How Restaurants Can Keep Up With the Growing Grocery Store Competition

Restaurants are experiencing more competition than they have in decades. Meal delivery services, online sales, apps, and grocery stores are eating away at a market that restaurants used to control. Hit hard by the unexpected threat that is the “grocerant,” restaurants are casting about for new ways to reclaim their audience and stay relevant as the line between grocery store and restaurant continues to blur.

The Threat

The grocery stores of today are worlds away from the straightforward aisles and monotonous product-lined shelves of the past. When you enter a grocery store today you are immediately greeted by the heady smells of indian curries, stone-fired pizzas, and baking bread. Comfortable seating is available, and low moody lighting. Long day at the office? There’s also a full bar where you can sample a craft beer as you stroll down the aisles.

A visit to the grocery store has become less of a necessary stop and more of an anticipated experience than one might have thought possible. As grocery stores continue to turn the shopping experience on its head and claim more market share then they have in the past six decades. Restaurants are beginning to panic.

Mind Games

Restaurant menu prices continue to rise to meet the demands of a service-based industry. As a result, the price gap between restaurants and ready-2-eat grocery store offerings continues to widen. That, coupled with groceries’ efforts to reinvent themselves, has effectively maximized the grocery store’s ability to be all things to all people. In fact, the fastest growing sector of the retail foodservice industry for the past four years has been the convenience store. This growth is driven mostly by expansion into the realm of freshly prepared foods.

Though the grocery store overhaul has been a major factor in their success, there is a psychological game at work here as well. In a recent Technomics survey, 52 percent of respondents said they viewed these grocery store prepared foods as healthier alternatives to fast food. They rated grocery store food higher in both freshness and quality. Patrons get the feeling that the food they order when surrounded by pyramids of fresh produce is somehow closer to the earth and healthier.

Fighting Back

The grocery store has reinvented itself, and restaurants must adapt. They must make an effort to become dynamic businesses that evolve with the consumer. In the battle for customers, there are two major fronts to consider: convenience and customization.

Convenience

There are three things that consumers value when it comes to food: convenience, price, and perceived health. The latter two typically fall by the wayside at the expense of convenience. Customers are willing to pay for it, up to 11% more per added convenience, according to some research.

Customers absolutely love the ability to order meals through mobile order-ahead apps. This allows busy customers to quickly order (and reorder) their favorite meals from your establishment, or have them delivered to their home. While grocery stores have cast a wider net product-wise than most restaurants can afford, they have not yet started offering order-ahead or meal delivery. But with Amazon’s recent purchase of Whole Foods, that gap will probably begin to close quickly. In the meantime restaurants have the advantage in that arena and must make efforts to capitalize on it.

Customization

Medium-rare? Gluten-intolerant? Restaurants have the upper hand when it comes to customization. Making dishes to order is the name of the game. While grocery stores have a broad new selection of options that you can mix and match, the offerings beyond the cold salad bar are not often customizable. To solidify your advantage, make sure your online ordering technology offers easy-to-use customizing options as well.

Key Takeaway

The advent of the grocerant has brought with it a host of challenges to the restaurant industry. There are things we can do to maintain and grow our businesses.

Just as grocery stores turned the tables when they introduced new meal options, restaurants must up their game. It’s time to innovate and evolve within the food industry’s ever-changing landscape. Capitalize on the inherent strengths of the restaurant by giving your patrons an excellent experience. Take advantage of technology to streamline your orders, and don’t forget to take time for innovation. Maybe that means a monthly brainstorming session, or perhaps a customer survey, remember to assess your own business and don’t be afraid to try something new.

Tune in tomorrow for an entry from the Grocery Store perspective. How can Grocery Stores continue to grow and offer more of what their customers want from a food service perspective?

How are you keeping up with the competition? We want to know! Don’t forget to share in the comments below or on any of our social media accounts. Follow us on Facebook, Twitter, Instagram, and YouTube!