Purchased products may include beverages, nuts, cereals, chocolate, tea, coffee, dairy products, honey, preserves, books, baking molds, and culinary gadgets.

Based on customer surveys, it is advisable to introduce raw meat and fish semi-finished products in small vacuum-packed portions, as well as vacuum-packed vegetables.

When forming the assortment, competitor monitoring is important. It is advisable to introduce items sold elsewhere, modifying them to achieve higher quality or more attractive pricing.

Ready-made dishes should be sold with mandatory side dishes to better manage food cost and shape customer eating habits.

The assortment should include daily sales hits as well as rotating items to create a sense of variety.

Correct algorithm for creating a dish in a Ready Meal Store (RMS)

Among the readers, there are undoubtedly owners of deli stores and ready-meal shops who, after reading this material, may consider reformatting their establishment into a new RMS format. Others may be thinking about opening a ready-meal store that meets the spirit of the times. In both cases, there arises the necessity to introduce new dishes into the assortment of the store.

In this section, an algorithm for creating a dish is presented, taking into account all nuances. This algorithm was developed for internal use by large retail chains and network formats of deli stores.

Dish creation is carried out by a technologist, production manager, or corporate chef. Control over the strict observance of the sequence of actions for creating, implementing, testing, and analyzing the sales of a dish is exercised by the owner, managing company representative, or operations director.

Step 1. Comparison of the planned and actual average check

When creating a menu, a certain average guest or several groups of guests are assumed. At the same time, markups are planned and an expected average check is calculated.

To determine the planned average check, the prices of all dishes in each menu category are summed. For weight-based formats, average portion sizes are assumed. An arithmetic mean is calculated for each category, after which an overall arithmetic mean is calculated across categories.

Thus, the planned average food check is obtained as it was originally conceived when prices were assigned.

Next, the actual average food check is calculated by dividing total kitchen revenue by the number of guests served over a given period.

In practice, in the overwhelming majority of cases, the actual average check is significantly lower than the planned one. This indicates that the menu does not correspond to the expectations of the audience.

This situation signals that prices are too high and that the menu requires the introduction of more affordable items.

Step 2. Identification of the set of ingredients for the dish

When creating a new dish, the following factors are important:

• availability of raw materials on the local market;

• alignment of raw materials with planned margin parameters;

• conditions of supply and payment;

• technological suitability of ingredients;

• interchangeability of product varieties and calibers;

• batch size from suppliers.

Step 3. Determination of the planned margin coefficient

The planned margin coefficient is the difference between minimum and maximum markup that allows:

• achieving maximum profit while covering fixed and variable costs;

• remaining competitive in the market;

• maintaining price stability in case of raw material cost increases;

• deciding to abandon a dish concept if margin targets cannot be achieved.

Step 4. Determination of the required dish type

If markup on an existing dish decreases due to rising raw material costs, it is advisable to replace the dish with another of the same type but with adjusted ingredients.

When determining a replacement dish type, a new planned margin coefficient is set.

It is important to avoid internal competition between dishes in the menu. Introducing multiple similar dishes leads to inventory overload and frozen working capital.

Eliminating dish competition allows guests to identify their choice more quickly.

Step 5. Development of a technical task for the cook

The technical task for the cook must include:

• dish type and portion size;

• list of ingredients with specifications;

• packaging type;

• planned margin coefficient;

• type of preparations and processing technology;

• serving time;

• presentation elements;

• ingredient overlap coefficient;

• dish markup;

• menu price;

• scenarios for reducing cost if necessary.

Step 6. Technological testing and tasting from preparations

Dishes should be tested not immediately after preparation, but from stored preparations close to the end of their shelf life.

Tastings are conducted as stress tests.

Tasting participants should include non-professional consumers.

A dish is approved only if the overwhelming majority of tasters give high ratings. Otherwise, the dish will quickly fall into low-performing sales categories.

Step 7. Preparation of technological documentation

Preparation of technological documentation includes creating process cards, photographic materials, and cost calculations.

Strict adherence to the described algorithm ensures effective cost management and alignment with customer expectations.