“Grocerant”—remember this word; it alludes to grocery stores or supermarkets that have catering facilities and sit-down food service, as well as cooked takeout and a wide variety of meals to go, both fresh and frozen. In other words, a restaurant’s competitor.
I came across the word ‘grocerant’ in a recent Restaurant Hospitality article that deals with how the Millennials are driving sales of grocery store prepared foods. However, restaurants still hold the upper hand when it comes to young adults. But for how long? And why is this? A recent report from market researchers NPD Group “confirms the notion that restaurants’ competition for Millennials’ dollars stretch beyond other restaurants to grocery stores. Supermarkets are raising the bar on their foodservice offerings and by doing so are attracting the attention of the coveted Millennials.”
The report went on to say: “Restaurant-quality and fresh food, chef-driven menus, have given rise to the grocerant and inspiration to Millennials to visit and spend.” NPD explains further. “‘Millennials’ interest in the benefits and experience supermarket foodservice offers will continue to be strong over the next several years,” says David Portalatin, V.P., industry analysis at NPD Group. “Give the Millennials what they want—fresh, healthier fare and a decent price—and they will come.”
“In-store dining and takeout of prepared foods from grocers has grown nearly 30 percent since 2008, accounting for 2.4 billion foodservice visits and $10 billion in consumer spending in 2015, according to NPD’s research. Furthermore, more than 40 percent of the U.S population purchases prepared foods from grocery stores and, while Millennials use grocery stores less than other generational groups, retail foodservice seems to be gaining traction with them.”
NPD lists the following as some advantages which grocers have: “Consumers rate visits to grocerants higher than … QSRs on variety and healthy options. … these two attributes are among the most important when it comes to motivating customers to purchase prepared foods and when it comes to their satisfaction with these purchases. Grocery prepared foods are also rated higher in the areas of ‘freshness and quality’—areas particularly important to Millennials.
“Beyond the food itself, Millennial-savvy grocers are understanding the importance of the ‘experience’ to the young adult cohort. More retailers are allocating space for comfortable, casual seating for in-store dining and some a full-service restaurant.”
However, all is not gloom and doom for restaurants. They “can take comfort in the fact that supermarkets are far from becoming dining destinations. Moreover, census data notes that Americans, for the first time, spent more at restaurants ($54.9 billion) than on groceries ($52.5 billion).
Aaron Allen, consultant and principal of Aaron Allen & Associates, says: “Keep in mind what helped restaurants gain market share in the first place: convenience, experience and service.”
Allen adds that restaurants can maintain the competitive advantage through the following strengths (because of time and space I have selected just two of them):
- Convenience. “Grocery stores aren’t considered convenient unless the consumer already happens to be there. … customers rarely go to grocery stores with the sole intention of getting a prepared dinner.”
- Customization. 62 percent of consumers believe grocery stores do not offer customizable meals. “Restaurants still have the edge in being able to prepare food exactly as consumers want it—especially in the ever-growing fast casual sector.”
I have read some projections that through 2022, instances of prepared food purchases at retailers for at-home consumption will increase by 10 percent over the next five to seven years, compared to a 4 percent increase forecast for commercial foodservice. While the report dealt with the competitive aspects of grocerants versus restaurants, it did not mention the growth in the wide variety of ethnic prepared foods now available, such as Italian, Chinese, and Mexican.
As an example of how the availability of microwave and frozen foods has affected restaurants, I offer the fact that most of the thousands of rooms in lodging facilities in the USA are equipped with a microwave oven as well as a refrigerator and a coffee maker, thus allowing guests to prepare breakfast, lunch, and dinner without leaving their room. While this convenience has facilitated especially families to visit various attractions across the country, it means they will not be visiting as many restaurants as they would have 25 years ago.
In light of the above, I cannot see how the federal government can exempt supermarkets and grocery stores from the labeling requirements expected to be issued in the near future. There is an old adage which goes like this: “If it walks like a duck, quacks like a duck, and looks like a duck, it is a duck”—or in this case, a grocerant.