Supermarkets are uniquely positioned to compete with restaurants when it comes to serving up convenient fresh meal offerings. If grocers could perfect the foodservice game, they will have a real upper hand. Consumers want good food to-go and have an increasingly large choice on where to get it which has come alongside the rise of fast-casual chains and more quick-service restaurants offering healthier options. Can grocers in New Zealand compete?
Millennials especially are looking for an opportunity not to just pick up a chicken to take home from the supermarket, but the chance to actually eat at the store. Supermarket Guru Phil Lempert believes that seasonal menus and affordable offerings are what millennials are looking for. “What these groceraunts can do is give them a convenient location where they can meet their friends, where they can have great food, and have it at great value,” said Lempert. “That becomes a terrific formula to attract this generation. It’s more of a one-stop-shop.” Lempert went on to say that the next step for grocers would be to look at adding a home meal-delivery option, as digital food orders are rapidly increasing among young adults. Alongside this, meal delivery and subscription boxes are putting pressure on supermarkets to come up with new and enticing concepts. “Grocers are putting more money and more effort in this. They see it as their culinary mark. So, this is here to stay.”
Will a restaurant strategy bridge the gap in the changing supermarket industry?
“Both foodservice establishments and retailers have been trying to figure out how to do this, and not with a lot of success,” said Christopher Muller, a professor at Boston University’s School of Hospitality Administration. “It’s an interesting problem because the supermarket people come from a place where logistics and production is their mindset. They want the customer to have a high production knowledge. You have to know what to do with a raw chicken to be able to buy a raw chicken. The restaurant side comes with a high connoisseurship or finished product. It’s less about logistics and more about experience management. We need to know that you know what a chicken cordon bleu is before you buy it. Those two mindsets are so diametrically opposed that neither of them has been able to figure out how to make that middle range, that conversion space, work very well.” Muller went on to discuss that the smaller profit margin in a grocery space is much less than the profitability in the restaurant space, and retailers should be looking to prepared foods to entice people into the store.
Employee-owned grocery store in USA, Hy-Vee, has recently announced a US$90 million investment to remodel its stores to include unique food service offerings and new departments.
Kyle Riggs, manager at Market Grille, the restaurant inside Hy-Vee grocery store in said that most people don’t expect to find a restaurant next to the produce aisle. “And then when they walk in, they’re amazed at the full wine wall with the over 20 beers on tap and a lot of high-end alcohol, and great food of course!” said Riggs.
It isn’t just about the food, however, it’s about the experience and stores can bank on popular brands and establishments to bring in the foot traffic.
Whole Foods has continued to expand its food offering into full-scale restaurants. The retailer has always had self-service kiosks for the likes of sushi, pizza and salad, among others, but in 2017 added nearly 30 full-service restaurants with wait staff and 250 quick-serve concepts in spaces inside or next to its stores.
Kroger has recently opened a new 52,000-square-foot urban format store offering the grocer’s first-ever food hall, named On The Rhine Eatery. The experience features eateries and restaurant concepts from around the Cincinnati area.
“Kroger is thrilled to introduce our first food hall and offer a one-of-its-kind shopping experience in our hometown of Cincinnati, providing a convenient location to experience delicious, quality meals and foods,” said Kroger CEO Rodney McMullen. “This innovative destination highlights Kroger’s food-first culture. Kroger’s new store offers something for everyone and we invite all to visit the store, shop for fresh groceries and discover their new favourite restaurant.”
A new two-level Kroger store features grab-and-go and ready-to-heat meals for lunch and dinner, in addition to fresh fruits and vegetables and a traditional grocery shopping experience. The store offers an exclusive Starbucks coffee blend as well as a walk-up window for beverage orders.
On The Rhine Eatery can accommodate up to 200 customers and offers indoor and outdoor seating as well as a full-service bar.
Closer to home, Coles supermarkets in Australia have recently announced its first-ever supermarket-restaurant hybrid in Melbourne which offers ready-to-eat food through partnership with fresh meal providers. The refurbished supermarket provides a convenient destination for premium quality and fresh meal solutions to inspire customers to help them to live healthier, happier lives.
“At Coles, we want to win together with our suppliers, so we’re excited to work with the best in the business for premium quality, quick and easy meal solutions that appeal to our urban and time-poor customers in Hawthorn East and surrounds. We’re also delighted to work with a small family business like EARL Canteen and support them as they grow their business, expand their workforce and reach a larger network of foodies for the first time outside the Melbourne CBD.”
Will the trend of in-store restaurants have a shelf life? Many believe this to be the case as it really is only following consumer behaviour, a behaviour that is bound to change or adapt or shift to something else sooner or later.