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

Can Shake Shack Customized Marketing Cut It

Sure, Shake Shack sales volume per store are impressive today averaging $4.6 Million per unit in Q4 2018.  They did that by offering a ‘better burger’ and you can get anywhere else.  Ok, so now what as Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

The problem is Shake Shack is now running into the same problem Whole Foods, Pappadeaux Seafood Kitchen, and all other specialty food retailers find after several years of successful growth. Shake Shack caters to an urban lifestyle consumers with more disposal income and consumers with more exposure to fresh food fare according to Johnson; the problem is those consumers are limited in numbers. 

So, when Shake Shack announced that will be rolling out two food trucks—one in the greater tri-state area (NY, NJ, CT + PA) and one in the Atlanta metro area we ask Why? Do they think they can sustain growth in the suburbs?  That is highly unlikely unless they reduce the average check size substantially.

Sure, fans of Shake Shack can book the truck at www.shakeshack.com/truck by simply filling out the form with their name, email address and event details. The Food Truck menu is customizable based on the event, and can include Shack classics like the ShackBurger, Chick’n Shack, ‘Shroom Burger, fries and shakes. Pricing is based on the duration of the event and the number of estimated people in attendance. 

We ask will that drive sales, build buzz, or simply put Shake Shack in the same league as Red Robin and Burger King?  What is Shake Shack’s goal? Drive Growth, Drive Profits, Drive Brand Buzz and at what cost?

The truth is the next 15 years growth in urban communities will outpace that of the suburbs for most branded food growth according to Johnson.  Who, continued saying urban brands growth needs to be focused on urban customers.  

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, www.Linkedin.com/in/grocerant/ or www.twitter.com/grocerant/

Walmart is Winning the Long Game

Last week when Kroger announced that it will close all 14 of its Kroger banner stores in Raleigh-Durham, North Carolina it reminded the team at Tacoma, WA based Foodservice Solutions® that three years ago we were the first food consultants to predict that Walmart would be the leader of the grocery sectors “middle’. 

While being stuck in the middle of any retail sector did not use to be a good thing as times change so does our thinking.  Being the leader of the ‘middle’ of the grocery sector just may be the safest place to be according to Steven Johnson the Grocerant Guru®.  Walmart’s rollout of rotisserie chicken proved that their current ability to succeed within the Grocerant niche may still be five years away. 

Kroger has another banner in Raleigh-Durham Harris Teeter that does well with grocerant niche Ready-2-Eat and Heat-N-Eat fresh food positioning in the mind-set of the consumer. Yet, we question if they can maintain that customer mind-set with their current product mix offerings.

Harris Teeter much like Mariano’s a Kroger banner in the Chicago area mind-set customer relevance, sales, and profitability can prove to be a mixed bag. Kroger has several markets that they have two competing banners.  If Raleigh-Durham is a clue it just might be that brands and banners that compete against themselves just migh be a strategy that worked best in the 1980’s or 1990’s rather than today.

WinCo, Aldi, and Lidl are all building new stores, evolving their solo brands to best compete in the retail foodservice world and have proven that the three of them have lower price points than Walmart, fewer ‘out of stocked’ items than Walmart, and service that rivals or beats Walmart. It is for that reason we once again say Walmart is now the leader of the ‘middle’ of the grocery sector.  Today that is a good thing. 

After all just think about it what does that mean for Albertson, Giant Foods, Kroger and Publix which one of them can win against Whole Foods, Wegmans, or Central Market? The foodservice sector is evolving faster than ever.  Customer migration back and forth from restaurants, grocery stores, c-stores, drug stores, and dollar stores has never been so intense. 

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit www.FoodserviceSolutions.us for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

Kid’s Meals Grocer H-E-B aims to Win back Families

In an effort to win back family business once the mainstay of the grocery business Texas, based H-E-B took a direct shot at chain restaurants when the company's Central Market location in San Antonio, Texas, has launched family focused meal kits for kids. The kid-friendly entree choices the ilk of spaghetti and meatballs and chicken quesadillas are designed to appeal to and feed only kids.

The meal kit are priced at $6.99 to compete with fast food restaurants and feed two kids. The meals come with pre-portioned ingredients and require some cooking, Ok we know that at fast food restaurants now cooking is required but you can serve a meal they like at home and your kids will know you cooked for them.  That just might be more important than you think.

H-E-B is the only grocer at this time targeting kids with specific kits designed to appeal to the younger palate. Scrumpt, Nurture Life and some other companies do offer subscription based meal kits for kids, and the "kid meal kit" space seems to be exploding accord to new reports.

1.        A new target consumer has emerged in the fast-growing meal kit industry – kids. H-E-B has launched meal kits for kids at its San Antonio Central Market store, according to Retail Leader. The new line features entrees such as spaghetti and meatballs and chicken quesadillas. Each kit costs $6.99 and feeds two.

2. H-E-B joins Yumble, Scrumpt and Nurture Life in the children’s prepared meals space. HelloFresh co-founder Dan Treiman helped launch Yumble last summer and it is now available in 26 states with expansion planned this year.
3. The home meal kit category has grown to $5 billion, according to Packaged Facts. Although online players like Blue Apron and HelloFresh dominate the market, grocers like Kroger, Albertsons, and now Walmart, have steadily grown sales. According to Nielsen, sales of in-store meal kits grew 26.5% last year, to $154.6 million.

McDonald’s Happy Meal just might be under attack as both H-E-B and Yumble have promised “fun” in their offerings, and Yumble’s boxes include activity sheets and trivia cards. It will also take some promotional pushes to get the word out that these targeted kits exist. H-E-B will need to promote the new offerings in store circulars and online, and, if they haven't already, position the kits next to their grown-up counterparts. H-E-B currently offers dinner-for-two meal kits ranging in price from $14 to $18. Think about it fun for mom, dad, and kids. 

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