Beating QSRs at the Foodservice Game: The Grocerant Has Been Playing This Game for Years

 

The foodservice battlefield is changing again, according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Convenience stores are investing more heavily in prepared food. Quick-service restaurants (QSRs) are accelerating menu innovation. Grocery stores are expanding fresh prepared foods. Restaurants are improving takeout and delivery. And consumers continue to move seamlessly among all of these channels looking for one thing:

A good meal, when they want it, where they want it, at a price they believe represents real value.

A recent Convenience Store News webinar, “QSRs vs. C-Stores: The Battle for Foodservice Dollars,” offered plenty of smart observations about how convenience stores can compete with QSRs.

But from my perspective as the Grocerant Guru®, there is a bigger story here.

Much of what the industry is now describing as the future of foodservice has actually been developing for decades.

Leading non-traditional food operators have been selling prepared food for takeout, delivery and consumption at home for years. They have been blurring the lines between restaurants, grocery stores, convenience stores and foodservice long before the word grocerant became part of the industry vocabulary.

Foodservice Did Not Begin With the Drive-Thru

The foodservice industry sometimes talks about innovation as if every new foodservice idea begins with a restaurant.

It doesn't.

The history of food sold for consumption away from the traditional restaurant table is much broader.

Takeout has been part of food culture for generations. Delicatessens, bakeries, pizzerias, Chinese restaurants, supermarkets, butcher shops and neighborhood markets have long prepared food specifically for customers to take home.

Then came increasingly sophisticated prepared-food departments in supermarkets.

Consumers could buy a rotisserie chicken, deli sandwich, prepared salad, soup, entrée or side dish and take it home for dinner.

That was an early version of what I call the Grocerant Revolution.

The restaurant wasn't necessarily preparing the meal.

The grocery store was.

Then convenience stores began expanding beyond gasoline, cigarettes and packaged snacks into fresh sandwiches, pizza, roller-grill food, coffee, breakfast and increasingly sophisticated prepared meals.

Delivery created another major shift.

Pizza companies demonstrated that the restaurant did not have to be the destination. The meal could come to the consumer.

Then technology accelerated everything.

Online ordering, mobile apps, third-party delivery platforms, curbside pickup, drive-thru, grocery pickup and increasingly sophisticated foodservice programs have transformed the consumer's relationship with food.

The consumer doesn't think in channels.

The consumer thinks in occasions.

“I'm hungry.”

“I need dinner.”

“I don't have time to cook.”

“I need something for the family.”

“I want something quick.”

“I want something healthier.”

“I want a good deal.”

“I want it delivered.”

That is the real foodservice competition.

Welcome to the Food Channel Blurring Era

This is why I have spent years talking about Food Channel Blurring.

The traditional definitions of restaurant, grocery store and convenience store are becoming less meaningful.

A supermarket can operate like a restaurant.

A convenience store can operate like a restaurant.

A restaurant can operate like a grocery store.

A grocery deli can compete with a QSR.

A c-store can compete with a fast-casual restaurant.

And a restaurant can compete with the supermarket's dinner solution.

The consumer simply sees food.

That is the fundamental premise behind the Grocerant niche: fresh prepared Ready-2-Eat and Heat-N-Eat food moving across traditional and non-traditional channels.

And this is precisely why the current QSR-versus-c-store conversation is so interesting.

What QSRs Do Well

The webinar correctly identifies several areas where QSRs have developed significant competitive advantages.

They understand operational consistency.

They understand portion control.

They understand speed.

They understand menu simplification.

They understand promotions.

They understand limited-time offers.

They understand marketing.

And perhaps most importantly, they understand that consumers need a reason to come back.

QSRs are also increasing the cadence of menu innovation.

Limited-time offers create urgency. New flavors create excitement. Sauces create differentiation. Chicken remains a powerful traffic driver. Beverages continue to expand. Better-for-you options address changing consumer expectations.

But there is another important point here.

Innovation isn't innovation simply because it is new.

The real question is whether the consumer believes the new product is better.

That brings us to perhaps the most important part of the current foodservice value equation.

Price Is Important. Value Is Bigger.

Consumers absolutely care about price.

But price by itself does not define value.

Consumers increasingly ask:

“What am I getting for what I'm paying?”

That is a very different question.

A $10 meal can be expensive if the consumer doesn't like it.

A $12 meal can be a bargain if the consumer believes the quality, portion, convenience and experience justify the price.

This is why I believe foodservice operators should think about Price, Value and Service as an equilibrium.

Lowering price is not always the answer.

Improving the food may be more powerful.

Improving packaging may be more powerful.

Improving portion size may be more powerful.

Improving speed may be more powerful.

Improving convenience may be more powerful.

Making the customer feel recognized may be more powerful.

The winning foodservice operator doesn't necessarily offer the lowest price.

The winner delivers the strongest perceived value.

The C-Store Has a Different Weapon

This is where convenience stores have an enormous opportunity.

QSRs are highly structured businesses.

