Today’s food and beverage landscape demands convenience, expediency, and cost-efficiency, each of which seems to constantly inspire new technologies, innovative brands, and exciting trends. In the ongoing battle for food convenience, two trends currently rise to the top: (i) grocerants and (ii) meal-kit delivery services. First, a grocerant (a phrase which, not surprisingly, combines the words “grocery” and “restaurant”) is a supermarket that sells prepared meals to consume onsite or take home. They are an extension of what’s known in the grocery circle as a service deli, the manned counters offering build-your-own sandwiches, salads, pastas, baked goods, and rotisserie chickens. Grocerants take the service deli concept to the next level by providing sit-down service and full bars. They are identified as a freestanding restaurant that is either adjacent to or within the supermarket. For many, Whole Foods serves as an appropriate paradigm for the term grocerant, where oftentimes you will see people who come to Whole Foods solely to dine in, sans shopping lists and carts. This is not to be confused with the Whole Foods’ locations that offer salad bars, hot food, and casual dining spaces, a concept that has been core to Whole Foods for many years. According to the NPD Group, in-store dining and take-out of prepared foods from U.S. grocerants has grown nearly 30% since 2008, and accounted for 2.4 billion new visits and over $10 billion in consumer spending in 2016.
So what is the root cause for the uptick in grocerant activity? While the concept of blending a restaurant with a grocery store has been around for a while, the changing perspective and tastes of Millennials have served as a catalyst pushing supermarkets to make stores feel like a food destination rather than simply a traditional grocery store. Fifty years ago, baby boomers purchased foods from grocery stores compared to today’s landscape where grocers are competing with smartphone app food delivery concepts (e.g., Postmates, UberEATS, Good Eggs, and Caviar), farmers markets, and other options. In a world where convenience seemingly holds more weight than ever before, grocerants offer the one-stop-shop solution for consumers who are motivated by a busy schedule while still adhering to the health-minded consumer of today’s society.
To keep up, grocers have been forced to adapt to these changing market conditions and consumer preferences, many of whom have gone beyond implementation of the grocerant concept and looked to the ready-to-cook market, which has seen its share of headaches. Blue Apron, for example, the popular meal-kit delivery service known by many in the U.S., went public in June, but has since seen its stock decline and has also laid off 300+ employees, driven largely by the Amazon-Whole Foods merger, which was announced at the time of Blue Apron’s IPO. However, there are signs that grocers still like what they see from meal-kit delivery outlets despite an aura of fatigue in the market. Plated, a U.S. meal-kit company, was acquired in September by Albertsons for approximately $200 million. This gives Albertsons, which owns the Safeway chain with approximately 2,000 store locations across the country, a new way to increase revenue and reach new food buyers. Other grocers have also taken to meal-kits, including Kroger, which launched Prep+Pared, and Canadian grocer Metro, which acquired Miss Fresh in August. Additionally, other big food companies have shown interest in the meal-kit space in 2017, including Campbell’s Soup, which invested $10 million in Chef’d, Unilever, which led a $9 million round in Sun Basket, and Nestle, which acquired a minority interest in Freshly.
Between grocerants and meal-kits, grocers and big food companies are being forced to look for ways to diversify their experiences for customers. Convenience, more than ever, seems to be key in the battle for market share in the constantly evolving food and beverage landscape.