What Grocery Stores Don’t Understand About Restaurants in Their Stores

 

In today’s dynamic food landscape, grocery stores and supermarkets are venturing boldly into the restaurant space, attempting to compete with quick-service and sit-down dining establishments. Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® was the first to predict that this venture would present challenges, as these grocery-restaurant hybrids frequently misunderstand the core consumer desires and fail to align their offerings with the critical price, value, and service equilibrium.

Consumer Focus: Dinner Tonight

The consumer’s primary goal when stepping into a grocery store with an in-store dining option is often clear: they’re looking for a meal solution for dinner tonight. This need includes five key attributes:

1.       Choice — The ability to customize or mix and match meal components, catering to diverse household preferences.

2.       Affordable Pricing — Transparent pricing that feels competitive with other ready-to-eat options.

3.       Meal Bundling — Packages that simplify decision-making, offering both convenience and variety.

4.       Speed of Service — A quick and seamless experience that rivals traditional fast-food restaurants.

5.       Branded Messaging — Clear communication about what makes the experience unique or valuable.

Unfortunately, many grocers fall short in meeting these criteria, creating an inconsistent consumer experience that alienates shoppers rather than drawing them in.

The Confusion of Mixed Messaging

Grocery stores historically thrive on a “buy here and cook from scratch” marketing strategy. This narrative conflicts sharply with the “eat here now” promise implicit in opening an in-store restaurant. Today’s time-starved consumers increasingly lack the skills or patience to prepare complex meals at home, a trend exacerbated by years of reliance on ready-to-eat and heat-and-eat offerings. By leaning into restaurant ventures without fully committing to a coherent “meal solution” strategy, grocery stores muddy their own messaging, leaving consumers unclear about what to expect.

Lessons from Hy-Vee’s Market Grille Reversion

Hy-Vee’s recent decision to transition its in-store Wahlburgers restaurants back to the company’s Market Grille concept exemplifies the pitfalls of poorly executed grocery-restaurants. While Wahlburgers is a recognizable and appealing brand, the partnership’s inability to meet the nuanced needs of Hy-Vee shoppers underscores the struggle:

·         The operational disconnect between a third-party restaurant brand and a grocery retailer led to a lack of consistency.

·         Menu options failed to align with the quick and flexible dinner solutions consumers sought.

·         The partnership confused Hy-Vee’s core brand identity, further diluting its value proposition.

Returning to the Market Grille concept is an effort to regain control, provide more tailored menus, and emphasize affordability. The Grocerant Guru® notes this as a wise step, but questions remain about its ability to address the fundamental issues plaguing grocery restaurants.

Three Reasons Grocery Restaurants Are Failing

According to the Grocerant Guru®, the failure of grocery stores to thrive in the restaurant space stems from three critical oversights:

1.       Misalignment with Consumer Expectations — Grocery store dining options often lack the immediacy, simplicity, and flavor-forward appeal that restaurant diners expect. Inconsistent menu designs, long preparation times, and limited customization options leave consumers dissatisfied.

2.       Inefficient Operations — The staffing, kitchen layouts, and supply chain models designed for retail operations are often ill-suited to support restaurant efficiency. This mismatch results in slow service times and logistical challenges that frustrate customers.

3.       Overlooking Core Competencies — Rather than doubling down on their strengths—convenience, affordability, and mix-and-match bundling—many grocers imitate traditional restaurant models without addressing their inherent weaknesses. This approach places them in direct competition with seasoned restaurant brands, a battle they’re ill-equipped to win.

The Future: Bridging Grocery and Dining

To succeed in the restaurant space, grocers must redefine the “dinner tonight” solution. This means:

·         Expanding ready-to-eat and heat-and-eat options tailored to family-sized portions.

·         Leveraging mix-and-match bundling to let consumers personalize their meals with ease.

·         Implementing clear and targeted messaging around the value of in-store dining and its role within the broader grocery shopping experience.

Hy-Vee’s pivot back to the Market Grille concept reflects an acknowledgment of these realities. Whether this strategy will fully capitalize on what today’s diners seek remains to be seen. But one thing is certain: as the Grocerant Guru® predicted, only those who embrace consumer-centric innovation—in pricing, convenience, and service—will flourish in this evolving space.

For international corporate presentations, regional chain presentations, educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert, and public speaking will leave success clues for all. For more information visit GrocerantGuru.com, FoodserviceSolutions.US or call 1-253-759-7869