Non-Traditional Fresh Food Retailers Are Disrupting the Industry in 2025

 

When Ronald Reagan famously declared, “Tear down this wall,” he wasn’t talking about the barriers in fresh food retail—but today, those walls are crumbling faster than ever. In 2025, the food industry has fully entered a phase of accelerated channel blurring and consumer-driven disruption. What was once the realm of traditional grocers is now a battleground for convenience-driven, digital-first, and non-traditional players.

For the first time in the history of the U.S. food retail landscape, non-traditional retailers are commanding not just attention, but also share of wallet—and stomach. Drugstores, e-commerce giants, club stores, and dollar stores are now core components of how consumers source their daily meals and snacks. According to the latest Supermarket News Top 75 Grocery Retailers ranking, Amazon, Dollar General, CVS, and even regional convenience store chains like Sheetz and Wawa are aggressively expanding their fresh food and meal solution offerings.

The Rise of the Grocerant: The Meal is the New SKU

Consumers today prioritize convenience, personalization, and speed. According to Foodservice Solutions® Grocerant Guru®, the Ready-2-Eat and Heat-N-Eat segment—known as the Grocerant Niche—is driving transformational change. This sector is not a trend; it's a full-fledged shift. Fresh prepared meals, bundled meal components, and grab-and-go options are being leveraged by every type of retailer—from Costco and Amazon to 7-Eleven and Walgreens.

While legacy grocers still dominate top-line revenue, they're losing momentum. Consumers are increasingly migrating from grocery stores to c-stores, e-commerce platforms, and delivery-based services like HelloFresh, Factor, and Amazon Fresh. According to the USDA's most recent data, the share of food expenditures spent on "Food Away From Home" surpassed 55% in 2024, a record high, and a far cry from the days when supermarkets monopolized meal decisions.

Grocery Shoppers Are Migrating to Restaurants for Takeout Meals & Meal Components

Another accelerating trend in 2025 is the migration of traditional grocery shoppers to restaurants—not for dine-in experiences, but for takeout meals and mix-and-match meal components. Today, over 68% of restaurant orders are consumed off-premises, according to Technomic, and a growing share of those orders are replacing grocery trips entirely.

Consumers seeking variety, speed, and restaurant-quality meals are leveraging takeout and curbside pickup from fast-casual and quick-service chains in place of cooking at home. Meal components such as rotisserie chickens, sides like mac-and-cheese, Caesar salads, or global sauces are bundled together by restaurants and marketed similarly to how grocers used to promote meal kits.

In fact:

·       36% of Gen Z and Millennials now say they buy dinner from a restaurant 3+ times per week to avoid grocery shopping altogether (NPD Group, 2025).

·       Restaurants like Panera, Sweetgreen, and Cava have begun packaging family meals and modular meal kits as grab-and-go options, mimicking grocerant offerings.

·       Chick-fil-A and Panda Express now promote bundled "family meals" that include entrees and shareable sides—designed specifically to intercept grocery store dinner traffic.

This movement isn't just about convenience—it's also about confidence. Many consumers report they lack the time, skills, or energy to cook from scratch, especially when global flavors or dietary needs are involved. As restaurants lean into this grocerant-style positioning, the line between retail and restaurant continues to blur. The net result: grocery stores are losing both basket size and shopper frequency to restaurant brands that embrace meal bundling, digital ordering, and portioned meal components.

 

Market Shakeup: Retail is Fragmenting

Today’s consumer is loyal to no one. Brand and banner loyalty are fading as consumers fluidly migrate between retailers and platforms based on need, occasion, and experience. A consumer might buy produce at Aldi, get a heat-and-eat meal at Walgreens, and subscribe to a plant-based meal kit—all in one week. This fragmentation is both a challenge and an opportunity for brands who can meet consumers wherever they are—on mobile, in-store, or at the curbside.

The traditional “Big Three” grocers remain on top in gross revenue, but their dominance is being chipped away at the edges:

·       No. 1 – Walmart: Still leading with over $270 billion in grocery sales, thanks to omnichannel fulfillment, expanded private label, and aggressive pricing.

·       No. 2 – Kroger: Holding strong with $125 billion, buoyed by their investments in robotics, digital fulfillment (via Ocado), and smart pricing.

·       No. 3 – Costco: With $105 billion, Costco’s treasure-hunt model and expanding fresh food assortment continues to drive traffic and loyalty.

But the real story lies in the disruptors:

·       Amazon: Now ranked in the top 10, with over $40 billion in food-related revenue, combining Whole Foods, Amazon Fresh, and Prime deliveries.

·       Dollar General: Emerging as a significant player, Dollar General now operates over 5,000 DG Market stores with expanded perishables and fresh food lines.

·       CVS and Walgreens: Both continue to evolve into neighborhood wellness and meal hubs, capturing the convenience-first consumer with upgraded food options.

 

The New Competitive Set: Everyone Sells Food Now

Food is no longer sold just in grocery aisles. It’s offered through TikTok shops, livestream e-commerce, delivery apps, and micro-fulfillment centers. AI and predictive analytics allow platforms to recommend meal solutions in real time. Brands like Trader Joe’s, Erewhon, and Foxtrot Market are leaning into experience, curation, and community to attract foodies, while value chains like Lidl and Aldi emphasize price and quality.

Meanwhile, meal kits and direct-to-consumer food startups are pivoting toward hybrid retail, creating co-branded kiosks, in-store pickups, and even licensing their menus to c-stores. The Grocerant Niche is no longer a side gig—it’s a core growth engine across the board.

 

Who’s Next to Fall? Who’s Poised to Rise?

Legacy giants like A&P, once untouchable, have long since faded into history. Today, brands like Albertsons and Save A Lot face existential questions: Can they adapt fast enough? Will they become acquisition targets or transform into innovation leaders?

On the rise? Amazon’s vertical integration, Instacart’s tech-first grocery marketplace, and fast-growing regional players like H-E-B and Wegmans are setting the pace. Meal-first thinking is now essential. Brands like Sweetgreen, FreshRealm, and Cava are redefining how fresh food is marketed, sold, and consumed—digitally native, supply-chain savvy, and experiential by design.

Foodservice Solutions® has been the global leader in Grocerant Niche Strategy since 1991. As consumer behavior continues to shift, the winners will be those who understand that fresh meals, not just groceries, are the future of retail food.

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·       Twitter/X: @grocerant

·       Email: Steve@FoodserviceSolutions.us