Are Grocery Stores Still Focused on Legacy Stationary Business—And Missing the Boat?

 

For more than 70 years the U.S. supermarket was built around one assumption: consumers would buy ingredients and cook dinner at home.

That assumption is collapsing.

Today’s consumer doesn’t necessarily cook dinner—they assemble dinner. Meals are increasingly built from a mix of restaurant takeout, grocery prepared foods, frozen entrees, snacks, and delivery orders. The dinner table has evolved into a multi-channel food ecosystem.

Yet many legacy grocers still operate using merchandising strategies designed in the 1970s and 1980s, when center-store packaged goods drove traffic and the deli counter was simply an add-on.

The marketplace has moved on.

 

A $2 Trillion Food Industry Is Being Rebalanced

The U.S. food economy now exceeds $2 trillion annually, split between food consumed at home and food consumed away from home.

According to the U.S. Department of Agriculture, food-away-from-home spending now regularly captures roughly 55% of total food expenditures, compared with just 25% in 1955.

Restaurants have dominated that shift for decades, but the growth of prepared foods inside grocery stores and convenience retailers is blurring the lines between retail and foodservice.

Consumers increasingly expect restaurant-quality food wherever they shop.

That expectation is driving the next phase of the Grocerant Economy—the intersection of grocery and restaurant retail.

 

Consumers Have Redefined Dinner

The typical dinner decision is no longer based on recipes or meal planning.

It is based on speed, convenience, and flavor.

Consumer research from Foodservice Solutions® Grocerant Guru® shows:

·       84% of family meals now include at least one pre-purchased prepared food component

·       Most dinner decisions occur after 3 p.m.

·       Consumers increasingly prioritize Ready-2-Eat and Heat-N-Eat solutions

Restaurant behavior reflects the same pattern.

Industry data from the National Restaurant Association indicates approximately 70–75% of restaurant traffic now occurs off-premises, including takeout, drive-thru, delivery, and curbside pickup.

Consumers want restaurant-quality food on their own schedule.

 

Prepared Foods Are Becoming Grocery’s Growth Engine

The fresh prepared foods manufacturing sector now includes more than 800 U.S. companies generating roughly $17 billion annually, supplying supermarkets, convenience stores, and specialty retailers.

At the same time, grocery retailers are expanding in-store kitchens, chef programs, and prepared meal assortments designed to compete directly with restaurants.

Leading examples include:

·       Wegmans, widely viewed as the benchmark for chef-driven prepared foods and international cuisine programs inside grocery retail.

·       H-E-B, particularly its premium banner Central Market, which blends grocery retail with culinary theater and restaurant-quality meals.

·       Metropolitan Market in the Pacific Northwest, known for high-quality prepared foods that drive destination shopping.

·       99 Ranch Market, which integrates large in-store food halls and restaurant stalls into the grocery environment.

These retailers understand that prepared foods are not a department—they are a strategic traffic driver.

 

Convenience Stores Are the Fastest-Moving Competitors

While many supermarkets debate strategy, convenience retailers are rapidly expanding foodservice operations.

Chains such as:

·       Wawa

·       Sheetz

·       Casey's General Stores

have invested heavily in fresh kitchens, made-to-order meals, and proprietary menu items.

Prepared food sales now account for 40% or more of in-store revenue at some convenience chains, dramatically improving margins compared with traditional packaged goods.

The result is a new competitive reality.

Consumers who once stopped at supermarkets for dinner solutions now frequently stop at convenience retailers instead.

 

Grocerant Experiments Are Not Easy

Despite strong consumer demand, hybrid grocery-restaurant concepts face operational challenges.

A notable example is Green Zebra Grocery, a Portland-based grocery-convenience hybrid that attempted to reinvent the neighborhood market with healthy grab-and-go meals and locally sourced products.

After operating for nearly a decade, the company closed its remaining stores in 2023 after rising costs—including labor, packaging, insurance, and freight—made profitability difficult.

The lesson for the industry is clear:

Prepared foods generate traffic—but operational discipline determines profitability.

 

Why Many Legacy Grocers Continue to Struggle

Despite the demand for fresh prepared foods, many supermarkets remain constrained by structural challenges.

Common barriers include:

Operational inconsistency
Prepared foods quality varies by location, staffing, and time of day.

Departmental silos
Prepared foods are often treated as a deli function rather than a strategic business unit.

Center-store dependency
Retailers remain heavily reliant on packaged goods categories that generate low margins and declining traffic.

Limited culinary leadership
Many chains lack professional chefs or culinary development teams capable of competing with restaurant innovation.

Without culinary leadership, grocery prepared foods rarely match restaurant flavor or consistency.

 

The Future Grocery Store Will Look More Like a Food Hall

Retailers that understand the shift are redesigning stores around meal solutions rather than ingredient inventory.

Future grocery formats are likely to feature:

·       Larger prepared foods kitchens

·       Global street-food inspired menu items

·       Modular meal components rather than fixed meal kits

·       Restaurant partnerships and branded food concepts

·       Food hall-style environments

In other words, the grocery store is evolving from a warehouse of ingredients into a culinary solutions center.

 

Four Insights from the Grocerant Guru®

1. Dinner Is Now a Multi-Retail Experience

Consumers assemble meals from multiple sources—restaurants, grocery prepared foods, convenience stores, and delivery platforms.

 

2. Prepared Foods Are the Most Important Traffic Driver in Food Retail

Retailers that invest in culinary-driven prepared foods gain higher trip frequency, stronger loyalty, and improved margins.

 

3. Modular Meals Beat Traditional Meal Kits

Consumers want flexibility. Proteins, sides, sauces, and snacks that can be mixed and matched outperform rigid pre-bundled meal offerings.

 

4. The Next Grocery Winners Will Think Like Restaurants

Retailers that combine culinary innovation, speed of service, and strong food culture will dominate the next era of grocery competition.

Those who remain focused on legacy stationary grocery models risk becoming irrelevant in the Grocerant Economy.

Tap into the Foodservice Solutions® team for greater understanding of New Electricity or for a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869