How restaurants compete with alternative meal sourcesHow restaurants compete with alternative meal sources

Meals eaten away from home and those eaten at home have historically had a negative correlation. When meals eaten out are up, meals eaten at home are down, and vice versa.

But according to the latest research from The NPD Group, both have softened, in part due to consumers getting more meals from a growing bounty of sources, including meal kits, online grocers and food trucks.

“People are getting meals, food from other sources,” said NPD analyst Bonnie Riggs. “We didn’t have these options before. There’s likely to be more coming on the scene.”

In the fourth quarter of the year ended December 2016, restaurant traffic growth was flat, while in-home, or the 12-month average of retail grocery sales, was also flat.

Meanwhile, NPD is finding that alternative sources for in-home meals are gaining momentum.

“There’s a lot of places we can get food prepared food that’s not even measured that adds a layer of competition for share of stomach,” Riggs said.

These sources are currently underrepresented in retail measurement, so comprehensive data is not yet available, Riggs added, “[but] it’s is an indication of what’s happening.”

Part of the reason these alternative meal sources are attractive to consumers is that they are serving needs that not being met by many restaurants, Riggs said.

For example, meal kits and online groceries appeal to consumers’ desire for convenience. Ethnic grocers are providing the growing Hispanic population with a source of food they like to eat. Farmer’s markets, the number of which has surged in the last decade, fulfill consumers’ desire for fresh and healthful foods. And all those food trucks? They’re all about variety, portability and “something unique,” Riggs said.

For operators to get consumers out of the house and into restaurants again, Riggs said they’ll have to be more innovative and relevant, and do a better job of promoting the benefits of eating out.

“So many restaurant offerings are mediocre,” Riggs said. “Those who are really going above and beyond are thriving.”

Among the leaders are chef Mike Isabella of Mike Isabella Concepts, which includes 10 concepts in the Washington, D.C., area, and Micha Magid, co-founder of Mighty Quinn’s BBQ, a fast-casual chain with six locations in New York and New Jersey. They shared some tactics to successfully compete with alternative meal sources and more.

Mike Isabella Concepts

As is the case with Mike Isabella’s restaurants, which encompass a diverse range of cuisines, when it comes to competing with non-restaurant meal offerings, the chef and restaurateur likes to do a little bit of everything.

“Everyone has to eat everyday. You’re not always going to eat at home. You need restaurants out there,” Isabella said. “That’s why we offer what we offer. I like to do everything.”

It all started two years ago with offering take-out pizza kits at Graffiato, his Italian-inspired concept. Not long after, Isabella began making whole and half spit-roasted chickens available for take out. Most recently, he added delivery of a variety of menu items available through third-party services at all his restaurants.

Adding delivery has been the biggest and most successful effort to date to compete with the alternative meal options, he said. For example, at Yona, Isabella’s Asian concept in Arlington, Va., delivery began just six months ago. Today, delivery, catering and pickup account for 20 percent of sales. At G, Isabella’s sandwich spot in D.C., delivery accounts for about 10–15 percent of sales.

But Isabella isn’t done yet. Later this year, he will open Isabella Eatery, a 42,000-square-foot food emporium with 10 restaurant concepts featuring various cuisines and a gourmet market with prepared foods inside Tyson’s Galleria in Fairfax, Va.

“We’ve adapted to what’s going on in the restaurant industry,” Isabella said.  

Mighty Quinn’s BBQ

With increased competition coming from all directions, Mighty Quinn’s is banking on its unique and hard-to-make-at-home food to draw its largely urban customers into its growing number of restaurants. 

“When we started Mighty Quinn’s, our idea was that authentic, smoked barbecue is not available in urban areas, and it’s so universally loved,” said Micha Magid, one of the three founders of the fast-casual concept.

“Anyone can make a chicken salad or make a hamburger at home. But [if you live in an urban area], you can’t smoke a rack of ribs for six hours. It’s that uniqueness.”

But the brand isn’t counting on authenticity alone. To keep customers interested and coming back again and again, the chain recently began offering seasonal specials to its streamlined menu. Among the latest specials is a Smoked Veggie Burger, a patty made with smoked vegetables, brown rice and beans served on a brioche bun with shredded lettuce and housemade chili mayo.

The chain also offers food at price point consumers can feel good about. For example, the brisket sandwich, made of brisket that is smoked for 24 hours, is priced under $10.

“In today’s market, we are over-restauranted,” Magid said. “There’s just too many options. [We’re] over-saturated with too many choices, and that dilutes everybody. Not everyone will survive.”

Despite that, Mighty Quinn’s is opening a new location in Westchester, N.Y., and plans to open several more before the end of the year.