Is The Grocery Store Stealing Your Business?

The days of visiting your local grocery store once a week to stock up on food supplies is starting to give way to more frequent, even daily visits, and customers are buying a lot more than a gallon of milk.  What started as a simple salad bar and deli in supermarkets in the ‘80s and ‘90s has grown into a full-blown restaurant industry inside American grocery stores.

The variety of prepared food offerings now available in supermarkets is rivaled only by their rapidly increasing quality.  Pioneers like Whole Foods have changed how consumers view the local grocery store, and the space inside many stores is evolving into a more comfortable dining environment.

All of this means supermarkets are fast becoming competition for any restaurant in the same neighborhood.  Many in the food service industry contend the local grocery will never be able to compete with a restaurant’s service and atmosphere, no matter how sophisticated their menu gets.  That may be true, but the unparalleled convenience of blending the traditional grocery with fast-casual dining at an affordable price means customers are going to have a higher tolerance for the perks of a restaurant.

As supermarkets expand their offerings and develop even better menus and spaces, the risk to nearby restaurants will only grow.

So how can restaurants compete?  As the old saying goes, if you can’t beat ‘em, join ‘em:

Get in the game. Approach your local grocery owners and propose a fast-casual version of your restaurant in their store.  If you’re a local favorite, it should be an easy sell to convince them that an already well-known brand will do well.

Of course, dealing with bigger chain supermarkets won’t be easy.  Most probably already have partnerships and rules about who can be involved in the store.  If that’s the case, try to get them to allow you to set up a tent in front of the store or in the parking lot.  You could even invest in a mobile food truck (a huge trend these days) and use that to market your restaurant in front of several area grocery stores.

The point is that as customers associate dining out with grocery stores more and more, a presence there is going to become more and more important for your restaurant.  Besides being a good opportunity to make some money, the marketing and brand exposure you gain for your restaurant is priceless.

Make yourself more convenient. The supermarket-as-restaurant trend owes its success primarily to the convenience customers get when they combine a trip to the grocery with their dining out plans.  Most big restaurant chains figured out a long time ago that locating next to a shopping center or mall was a no-brainer for business.

For independents, it’s a lot harder to break into that market.  Rents are higher and competing with chains for the same customers difficult.  However, you  may be able to find some cracks in the strip mall armor.  Try partnering with a small organic grocery or some other specialty food shop to make a trip to your restaurant more of an all-purpose outing.

If you can’t take yourself to the grocery store, bring the grocery store to you. Cracker Barrel and, very recently Bob Evans, both dominant Midwestern chains, devote half the space in their restaurants to selling things besides food.  If you can’t break into the grocery store market, try diversifying the offerings in your restaurant.

A simple place to start is with “secret recipe” sauces and spices that come right from your kitchen.  Getting production rolling can be a pain, but many restaurants have had great success with marketing their own sauces and recipes.

At some point the convenience factor offered by grocery stores gives way to the service and experience factors restaurants bring, but that doesn’t mean restaurant owners should sit idly by and let supermarkets move in on their business.  Your restaurant can be a convenient destination as well if you’re willing to invest in positioning your brand and your products just right.