Supermarkets want to convince customers to visit stores for lunch or dinner — not just for a grocery haul.
For decades, grocery stores have included hot food and salad bars, delis and sandwich stations. But in recent years, many grocers have started adding sit-down restaurants, food halls and craft beer on tap, giving rise to the term “grocerants.”
“The grocerant game is something that almost every retailer with larger stores should be playing,” said Diana Sheehan, vice president at marketing research firm Incontext Solutions. “Restaurants have become one of the most successful ways for retailers to stand apart.”
Americans are making fewer of their meals at home as they increasingly opt to eat out or order in. The trend is a risk for grocery stores that have grown by stocking up on meat and produce. So supermarkets are trying to evolve to the changing ways customers eat to capture a growing part of the business.
Food service sales at grocery stores are growing at about 8% a year, according to the Food Marketing Institute. Supermarkets like Kroger (KR) are positioning themselves to capture this market.
“About half of food is food already prepared where people spend their money. And our market share there is significantly less than on the traditional supermarket business,” Kroger CEO Rodney McMullen said on a call with analysts earlier this month. “Food that’s already prepared is a massive opportunity.”
Earlier this year, Kroger opened a new two-level store near its headquarters in downtown Cincinnati with its first-ever food hall that includes local barbecue, Asian street fare, tacos and Kroger’s fledging restaurant chain, Kitchen 1883 Cafe and Bar.
Kroger has opened two other Kitchen 1883 restaurants over the past several years.
Separately, Kroger recently entered into a partnership with ClusterTruck, a food delivery startup that runs delivery-only restaurants— also known as “dark kitchens” — in four markets.
“It’s really an additional piece in terms of how do we get the customers what they want, when they want it, the way they want it,” McMullen said of the expansion.
Other grocers such Hy-Vee, H-E-B, Whole Foods and Mariano’s have also expanded to add restaurants and food halls to their stores.
Hy-Vee, based in Iowa, has restaurants inside close to half of its grocery stores. It also plans to open more than 20 standalone Wahlburgers burger restaurants over the next five years. Texas grocer H-E-B runs separate barbecue and taco restaurants, while ShopRite has added Saladworks mini-stores to some of its supermarkets. And Whole Foods recently opened a new 70,000 square-foot store in Washington, equipped with a food hall and a cocktail bar.
“Kroger, Whole Foods and Hy-Vee are a few of the grocery stores driving the grocerant trend,” said Anne Mills, senior manager of consumer insights at Technomic, a market research firm.
Clothing and home furnishings chains are also following suit, adding restaurants to convince customers to stick around in their stores.
Lululemon (LULU), Crate & Barrel and Restoration Hardware (RH) are among the brick-and-mortar chains that have recently bet on restaurants in stores to lure customers. Ikea has long been known for its Swedish meatballs in its cafeteria.