Stuck in the Middle: What the Grocery “Mushy Middle” Feels Like — A Grocerant Guru® Take

There’s a physical sensation to being “stuck in the middle” of the grocery sector — a vibration between two magnets pulling in opposite directions. The discounters (Aldi, Lidl, WinCo and others) are tugging hard on price-sensitive shoppers while tech-forward giants (Walmart, Amazon-adjacent players) and premium specialists pull on convenience, assortment and experience. In the middle sit legacy supermarket operators — think Kroger and, for many product categories, Walmart’s traditional grocery business — trying to be everything to everyone and risking being nothing memorable to anyone.

Below I’ll walk you through the history, the current facts that matter, why this middle is dangerous, and finish with four Grocerant Guru® insights on where to actually go next.

A short history — how we arrived here

Grocery used to be simple: low price or differentiated assortment. For decades the market bifurcated into broad national chains (big assortment + scale), regional premium/specialty grocers (fresh, variety, service), and the warehouse/wholesale clubs. In the last 15 years two structural forces changed the map:

1.       Discounters perfected private-label value at scale. Aldi and Lidl brought extremely lean stores, concentrated SKUs and strong private-label programs that undercut mainstream supermarkets on staples and increasingly on fresh items. WinCo—employee owned, warehouse-like—has gained traction by offering wholesale-like pricing without a membership. Discounters have been expanding and grabbing share from traditional supermarkets.

2.       Technology and e-commerce rewrote convenience expectations. Amazon, and then the grocers who tried to emulate its model, pushed same-day delivery, subscription convenience and hyper-personalization. That forced incumbents to decide: double-down on price, double-down on tech, or try to do both. Many tried the latter and got caught between heavy capital investment and thin operating margins.

The current battleground — what the data is telling us

• Discounters are growing visits and market share. Foot-traffic and market studies show value grocers continuing to gain momentum as consumers prioritize price and private label. Aldi and Lidl, in particular, report strong visit growth versus the broader grocery segment. WinCo and other value chains have also shown traffic gains.

• Kroger’s expensive experiment is being rethought. Kroger’s robotic/automated fulfillment strategy (the partnership with Ocado) is being scaled back — recent announcements show Kroger closing several automated delivery/fulfillment centers and taking a material impairment charge as it reorients to a hybrid, store-based fulfillment model and third-party delivery partnerships. The company says this will improve e-commerce economics but it’s a clear signal that trying to be both low-cost scale and high-tech convenience is fiendishly hard.

• Walmart doesn’t want to be the middle — it wants the edge. Walmart publicly and privately has leaned into technology (GenAI, agentic AI, real-time fulfillment improvements) to be faster, cheaper and more convenient — basically to out-Amazon Amazon on a blend of scale + tech. Walmart’s corporate narrative in 2025 stressed AI and automation as strategic priorities for making shopping faster and more relevant. That’s not a middle-management choice; it’s an identity shift.

• Online grocery economics remain challenging. Online grocery has grown enormously as a share of consumer behavior, but unit economics are still poor unless you achieve scale or efficiency in fulfillment. That is why Kroger’s shift to third-party partnerships and Walmart’s aggressive tech push are such important strategic moves — both are experiments to solve thin margins in delivery/fulfillment.

What “stuck in the middle” feels like operationally and for shoppers

·       Confused assortment and unclear value proposition. Middle grocers try to stock everything — premium dinner kits, private-label staples, a sushi case, and too many SKUs. The shopper who wants the cheapest eggs goes to Aldi or WinCo; the shopper who wants a curated meal experience goes to a specialty or foodservice-forward retailer. Middle grocers end up being the “also-ran” in both missions.

·       Margin squeeze from two sides. Discounters compress prices on staples while tech/fulfillment investments inflate operating costs. Trying to match both results in underpriced promise and overexpansive delivery. Kroger’s recent write-downs of automated centers are a textbook symptom.

