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BUSINESS
Whole Foods Market

Want a hot new restaurant? Try a grocery store

Karen Fernau
The Arizona Republic


Graham and Sara Black, along with daughter Emma, choose their dinner at a Whole Foods Market in Chandler, Ariz.

PHOENIX — Sara and Graham Black are discerning diners in their early 30s who run restaurants through an exhaustive checklist before deciding where to eat.

Is the restaurant family friendly? What craft beers are on tap? Are the vegetables organic and local? What's on the cheese platter? Do the dinner offerings span the globe, from Italian pizza to British fish and chips to Asian Pad Thai? What's today's bruschetta special?

The Chandler couple, more nights than not, choose Whole Foods Market. Their neighborhood grocer has become their favorite restaurateur.

"We are both foodies and love that we can have a glass of wine, a meal made by a chef with quality ingredients and pick up groceries at the same time," said Sara Black, a former public-relations professional turned stay-at-home mom of 6-month-old Emma.

"The food is as good as any restaurant and the convenience hard to beat," she said.

The Blacks join a record number of consumers who are eating breakfast, lunch and dinner in the grocery store. Today, in-store dining is one of the fastest-growing segments of the grocery industry, according to Chicago-based researchers NPD Group. Sales of prepared foods, which include in-store and takeout dining, are up by nearly 30 percent since 2008.

In-store dining comprises a small percentage of overall store sales, but the upward trend shows no signs of petering out.

"It's not what's paying the bills, but an adjunct to our core business," said Rob Johnson, a spokesman for Bashas', a grocery chain based in the Phoenix area that also operates AJ's Fine Foods and Food City.

NPD analyst Warren Solochek attributes the popularity of supermarket dining to the variety of choices, value, healthier options and, most importantly, convenience.

"Busy consumers love being able to eat dinner and grab a gallon of milk for breakfast before heading to their car," he said. "Grocers have upped their game to attract those who want to save time by eating and shopping in the same location.

"Dining really makes the grocery store a one-stop option for food," he said.

Not all grocers offer in-store dining. Ethnic and gourmet grocers are the vanguard of the trend. Several major chains still sell only food to take home to eat or cook, leaving dining to restaurants. But as older mainstream stores remodel, they're likely to add in-store dining.

Supermarkets began to experiment with casual dining a decade ago, replacing fried chicken and Chinese egg rolls served in Styrofoam clamshells with fresh sushi, kale salads and pulled pork sandwiches, often prepared from scratch by their chefs.

Sara Black eats dinner with her daughter, Emma, and husband, Graham, at a Whole Foods Market in Chandler, Ariz.

Today, the experiment has evolved into a potent tool in wooing back lost business, said Phil Lempert, a Santa Monica, Calif.-based grocery and retail analyst. Conventional grocery stores have lost 15 percent of their market share in the last five years to competing warehouses, dollar stores and drugstores.

"What grocers are saying with in-store dining is that we are all things food. We want to be the center of your universe, whether it's for dining or shopping," Lempert said. "It's their way of building a lasting relationship with their shoppers — and it's working. There are grocery stores with waiting lines for dinner."

Grocers are aiming their relationship building at a wide swatch of shoppers: time-crunched families, health-conscious millennials, ethnic-food loving Baby Boomers and telecommuters.

"We have Wi-Fi so people can work in our stores. They can come in for a muffin and coffee for breakfast and stay all day if they want," said Theresa Sarna, marketing team leader of Whole Foods in Phoenix.

"We've become the town square, a place in the community where people can gather — and they do," she added. "We've had people come to our store to hold meetings."

Industry experts predict the rising popularity of grocery-store dining will take business away from struggling fast-casual restaurants, which, according to market research, have lost about 7 million visits since 2009, or about 2 percent a year.

While prices are competitive, restaurants seldom offer the sprawling menus of supermarkets, which include options from vegetarian wraps, beef chow mein and green chile pork to chicken Parmesan and soup-and-salad bars.

"People love that they can come with a group and one person can order a burger from our outdoor grill, another can order a brick-oven pizza and someone else can eat a salad," Bashas' Johnson said.

At Bashas', chefs prepare meals at all three grocery concepts, proving another point made by industry experts: Dining appeals to consumers from all income groups and ethnic backgrounds, from Asian to Hispanic.

Experts predict the trend will continue, with more grocers turning deli counters into eateries in a move to court tired shoppers wanting to grab a bite to eat before hitting the aisles, couples on the way to the theater or students meeting for study sessions.

"The grocer that once sold you food to take home for making dinner is now cooking and serving you meals in the store," Johnson said. "Walk into any of our stores at mealtime and you will see how many people come to the grocery to eat. We're as busy or busier than any restaurant."

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