Watch out restaurants, grocers are coming for you

The 2023 IDDBA conference in California highlighted the growing competition between restaurants and grocers for consumer food dollars.

2023 International Dairy Deli Bakery Association (IDDBA) conference in Anaheim, California—a grand gathering of industry professionals. This event bears similarities to the restaurant show, yet it carries a distinct message: Beware, restaurants, as grocers are preparing to challenge your dominance.

Since the first general session on Sunday, IDDBA attendees have been repeatedly informed about the immense opportunity they have to siphon dollars away from restaurants. The pandemic has compelled consumers to rely less on dining out, and soaring inflation has further solidified the economic reasoning for many individuals to continue dining at home.

During one of the general session presentations, a slide prominently displayed the headline, “Curbing restaurant spending affects all occasions,” highlighting the significant potential for grocers to capture market share during breakfast and lunch.

This competition for food expenditures between restaurants and retailers is not a novel concept. (In fact, during my tenure as an editor at WGB’s sister publication, Restaurant Business, one of my initial stories explored why restaurant operators should be apprehensive about the vast assortment of food offered by the then-new Whole Foods store on Chicago’s North Side.)

However, the intensity of this battle has reached unprecedented levels, akin to the fiery spiciness of the Carolina Reaper pepper, particularly as food-away-from-home inflation continues to outpace the rise in food-at-home prices.

It is high time—indeed, long overdue—for grocers to adopt a more restaurant-like mindset.

While traversing the trade show floor, I had the opportunity to engage in conversation with Anne-Marie Roerink, principal and founder of grocery market research firm 210 Analytics, who shared some insights on how supermarkets can emulate restaurants.

Roerink emphasized the importance of making the value proposition impossible to overlook. She cited Wegmans as an example, where the per-person cost of a meal’s ingredients is displayed—a practice reminiscent of perusing a restaurant menu.

“They’re demonstrating the challenge of obtaining a delightful spaghetti dinner for a mere $2.50,” Roerink noted. “Attaching a figure to the meal is truly significant.”

In addition, she suggested that grocers take a page from the restaurant playbook and entice customers with limited-time offers. Why not introduce a “pizza of the week” or offer seasonal baked treats and Taco Tuesday selections to entice shoppers to make an extra trip?

Roerink also stressed the importance of highlighting the strengths of the deli or bakery department, or creating a signature item if one does not already exist. When dining at a restaurant, waitstaff often extol the virtues of the establishment’s signature dish. Grocers can follow suit by developing their own must-have item.

Furthermore, grocers can borrow another tactic from restaurants—upselling. Roerink recommended redeploying some grocery employees from the back of the house to the sales floor to offer product recommendations. Placing miniature bottles of sake next to the sushi section or single servings of flan near the refrigerated taco kits can be effective upselling strategies. Additionally, enlisting a TikTok enthusiast from the store to curate and promote viral recipes can create a buzzworthy merchandising approach.

However, Roerink proposed an intriguing idea during our conversation: Perhaps restaurants and grocers need not view themselves as rivals. With rising restaurant prices, studies have shown that consumers are opting to forgo certain components of their takeout and delivery orders.

This presents an opportunity for grocers to fill the void and capture those dollars.

“What a tremendous opening for retailers to provide appetizers, desserts, beverages, and side dishes,” Roerink exclaimed. “We often think in terms of restaurants versus retailers, but a more balanced approach benefits everyone. You don’t have to claim that entire dollar exclusively.”

As the line between restaurants and grocers continues to blur, it is crucial for both sectors to adapt, innovate, and seek inspiration from one another. By embracing the best practices of their counterparts, grocers can effectively compete and thrive in an evolving landscape where consumer preferences and economic circumstances dictate the path forward.

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