That structure creates consistency, but it can also create limitations.

The convenience store has something different:

Convenience.

It is right there.

It can be open when other foodservice operators are closed.

It can sell gasoline, beverages, snacks, grocery items and prepared food during the same visit.

It can create a highly localized assortment.

It can know its customers.

And it can potentially change its food offer much faster than a large national restaurant chain.

That last point deserves considerably more attention.

A national QSR may have to navigate corporate development, testing, supply chains, packaging, equipment, training, marketing and technology before a new concept reaches thousands of restaurants.

A well-run convenience retailer can sometimes identify a local opportunity and move much faster.

Speed to market is a competitive weapon.

The question is whether c-stores will actually use it.

The Grocerant Advantage: Think Beyond the Store

The biggest mistake any foodservice operator can make is thinking only about what happens inside the four walls.

The future of foodservice is about the food occasion.

Breakfast on the way to work.

Lunch at the job site.

Dinner on the way home.

A family meal when nobody wants to cook.

A prepared meal for an older consumer.

A protein-rich snack between activities.

A beverage occasion.

A late-night meal.

A weekend gathering.

A meal ordered for delivery.

A meal purchased for pickup.

These are all foodservice occasions.

The operator that understands the occasion can build the offer around the consumer rather than forcing the consumer to adapt to the operator's business model.

That is exactly what leading non-traditional food operators have been doing.

Prepared Food for the Home Changed Everything

The growth of prepared food for home consumption may ultimately be more important than the battle between QSRs and c-stores.

For decades, consumers were taught that dinner meant buying ingredients and preparing the meal at home—or going to a restaurant.

That binary choice has largely disappeared.

Today, consumers can buy a fully prepared meal at a grocery store.

They can buy a partially prepared meal.

They can buy a restaurant meal for takeout.

They can have a restaurant meal delivered.

They can pick up a hot meal at a convenience store.

They can order groceries and prepared foods together.

They can purchase a refrigerated or frozen prepared entrée and finish it at home.

The kitchen has become an extension of the foodservice industry.

That is the Grocerant opportunity.

The New Competition Isn't QSR vs. C-Store

I don't believe the real battle is QSRs versus convenience stores.

The real battle is for the consumer's next meal occasion.

That competition includes:

·       QSRs

·       Fast-casual restaurants

·       Convenience stores

·       Grocery stores

·       Supermarket delis

·       Club stores

·       Food halls

·       Delivery platforms

·       Prepared-meal companies

·       Specialty food retailers

·       And increasingly, retailers that never traditionally considered themselves foodservice operators

The consumer doesn't care who wins the channel battle.

The consumer wants the best answer to today's meal occasion.

That changes the competitive equation.

What Should Foodservice Operators Do?

The lessons from QSRs are valuable.

Build a strong innovation pipeline.

Use LTOs.

Improve existing products.

Manage portions.

Control execution.

Create compelling promotions.

Use culturally relevant marketing.

Deliver consistent quality.

But don't simply copy the QSR playbook.

Use the strengths of your own channel.

For convenience stores, that means using convenience, speed, location, extended hours, product diversity and local customer relationships.

For grocery stores, it means leveraging fresh food, shopping frequency, prepared meals and the ability to combine ingredients and finished foods in one trip.

For restaurants, it means recognizing that the restaurant is no longer limited to the dining room.

And for every operator, it means understanding that foodservice is no longer a channel. It is an ecosystem.

Three Insights from the Grocerant Guru®

1. Stop Thinking in Channels. Start Thinking in Food Occasions.

The consumer doesn't wake up thinking, “Today I'm going to give my foodservice dollars to a QSR.”

They think, “What's for breakfast?”

“What's for lunch?”

“What's for dinner?”

“I'm hungry.”

The operator that solves the occasion better wins the transaction.

2. Convenience Is More Than Location.

Convenience isn't simply being five minutes away.

Convenience means reducing friction.

It means having the right food, at the right time, in the right format, at the right price, with easy ordering, pickup or delivery.

Convenience is the new currency of foodservice.

The winners will be the operators that make the consumer's life easier—not merely the operators with the lowest price.

3. The Grocerant Is Not the Future. It Is the Evolution of Foodservice.

For decades, innovative non-traditional food operators have been preparing food for people to take home, delivering meals, selling prepared foods through grocery stores and convenience stores, and blurring the line between retail and restaurants.

What is happening today isn't the beginning of that movement.

It is the acceleration of it.

The next generation of foodservice winners will not ask, “Are we a restaurant, grocery store or convenience store?”

They will ask a much better question:

“What foodservice problem can we solve for the consumer today?”

That is where the real growth opportunity lies.

And that is why I believe the Grocerant niche—fresh prepared Ready-2-Eat and Heat-N-Eat food—isn't taking foodservice away from traditional operators. It is redefining what foodservice means.

For international corporate 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 www.GrocerantGuru.com , www.FoodserviceSolutions.us or call    1-253-759-7869