·       Brand identity dilution. When your ads claim both “lowest price” and “premium chef-quality meals” you create a fuzzy brand that makes loyalty fragile. Consumers migrating toward specialists (value or premium) vote with feet and wallets.

·       Operational whiplash. Constantly switching strategies — build warehouses, then close them; push proprietary delivery, then partner with Instacart/DoorDash — leads to execution drag, associate churn, and customer confusion.

Marketing & food industry facts the middle must reckon with

·       Private-label is a weapon. Discounters leverage a tight private-label assortment to deliver perceived quality at low prices and that perception is holding up with shoppers. That’s an advantage the middle must either match or clearly differentiate from.

·       Foot-traffic trends favor simplicity. Recent data show value grocers posting higher traffic growth than the average supermarket, especially when inflation bites. Consumers will trade up on occasional items but shop down on staples.

·       E-commerce is essential but costly. Kroger’s shift away from a full Ocado roll-out and toward hybrid fulfillment plus third-party partnerships is a reminder: owning the tech is not the same as making the economics work.

 

Four Grocerant Guru® insights for grocers stuck in the middle

1.       Choose a real strategic pole — don’t try to be the midpoint on price and the leader on tech.
If you want price leadership, ruthlessly optimize assortment and private label. If you want convenience/tech leadership, accept higher AOVs and build fulfillment economics that scale (or partner where it’s smarter). The middle dilutes investment and brand clarity.

2.       Turn stores into micro-experience hubs, not cost centers.
If you cannot win on lowest everyday price, win on a handful of foodservice or fresh offerings that create habit (breakfast bundles, ready-to-heat chef bowls, local fresh counters). Make those experiences repeatable, measurable and profitable.

3.       Be pragmatic about tech: hybrid > headline.
Kroger’s closures remind us that headline robotics are sexy but store-first hybrid fulfillment often wins in cost-per-order and speed in sprawling U.S. markets. Use automation where density justifies it; everywhere else, optimize store labor and routing.

4.       Market decisively to the evolving consumer — not to a mythical average shopper.
Segment your marketing into clear missions: “value staples,” “midweek fresh meals,” “premium weekend entertaining.” Speak to the shopper’s occasion — the consumer increasingly shops by meal occasion and mission. Those who craft messaging by occasion win share.

 

Think About This from the Grocerant Guru®

The “mushy middle” isn’t a fate — it’s a warning label. The discounters have made price a science; the tech players have made convenience a technology playbook; the winners will be the ones who make deliberate bets and then own the day-to-day mechanics of that bet. For Kroger, Walmart and others, today’s choices — close or repurpose automated sites, invest in AI search, partner with third-party delivery — are identity moments, not mere tactical shifts. The market rewards clarity. Choose your pole, optimize for it, and then tell your customer exactly why you exist for their life.

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

A Thanksgiving Letter to the Hearts That Feed America By The Grocerant Guru®

 

Every Thanksgiving, the aroma of warm bread, roasted turkey, and simmering spices fills homes across America. Families gather at tables big and small, sharing stories, gratitude, and the kind of laughter that only comes when we’re surrounded by people we love. But as we celebrate this moment of togetherness, I want to take a pause—a heartfelt one—to honor the people who make these moments possible.

To the restaurant workers, the grocery store teams, and the C-store associates… this one is for you.

Whether you have today off or you’re among those keeping the lights on and the ovens warm, you are part of the beating heart of the global food ecosystem. You are the quiet heroes who turn ingredients into meals, chaos into comfort, and everyday work into something profoundly meaningful.

For those who have the day off today…

You’ve earned it.
You’ve spent a year on your feet, often lifting more than boxes—lifting spirits, lifting your teams, lifting your communities. Today, as you rest with your families, your friends, your pets, or even in the quiet company of yourself, know that your time off isn’t just well-deserved… it is sacred.

Across every culture on Earth, sharing food and sharing time is the universal intersection of happiness. It’s the global language of love. Whether you’re carving a turkey in Tacoma, frying plantains in Miami, rolling sushi in Seattle, or stirring a family stew in Manila or Mumbai, this truth holds:

Food plus time equals connection.
When you get a rare chance to enjoy both, that is a gift.

