If anyone has found a silver lining in the ongoing restaurant industry slowdown with its twin scourges of rising costs and sluggish traffic, it’s supermarkets, which have seen increased interest in their continually improving prepared foods. In fact, prepared-food sales at retail grocery stores are expected to grow 7 percent over the next year, more than twice the rate of conventional restaurants, according to industry analyst Technomic Inc.
That’s cause for operators to sit up and take notice because, while grocers have benefited during prior downturns, what makes their current surge more scary is that this time around they are aided and abetted by more corporate chefs, who are upending the competitive landscape.
Operators can best battle emerging competitors by not only shoring up their own brand signatures, but also by keeping a keen eye on supermarket innovations.
They’re focusing on the food. Supermarkets are imitating restaurant bills of fare, from the foods and flavors on offer to prep and presentation techniques. Richmond, Va.-based Ukrop’s, a formidable competitor for the dining dollar in its core markets, promotes in-store chef specialists, who whip up everything from shrimp scampi wraps in herb tortillas to daily dinner-for-two specials that provide three courses and bread for $11.99. The store’s creative pizza list boasts an apple-cheddar option.
Gelson’s, based in Encino, Calif., runs the gamut from holiday meals to go, like a roasted-goose dinner with gingered yam soufflé and caramelized pumpkin trifle, to lunch bags filled with peppered filet mignon panini with roasted red-pepper tapenade or beef-and-Brie focaccia with caramelized onions.
They’re touting technique. Recognizing the promotional power of freshness and the need to differentiate prepared foods from packaged goods, supermarkets are underscoring their fresh positions with flair. Shoppers at Giant Eagle in Pittsburgh can head to the Churrasco Grill for some Brazilian barbecue or stop at the Smoke & Fire department for roasted meats packaged with starches and veggies.
On the heels of its successful seafood and veggie bars, Wegmans, a regional powerhouse based in Rochester, N.Y., is testing a tea bar that offers freshly brewed exotica like Moroccan mint green tea and pomegranate decaf tea for quaffing on site or on the go. The hotand-spicy chicken wings at 950-unit Publix of Lakeland, Fla., are made in the store daily, using nonfrozen wings that are double hand-breaded and marinated in a signature sauce, an approach that would be at home on the menu of any casual-dining restaurant.
They’re catching up on convenience. A lack of speedy service, especially in the checkout lines, has been the bane of supermarket foodservice programs. But enhancements are occurring here, too, as grocers introduce separate entrances, drive-thrus and walk-up windows, as well as designated parking spaces and special checkout lines for prepared-food customers.
Perhaps of most long-term concern is an emerging grocery-store class of trade dubbed “small marts” and led by British uber-retailer Tesco’s new Fresh & Easy Neighborhood Market concept. Intended to fill a gap between convenience stores and supermarkets, Fresh & Easy units offer a wide range of what the Brits call “ready meals” in an easy-to-navigate, small-box format. Sensing opportunity to woo time-pressed, budget-crunched consumers, U.S. retailers have wasted no time jumping in with such copycat versions as Wal-Mart’s Marketside concept and Jewel supermarket’s Urban Fresh prototype in Chicago.
In response, smart restaurants have reacted to the supermarket threat by redoubling their menu R&D efforts and reconsidering their value propositions. They’ve zeroed in on items like hotter-than-hot sliders, mini burgers and sandwiches that offer smaller portions at smaller prices without sacrificing flavor or fun.
They’ve redoubled their emphasis on drinks, focusing on premium products at popular price points. They also recognize that hospitality is key to what separates restaurants from supermarkets, which means a focus on service and ambience. When the storm inevitably subsides, the winners will be the operators who have combined smart financial management with an unflagging commitment to culinary creativity and menu excellence.
