Grocery Delivery Growth is Troublesome for Restaurants

While growing one sector of your grocery business is a good thing it may not be the best thing overall for your business but in this case it’s even worse for the restaurant sector according to Steven Johnson, Grocerant Guru® at Tacoma WA based Foodservice Solutions®. 

Edison Trends recently reported that during September, Publix accounted for a 37% estimated market share of Instacart orders, followed by Costco at 24%, Kroger at 16%, Wegmans at 12% and H-E-B at 11%. A year earlier, Whole Foods Market (20%) was second behind Publix (34%) and ahead of Costco (18%), H-E-B (15%) and Kroger (13%).  So, what this tells us is that consumers across the country are eager to embrace both technology, delivery, and grocerant niche fresh food fast according to Johnson.

Edison made note that Wegmans has moved into the top five following Instacart’s wind-down of its service with Whole Foods Market stores earlier this year. In December 2018, Instacart founder and CEO Apoorva Mehta said the company was phasing out its partnership with Whole Foods, which under the ownership of e-tail giant Amazon has been ramping up online grocery delivery via the Prime Now service. Ok, no news their Amazon has been great for Whole Foods and Amazon will do the delivery of Whole Foods fresh food and more, just watch.

Grocery delivery is still just a minnow in the ocean of grocery food options today according to Johnson, yet its delivery that is helping upend legacy restaurant year over year customer counts. Sept. 30, 2019, the top five grocery retailers by Instacart orders were Publix, Whole Foods, Kroger, H-E-B and Costco, according to Edison’s analysis, which was based on more than 50,000 transactions. Data was scaled so that the highest monthly number of orders was set to 100.

The fact is the restaurant sector owned MEAL CONVENIENCE from the 1950’s through the 2,000’s.  The restaurant sector was innovative beginning with fast food restaurants, the drive-thru, and delivery only restaurants where once pizza was the king.  The restaurant sector has capitulated innovation for copycat menus, marketing, and meal bundles according to Johnson.

Today, the only thing innovative within the restaurant sector is their justification for price increase. If success leaves clues and it does competitive pricing, meal bundling differentiation, and new avenues of distribution will resonate with consumer over price hikes.

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, Linkedin.com/in/grocerant/ or twitter.com/grocerant