I hope today you taste something wonderful.
I hope you feel appreciated.
I hope you experience the warmth you help create for millions throughout the year.

And for those who are working today… thank you.

You are elevating Thanksgiving for everyone else.

The restaurant worker preparing takeout for families who can’t cook today…
The grocery clerk ensuring last-minute shoppers can still put their favorite pie on the table…
The C-store associate brewing hot coffee for travelers heading home…

Each of you is making someone’s holiday better, easier, and more joyful.

In the Grocerant world, we talk endlessly about customer experience, meal solutions, and the intersection of convenience and food culture. But on Thanksgiving, it all condenses into something simpler and profoundly human:

You help people create moments of happiness.

Your kindness, your energy, and yes—your sacrifice of time with your own families—ripples outward into thousands of homes. That is something to be genuinely proud of.

A Global Intersection of Gratitude and Food

Thanksgiving may be an American holiday, but the emotional center of it—gratitude, food, time, and human connection—is universal. Around the world, when people gather to share a meal, it is never just food on a plate. It’s memory. It’s belonging. It’s comfort. It’s hope.

Across cultures, the happiest moments tend to sit right next to the meals we share.

You—the people who prepare, stock, cook, serve, clean, organize, and manage—are the quiet curators of that happiness.

From My Table to Yours

To every restaurant worker, grocery employee, and C-store associate:

Thank you for being part of the fabric that feeds us—literally and emotionally.
Thank you for your professionalism, your patience, your resilience, and your smiles.
Whether today brings rest, work, celebration, or something in between, I hope you feel seen and valued.

Because you are.
Today and every day.

May your Thanksgiving be filled with warmth, good food, and people who make your heart feel full.

With respect and gratitude,
The Grocerant Guru®

Casey’s & Pepsi: A Classic Restaurant Playbook Move Fueling C-Store Foodservice Growth

For more than five decades, Casey’s General Stores has steadily evolved from a rural convenience outlet into a national powerhouse, one that has long understood what many retailers only recently discovered: fresh food and foodservice are the engines that drive sales growth, brand value, and customer frequency according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®

This latest collaboration with Pepsi—positioning Casey’s handmade pizza alongside an ice-cold Pepsi—demonstrates that Casey’s is now fully embracing the Chain Restaurant Marketing Playbook that helped legacy restaurant brands build national followings.

From the 1980s introduction of made-from-scratch pizza to today’s broad menu of fresh, ready-to-eat staples, Casey’s history mirrors the restaurant sector’s evolution:

·       Fresh food as a differentiator

·       Signature items that create destination-level traffic

·       Co-branding partnerships that elevate flavor, fun, and frequency

·       Marketing campaigns that behave like restaurant media, not traditional c-store ads

Today, Casey’s—now the third-largest convenience store retailer and fifth-largest pizza chain in the country—is leveraging that restaurant-style strategy at scale. And its newest national campaign proves it.

 

Casey’s Joins Pepsi’s ‘Food Deserves Pepsi’ Movement

Casey’s becomes the first convenience retailer to join the nationwide Food Deserves Pepsi platform, a powerful campaign built on the idea that America’s favorite foods just taste better with Pepsi.

A new co-branded advertising spot features a dedicated “Pepsi Chaser,” ensuring that no slice of Casey’s handmade pizza is enjoyed without the bold, refreshing flavor of Pepsi. The creative includes:

·       A 30-second national digital ad

·       A 15-second cutdown

·       Broad distribution across social platforms and fuel pump screens

“Quality is baked into everything we do at Casey’s, and you can taste that in every slice,” said Tom Brennan, chief merchandising officer at Casey’s. “Teaming up with Pepsi is a natural fit—two brands that know great taste, coming together for the perfect hometown combo.”

