Wider Turf War Between Supermarkets, Restaurants

The blurring line between supermarkets and restaurants just got fuzzier.

Both types of outlets are increasingly borrowing from each other's playbooks to entice value-oriented customers. Supermarkets are stepping up their restaurant-quality, ready-to-eat food offerings, and restaurants are touting meals or components to take home.

This trading-places phenomenon has intensified as the tough economy lingers, and it's catching the attention of the consumer media.

One recent Associated Press article was called “Bistro in Aisle 9: Supermarkets Mimic Restaurants.” It outlined the upscale foodservice offerings from chains including Wegmans and Kroger. It cited Wegmans' Market Cafes that feature offerings such as pizza, sushi bars, burrito bars, Thai food and vegetarian choices for dining in or taking home. It also cited The Bistro at Kroger, which features items include tilapia and pork loin.

The article quoted Jim Berndt, senior vice president for prepared foods, deli and specialty cheese at Wegmans, who said: "We don't want you coming to the store once a month, or once a week. We want you coming three or four times a week."

The article pointed out how the recession has delivered more customer traffic for supermarket prepared foods. It also quoted a well-known blogger on restaurants, Peter Romeo, who contended that value is only part of the supermarket's success formula.

“The big change … is that supermarkets have cracked the quality code so they're able to offer a restaurant-quality meal at a price that is usually lower than restaurants,” Romeo said.

Meanwhile, restaurants are battling back with curbside takeout and, in some cases, exclusive take-home products, according to the AP story. It cited the case of restaurant chain Bob Evans, which in December opened a retail section connected to its location in Westerville, Ohio, in which customers can purchase hot dinners and salads, and Bob Evans-brand grocery items.

A recently opened downtown Philadelphia restaurant, Jose Garces Trading Co., is pursuing a similar strategy. This restaurant has a large takeout section offering “GTC At Home” boil-in-a-bag entrees, as well as Garces-branded coffee, honey, olive oil, vinegar and charcuterie, according to Restaurant Hospitality, a magazine that is part of Penton Media, SN's parent company.

There’s another wrinkle in the supermarket-restaurant battle that shows how warring parties can come together for mutually beneficial reasons. A USA Today article reported that restaurant brands P.F. Chang’s, Burger King and Jamba Juice are among the latest to have engaged in licensing arrangements to sell new frozen products in supermarkets. One restaurant industry expert quoted in the article said this shows that restaurants are searching for new revenue streams. But, of course, supermarkets are also gaining from these arrangements.

A reality check is in order. Supermarkets that emulate restaurants with foodservice need to remember that, ultimately, they have a different business model. Restaurants need to keep in mind that take-home sales alone won't turn around their sagging fortunes if the economy doesn't rebound.

Yet ultimately this topic really isn't about supermarkets or restaurants, but rather consumers. The main reason for cross-over business is that consumers want it that way. They insist on having restaurant-quality food at a good value, regardless of how it's accomplished. So let supermarkets and restaurants battle or collaborate as they choose, as long as the customer is ultimately satisfied. If not, there will be a big price for everyone to pay.