(Nov. 28) Foodservice business is growing at a rapid clip, but not necessarily where you might think.

A report released by the NPD Group, Port Washington, N.Y., says that while overall foodservice business has grown 3% in the past two years, retail foodservice operations have the fastest growing segment with 5% growth. That outpaced growth in quick service restaurants (4%) and casual dining establishments (2%).

The NPD Group, Port Washington, N.Y., is a consumer and retail market research company.

Dwaine Stevens, media and community relations manager for Publix Super Markets Inc., Lakeland, Fla., said sit-down restaurants take more time than some consumers are willing to commit to a meal. He also pointed to the convenience of one-stop shopping.

“Buying prepared foods where you buy your groceries is a logical occurrence,” he said. “Customers typically trust their grocer to be an expert in food.”

Pewaukee, Wis.-based retail analyst David Livingston said Publix has done a good job of differentiating itself with curbside pickup service at its Greenwise Market in Palm Beach Gardens, Fla.

Stevens said the Lake Mary, Fla., store will offer the same service starting in January. The retailer also has a handful of cooking schools and meal-assembly stores.

“Stores are being innovative and trying to differentiate themselves,” Livingston said. “We’re getting more niche operations. Places like Wegmans and Whole Foods do a significant amount of sales in that end of the business. Wegmans has restaurants right in the stores.”

David Corsi, vice president of produce and floral operations for Rochester, N.Y.-based Wegmans Food Markets Inc., said the chain has to meet the needs of a diverse group of customers.

“With the number of choices — many being of high nutritional value, like the salad bars, sushi, vegetable side dishes, etc. — there is more appeal,” he said. “And don’t forget great flavors to savor. Let’s face it, if the meal replacement item doesn’t taste good, they are not coming back to buy it.”

NPD reported that traditional supermarkets account for 32% of retail foodservice, and sales increased 6% in the past two years. Discount stores, such as Bentonville, Ark.-based Wal-Mart Stores Inc., have the fastest growth rate in the segment at 11% and account for 11% of retail foodservice. Club stores account for 3% of sales.

Supermarkets lead way for foodservice growth
While overall foodservice has grown just 3% in the past two years, retail foodservice has grown by 5%.