The Food Deserves Pepsi platform launched in 2024 and has captured national attention through campaigns such as BBQ Crashers, Tailgate Crashers, and Undercover Cups—all reinforcing one simple message: a meal without Pepsi is leaving taste on the table.

 

Fueling the Next Era of C-Store Foodservice

Casey’s adoption of restaurant-style branding, storytelling, and meal pairing shows how convenience stores continue to redefine themselves as meal destinations, not just fuel stops. Pepsi’s partnership only accelerates that shift by tapping into consumer expectations shaped by restaurants:

·       Flavor pairing

·       Branded meal bundles

·       Social-driven marketing

·       Daypart-specific promotions

This is the restaurant playbook—modernized for the C-store era.

Insights From the Grocerant Guru®: The Future of Mix-and-Match Meal Component Bundling

1.       Breakfast Will Become the C-Store Battleground
Mix-and-match bundles—breakfast pizza + energy drink, burrito + coffee, sandwich + juice—will drive morning loyalty, just as QSRs did with combo meals two decades ago.

2.       Lunch and Dinner Bundles Must Mirror Restaurant Behavior
Expect more strategically paired “meal duos” like pizza + Pepsi, sub + chips, wings + fountain drink—engineered for value, flavor, and convenience. C-stores that offer menu-level curation will grow frequency fastest.

3.       Snacking Is the New ‘Fourth Meal’
Snack-driven bundles (pretzel bites + frozen drink, cookies + cold coffee) tap into all-day traffic. As restaurant brands lean into snacking, C-stores must follow with flexible, frictionless mix-and-match formats.

4.       Personalization Will Define the Next Generation of C-Store Meal Solutions
Digital apps and loyalty programs will enable dynamic bundling—letting shoppers create their own component meals across dayparts with personalized pricing. This is where the c-store sector pulls ahead of restaurants.

Success Leaves Clues—Are You Ready to Find Yours?

One key insight that continues to drive success is this: "The consumer is dynamic, not static." This principle is the foundation of our work at Foodservice Solutions®, where Steven Johnson, the Grocerant Guru®, has been helping brands stay relevant in an ever-evolving market.

Want to strengthen your brand’s connection with today’s consumers? Let’s talk. Call 253-759-7869 for more information.

Stay Ahead of the Competition with Fresh Ideas

Is your food marketing keeping up with tomorrow’s trends—or stuck in yesterday’s playbook? If you're ready for fresh ideations that set your brand apart, we’re here to help.

At Foodservice Solutions®, we specialize in consumer-driven retail food strategies that enhance convenience, differentiation, and individualization—key factors in driving growth.

 Email us at Steve@FoodserviceSolutions.us Connect with us on social media: Facebook, LinkedIn, Twitter 

Convenience Stores Turn Restaurant Meal Deals into a Magnet for Customer Migration

 

How C-Stores Are Winning the “Restaurant Quality Ready-2-Eat” Battle. For over a decade, convenience stores have quietly reinvented themselves from fuel-forward pit stops into fresh food destinations—and the data now confirms it: 68% of consumers say C-store ready-2-eat meals are “as good as” or “better than” quick-service restaurant food, according to NACS shopper insights. Foodservice now accounts for over 25% of total C-store revenue, outpacing fuel and center-store growth.

But the biggest shift of all is how C-stores are leveraging restaurant-style meal deals and mix-and-match bundling to capture migration from both grocery stores and restaurants. The new RaceTrac breakfast bundle—a complete hot breakfast meal for just $4 through February 2026—is the clearest sign yet that convenience retail has entered the value-driven restaurant arena.

 

Restaurant Quality: The New Consumer Baseline for C-Store Fresh Food

Consumers no longer see convenience food as “grab-and-go snacks.” In the mind’s eye of today’s shopper, C-store fresh food is:

·       Faster than fast food

·       As customizable as fast casual

·       Cheaper than grocery meal kits

·       Restaurant quality without the time or effort

This perception shift did not happen by accident, it came from deliberate menu innovation, chef-inspired recipes, fresh commissary programs, and a relentless push toward restaurant-style branding.

