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The burgeoning business of foodservice in retail

Retailers and food brands alike try a heavier hand in foodservice to meet consumer demand for prepared foods and meals.

6 min read

Restaurant and Foodservice

A Whole Foods bar -- The burgeoning business of foodservice in retail

(Herry Lawford/Flickr)

When consumers go to pick up dinner after work, it is no longer safe to assume they’ll be heading to their favorite restaurant for take-out. These days, it is likely they could be heading to their local grocery store.

Food retailers are delving deeper into the world of foodservice in an effort to boost sales, and they are taking foodservice and prepared offerings beyond the traditional deli counters, adding in-store stations where staff can prepare food to order or package up meals for customers to grab and take home, and even adding restaurants and bars and becoming more of a destination than a quick stop on the way home from work.

And foodservice operations at food retail are certainly not taking a one-size-fits-all shape. Retailers are innovating and getting creative to offer shoppers prepared foods and meals that will appeal to them and encourage them to visit stores more often.

Offering food — and even drinks — to go

Sales from in-store dining at food retailers and prepared foods from grocers have increased by nearly a third in the last eight years, and prepared foods and grocery dining brought in 2.4 billion store visits and $10 billion in sales, according to a report from NPD Group.

And grocers are only getting more creative in this space.

At Gelson’s, shoppers can purchase cocktails at an in-store wine bar and Whole Foods stores offer a variety of wine and beer options that customers can sip at in-store seating areas or take with them on their shopping trip, the Wall Street Journal reported, and more retailers are looking to add beer and wine to their offerings to draw shoppers in and encourage them to spend more time in stores.

Fresh food buffets and in-store stations that offer meals to eat in stores or to take home are also becoming common staples in grocery stores, with retailers offering foods that span across many exotic categories including Asian, Mexican, Italian and barbecue.

“Many grocers now offer restaurant-quality food at a lower cost than full-service or some fast-casual restaurants,” NPD reported.

Bringing chefs into retail

One resource retailers have tapped to help them get more creative in their foodservice and meal offerings is chefs. Whether chefs and retailers team up to come up with new foodservice and to-go items for shoppers or chefs actually set up shop in food retail stores to oversee foodservice and prepared food operations, chefs have helped retailers really elevate the foodservice experience in their stores.

For example, Kroger announced earlier this year that the company will invest in a new culinary training facility in an effort to beef up its foodservice offerings. The retailer will spend $2.5 million to remodel a building in Cincinnati, making it into a place for store chefs to meet, learn and exchange ideas to improve Kroger’s status as a foodservice destination.

“It’s more about the food experience for us. It’s about how to stay more in tune with food trends,” Kroger’s Executive Vice President of Merchandising Mike Donnelley told the Cincinnati Business Courier.

Kroger is not alone in its culinary efforts. California’s Cardiff Seaside Market teamed with Michelin-starred chef James Montejano to up its status as a destination for gourmet foods, Forbes reported, while chefs from Kowalski’s Market, Hy-Vee and Foodland Super Markets joined the Food Marketing Institute at this year’s FMI Connect show to share their experiences forming stronger connections with grocery shoppers and working to improve prepared foods at their stores.

“In grocery stores we get a unique opportunity at education,” Kowalski’s Rachael Perron said. “We see our customers a lot and get a chance to have a real relationship with them. We can learn from them and teach them about food.”

Going high-tech to bring consumers meals

Technology has also proven to be a way for retailers to strengthen their meal offerings.

Earlier this summer, Whole Foods opened a new store in Brooklyn, N.Y., at which the retailer included digital kiosks offering unique specialty ingredients. The ingredients offered at the kiosks, dubbed The Baldor Forager and supplied in partnership with Baldor Specialty Foods, include items that are often only found in restaurants like water-grown wasabi root, bluefoot mushrooms and white strawberries. The in-store technology is part of the retailer’s effort to inspire home cooks.

“We know our customers want to try new, special and exotic ingredients,” Whole Foods’ Northeast Division Produce Coordinator Tony Rajaram told Supermarket News. “The Forager is going to let us accomplish this simply and efficiently through our in-store kiosk.”

Taking a restaurant approach in CPG

Retailers aren’t the only members of the food industry tapping into foodservice to draw more customers. Food brands are also trying their hands at culinary-inspired creations as a way to help consumers understand all the different ways to use their products.

For Kellogg’s, a new Times Square restaurant will look to take the brand’s cereal products outside the breakfast box, offering diners chef-inspired creations starring cereals like Frosted Flakes. The concept was developed in partnership with Anthony Rudolf, who used to handle operations for chef Thomas Keller restaurants in the city, and Milk Bar owner and chef Christina Tosi developed the cereal-based culinary offerings that include pistachio- and lemon-spiked bowls of Frosted Flakes and Special K and ice cream with Rice Krispies, matcha powder and strawberries on top.

“This is story-doing versus storytelling. We could have put a great recipe on the box. But this is much more powerful,” Kellogg’s Associate Director of Brand Marketing Andrew Shripka told the Wall Street Journal.

Kellogg’s move into the foodservice realm followed similar ones made by other food brands, including Chobani, which has a cafe location in SoHo and another one on the way in Tribeca, and Magnum, whose ice cream bars were featured at a pop-up shop this summer. Pepsi will also join the ranks of food brands looking to take advantage of foodservice opportunities, when it opens the Kola House cocktail restaurant this fall.


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