More grocery stores are opening restaurants but charging less


Per person, it’s hard to beat a $2.50 spaghetti dinner

There’s a French phrase that marketing gurus love to use – “Cherchez le Creneau” – which means “search for the hole.”

Now that retailers have had a year or so to resettle from the ravages of the pandemic, there’s an ever-growing hole smack dab in one segment in particular: how to appease the price-conscious consumer when it comes to chowing down.

The cost of dining out has been rising faster than inflation for a while now and rising at a far quicker clip than grocery stores. And that is the hole that grocers have decided they can fill. Take Hy-Vee, for example.

“When Hy-Vee opened its largest supermarket to date this past summer in Gretna, Nebraska, customers were greeted by a large food hall in addition to numerous aisles of groceries,” GroceryDive’s Catherine Douglas Moran wrote in her narrative of the situation.

“At the food hall, customers can find an expanded breakfast menu, a pub with 32 taps and several fast-casual offerings including Mia Italian, HyChi and Hibachi, Nori Sushi, Market Grille Express, Long Island Deli and a Wahlburgers. The 135,000-square-foot store offers indoor seating situated near the food hall, while the pub has sit-down options along with an outdoor patio.”

In other words, if it sounds like a restaurant and looks like a restaurant, then to a consumer, it is a restaurant for all practical purposes.

Hy-Vee isn’t by itself, either. Wegmans has cafes, restaurants and burger bars. H-E-B’s has its own True Texas BBQ in-store restaurant; Fresh Market has opened its own “Little Big Meal” offering with gourmet burgers and hibachi grilled options; the Western U.S. 200-store Save Mart/Lucky/FoodMaxx chain has introduced gourmet sandwich and salad lines; and Kroger recently teamed up with Home Chef, a meal solutions brand, to offer a new ready-to-heat, nutrition-focused meal brand called Tempo.

“You can come in, pick something up and get a high-quality meal at a price that’s a value relative to what you would pay if you were going to a restaurant,” Mark Van Buskirk, Kroger's senior vice president of merchandising and marketing, told Moran.

And consumers can expect the lines between grocery meals and restaurant meals to be blurred even further. Grocery chains are increasingly investing in specialty chefs to offer more variety and capture more top-of-mind space in the consumer's head.

One example is the employment of sushi chefs -- an investment that has shown a handsome pay-off with sushi sales ringing up more than $2 billion in sales at national and regional grocers. 

Consumers can expect this evolution to continue

A recent report by the Food Industry Association (FMI) suggests that what these grocers are doing is just the beginning. Nearly 75% of the grocers studied are increasing the space for fresh-prepared grab-and-go products and more than 40% are making way for in-store dining.

And consumers are responding, too. 

PYMNTS’ data reveal that about 25 million consumers buy ready-to-eat meals at least once a week. “This potentially jeopardizes restaurant sales, as most consumers who opt for ready-to-eat meals are also restaurant patrons,” PYMNTS said, referring to its “Connected Dining: Ready-to-Eat Meals are Eating Restaurants’ Lunch” study.

And consumers are doing this because they’re finding that the food they’re taking away from a grocery store is as good as what they might get at a restaurant, but also is a lot cheaper.

Anne-Marie Roerink, principal and founder of grocery market research firm 210 Analytics, pointed to Wegmans, where the grocer smartly prints the per person cost of a meal’s ingredients right on the product, akin to how a diner would find the cost factor on a restaurant menu.

“Good luck trying to get a nice spaghetti dinner for $2.50,” Roerink said. “Putting a number on there is really, really important,” she told Winsight Grocery Business’ Editor-in-Chief Heather Lalley.

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