Quick-service and sit-down restaurants across the country are taking notice of their formidable competition: supermarket grocerants.
For example, Hy-Vee’s 36,000-square-foot smaller-format store in downtown Des Moines, Iowa, is driving some nearby eateries out of business by offering an abundance of fresh-prepared offerings through its expanded deli and made-to-order stations and by having plenty of tables so customers can eat in the store.
“We didn’t realize the Hy-Vee would be half food court and one-fourth groceries,” the owner of a struggling restaurant across the street from the store told the Des Moines Register in late February.
Des Moines restaurateurs shouldn’t have been surprised, however. West Des Moines-based Hy-Vee has long been strong in retail foodservice, with its sit-down Market Grille restaurant, fast-casual Market Grille Express and its more recent amping up of food hall-style stations integrated into fresh-food departments along the perimeter of its newest stores.
San Antonio, Texas-based H-E-B has also made a deep dive into the foodservice realm with its growing number of True Texas BBQ quick-service restaurants, while Rochester, N.Y.-headquartered Wegmans will soon open its first full-service Mexican restaurant and tequila bar, Blue Dalia, in its new Natick, Mass., store.
But these regional powerhouses aren’t the only food retailers taking the grocerant plunge. Some independent grocers and very small stores also differentiate themselves with culinarily cutting-edge fresh-prepared food.
San Francisco-based Bi-Rite, which has tiny stores by grocery retailing standards, has made a name for itself with its chef-prepared sandwiches, ethnic bowls and sushi and ice cream made in the company’s creamery.
“Our stores are really small, so we have nowhere to eat inside the store. Yet we have a lot of guests who will grab a sandwich after it’s made and tear right into it while waiting in line,” notes Jason Rose, Bi-Rite’s culinary director. “That’s pretty awesome. We love that they can’t wait to get at it.”
Many of Bi-Rite’s customers at its 1,400-square-foot Mission District store will sit on the sidewalk outside to eat or walk to a nearby park with the fresh-made grab-and-go food. At the retailer’s store in San Francisco’s Western Addition neighborhood, customers will often pick up a ready meal for lunch while they’re buying a breakfast pastry or sandwich, which they may eat while walking to the office.
Artisan food consumed on the go fits foodie San Franciscans’ vibrant, busy lifestyles, according to Rose.
Because Boulder, Colo.-based Lucky’s Market was founded by married chefs Trish and Bo Sharon, it’s not surprising that the chain emphasizes fresh-prepared food. The retailer also strives to make the shopping experience more enjoyable by allowing customers to “sip and stroll” $2 draft beers beer and $3 glasses of wine purchased from the kiosk-style bar (without seating) that’s in each store. The shopping carts even have a cup holder designed to accommodate a pint of beer.
The hub of meal preparation at each Lucky’s location is known as The Kitchen. “We pride ourselves on how much of our menu is actually made in-house and from scratch,” says Paul White, the retailer’s vice president of fresh merchandise. “We make most of our deli products in our kitchens, including all of our roasted meats, salads, grilled vegetables, pizzas and meals to go. We are very excited about a recent line of “Meals for 2” we launched this year that has been doing quite well.”
While Lucky’s has in-store seating in its café areas, the retailer has also added dine-in Ramen Bars to a few of its new stores. “Based on their success, we’ve been expanding the program to existing stores,” White says.
Retail foodservice evolves
Long gone are the days when a grocery market could have a salad bar and a basic hot bar and consider itself innovative and on-trend.
“What’s really evolved is the concept of ‘grocerant,’ ” notes Jill Tomeny, senior manager for fresh category solutions at Daymon. “It’s no longer just about offering fresh food in-store and a physical place to eat it — grocerants are growing into stand-alone formats. And while these grocerants may be connected to stores, it may not be necessary to enter the store to enter the restaurant. Many grocerants are offering some form of table service, whether it’s just the delivery of food ordered at the counter or full service.” In addition, it has become more common for grocerants to offer wine as well as “extensively curated selections” of local craft beers, she says.
Julie Dugas, principal and partner with Studio H2G, a Birmingham, Mich.-based retail design firm, has helped two recent clients add restaurants to their grocery markets. One, Cantoro Italian Market in Plymouth, Mich., opened a white-tablecloth Italian restaurant that adjoins the store — in a neighborhood that previously didn’t have a lot of dining choices.
“The restaurant is very popular and has had a big impact on the community,” Dugas says. Patrons can enter Cantoro’s Trattoria directly or through the market. The restaurant uses many of the products sold in the Italian grocery store, so there is a cultural synergism between the two settings, providing customers an immersive total brand experience, according to Dugas.
“There is this wonderful connection between all of these things we love about food,” she states. “Many of us love the idea of cooking good food for ourselves. But we also like eating good food that someone else has cooked for us. And sometimes, we’re in a hurry, so we want to take it away and eat it somewhere else. It’s really interesting for us to look at how to capture that in one space and under one brand.”
Studio H2G also recently designed a more casual restaurant inside a Busch’s Fresh Food Market store in Canton, Mich. Named after the initials of the owner’s father, J.B.’s Smokehouse is a roughly 3,000-square-foot eatery carved out of a nearly 50,000-square-foot traditional grocery store.
“There is a ton of under-utilized space in most markets,” observes Dugas, who helps retailers make better use of their center store and perimeter “real estate.”
J.B.’s Smokehouse is a destination restaurant with a more intimate atmosphere and more subdued lighting than one would normally find in a supermarket grocerant.
“Why do some retailers think they can excite shoppers if they just place a small smattering of tables and chairs — using the most inexpensive furniture they can find — off in a little-used corner of the market?” Dugas questions. “That’s not very welcoming or user-friendly, and it doesn’t create the kind of environment that would draw customers in to try the food.”
J.B.’s Smokehouse, in contrast, has already drawn dozens of mostly rave reviews on Yelp.com.
Grocery retailers are not just following restaurant trends with their kitchen creations. As Rose points out, Bi-Rite is a trendsetter that even attracts tourists. The retailer currently stands at the forefront of three contemporary food developments: transparency, the serving of prepared food in bowls, and the focus on customer convenience by offering portion-controlled proteins and salads that customers can mix and match.
“Our guests want to know where their food comes from — not only that, how it was raised, how it was grown, and how the workers were treated who raise and grow the products that we use,” Rose says. Bi-Rite, which emphasizes organic, non-GMO and locally produced food, tells its transparency story primarily by having staff members who are well-educated about the products on the shelves, including the fresh-prepared items.
“We’re leading classes constantly for staff so the folks who are out on the floor can carry out our vision of service,” Rose notes.
The grab-and-go meals that are especially popular for lunch at Bi-Rite include poke bowls, Moroccan or South African chicken bowls, and various vegan offerings.
“In our store on Divisadero Street in the Western Addition, we have a huge focus on nutrient-dense meals,” Rose says. “Customers have 30 to 45 minutes on a lunch break and want to cram themselves full with as much protein, vegetables and whole grain as humanly possible.”
At Lucky’s, the menu is always evolving with new fresh offerings that change seasonally, White says. “We have some new favorites like our Triple Citrus Salmon and our Blood Orange Beet Salad,” he notes. “And we love our new Thai Kelp Noodle Salad, which is a delicious vegan option.”
Lucky’s launched a hot bar breakfast program at its new store in Clermont, Fla., and plans to roll it out chain-wide because of its success.
As White explains, “We’re always looking for new flavors, answering emerging trends and meeting our customers where their palates and diets take us.”