The Rise of “Grocerants”: How to Optimize Retail Foodservice

In the not too-distant past, hot bars or foodservice inside of retail operations may have been just an added bonus for hungry customers. These days, however, foodservice in grocery stores, including full-blown restaurants (aka “grocerants”) has gone so mainstream, a business that lacks one is simply not meeting customer expectations. Consider that, according to Technomic’s 2018 State of Retail Foodservice, foodservices sales in the U.S. have gone from $13 billion in 2006 to $34 billion in 2017. Grocery foodservice has gone from a nice bonus to a must-have.

For example, Union Market, a grocery chain in Brooklyn, N.Y., now offers prepared foods such as adobo-rubbed grilled chicken, butternut squash and kale salad. Category-leader Whole Foods, based in Austin, Texas, offers made-to-order pizzas and sandwiches in addition to its extensive hot and cold bars. One Wegman’s location even offers a full-service Mexican restaurant and tequila bar.

The foodservice options are endless and Technomic’s 2018 State of Retail Foodservice breaks down the service types into four tiers: Specialists—stores that blur the line between retail and restaurant (Wegmans, Whole Foods); Destinations—supermarkets that offer almost every type of foodservice option, from made-to-order stations to café seating, while still presented as a full-line retailer (HyVee, Mariano’s); Standard-Bearers—stores that have limited foodservice, offering mostly grab-and-go fare (Jewel-Osco, Albertsons); and Essential-Provider—stores whose emphasis is on sliced meat and cheese with little or nothing prepared in-house.

Increased expectations

As chains with sophisticated foodservice program expand, more U.S. consumers will have visited such retail environment at some point, thereby changing their expectation of what a grocery store can provide. To stay competitive with area restaurants as well as with other grocery chains, retailers must make the best of their foodservice offerings to stay ahead of this consumer demand. According to Technomic’s 2018 State of Retail Foodservice report, 34% of consumers say they are making more supermarket foodservice purchases than they were a year ago, and one of the top reasons why they’re buying more is the quality of food, along with affordability, variety and convenience. Retail foodservice is projected to grow at least 6% over the next five years, according to the report, which makes it the third fastest-growing segment in all of foodservice.

Streamlining foodservice operations

While hungry, time-strapped consumers are deciding they’d like to eat where they grocery shop, stores must make sure that their foodservice program makes operational sense. To keep costs low, operators need to continually optimize menus to balance popularity and profitability of each item. In the kitchen, operators may need to adopt robust management systems to reduce wasting supplies such as fryer oil while improving food quality and consistency. As an added benefit, something like an automated oil management system can also cut down on labor costs as fryer vats will required less emptying, filtering and refilling.

To attract more consumers, retailers should also focus on improving cleanliness of food bars as well as the cleanliness in merchandisers, seating areas and visible food prep areas, and take advantage of consumers’ growing interest in ethnic cuisine and beverage stations and offer more variety.

Foodservice within grocery is no longer an option. In order to compete, retailers need to stay abreast of the trend, and by optimizing menus and operations, they can do so profitably and efficiently.