Below is how the industry’s leaders have elevated consumer expectations.

 

Five Chains Reshaping Ready-2-Eat Perception Through Elevated Fresh Food

Rutter’s – Setting the Standard for made-to-order diversity

1.       Chef-crafted menu boards featuring premium proteins, including bison burgers and grilled chicken, rarely seen in C-stores.

2.       Large-format customizable meals (bowls, pastas, quesadillas) that rival fast-casual operators.

3.       24/7 made-to-order kitchens, positioning Rutter’s as an all-day restaurant alternative.

Sheetz – Turning convenience into a fast-casual digital experience

1.       Touchscreen ordering kiosks delivering extreme customization—mirroring Chipotle-style personalization.

2.       Fresh ingredient upgrades, including avocado, caramelized onions, and premium sauces.

3.       Sheetz Bros. Coffeez® cafés offering barista-style beverages, enhancing the “café + restaurant” perception.

Wawa – The undisputed leader in fresh hot and cold prepared foods

1.       Hoagies and sandwiches consistently ranked among top QSR quality scores.

2.       Made-to-order bowls, burritos, and handcrafted beverages, competing directly with fast casuals like Panera.

3.       Seasonal LTO drops (Gobblers, handcrafted lemonades) that create restaurant-style anticipation and loyalty.

RaceTrac – Expanding fresh food and now restaurant-style meal deals

1.       New $4 Breakfast Meal Deal, bundling a classic sandwich + hash brown + fresh-ground coffee.

2.       Crazy Good Coffee® program, focusing on freshness and flavor distinction.

3.       Grab-and-go hot bar enhancements, adding consistency and expanding freshness signals.

7-Eleven – The global food innovation engine

1.       Laredo Taco Co.® restaurant concept, offering street-style tacos, burritos, and bowls made from scratch.

2.       National LTO flavor crossovers, including the new Cheetos® Flamin’ Hot Burrito, Tacos, and Nachos.

3.       Fresh bakery and snackable meal items, positioned alongside QSR competitors with similar formats.

 

How C-Stores Use Mix & Match Meal Component Bundling to Drive Customer Migration

Bundling is the strategic bridge pulling customers away from both grocery stores and restaurants:

From Grocery Stores

Consumers leaving grocery stores cite:

·       Too expensive

·       Time-consuming meal prep

·       Difficulty assembling “complete meals”

C-stores win by offering:

·       Ready-2-Eat + Heat-N-Eat meal components

·       Simple mix-and-match bundles (sandwich + side + drink)

·       Transparent price points that beat grocery deli inflation

From Restaurants

QSR meal prices have increased over 40% since 2019, driving customers to seek lower-cost alternatives.
C-stores counter with:

·       Restaurant-quality entrées

·       Faster service

·       Customizable add-on bundles

·       Lower “all-in” price points

The new RaceTrac breakfast deal—a complete restaurant-quality breakfast for $4—is precisely the kind of offer accelerating customer migration.

 

The Grocerant Guru®: Three Forward-Looking Insights

1. Meal Component Customization is the New Currency

Consumers want freedom to build meals the way they want. C-stores that master mixing and matching meal components will pull share from grocers who still sell components separately and restaurants who bundle rigidly.

2. Flavor Innovation Will Determine the Next Market Leaders

Partnerships like Cheetos Flamin’ Hot x Laredo Taco Co. signal the next frontier:
co-branded LTOs that generate social buzz while raising food quality perception.

3. Morning Meal Deals Will Trigger the Greatest Customer Migration

Breakfast is the least brand-loyal daypart and the most inflation-sensitive.
Deals like RaceTrac’s $4 complete breakfast will shift morning routines permanently toward C-stores.

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Since 1991, Foodservice Solutions® has been the global leader in the Grocerant niche—helping brands identify high-growth strategies that resonate with modern consumers.

📞 Call 253-759-7869 or 📩 Email Steve@FoodserviceSolutions.us