'Grocerant' concept red-hot, restaurants concerned

Whether it's pizza from a wood-fired oven or a glass of wine while shoppers stroll the aisles, some grocers are turning portions of their stores into a nosher's delight -- and creating tough new competition for fast-food chains and traditional restaurants.

The phenomenon is growing fast enough both in prevalence and sophistication that the food industry has coined a name for these combination grocery stores and eateries -- the "grocerant." Customers get the convenience of being able to order a meal, then fill their shopping carts with home essentials while they wait. Stores pick up extra sales.

 

 

Grocerants generated 2.4 billion visits and $10 billion in sales in 2016 by promoting restaurant-quality freshly prepared foods, which are on trend with the contemporary palate, reports The NPD Group, a research outfit. Grocerant visits have increased close to 30% since 2008.

Grocerants represent an extension of what's known in the supermarket trade as the service deli, those staffed counters in many upscale stores that have long offered salads, fresh bakery items and rotisserie chickens. Grocerants, however, take these delis to the next level with niceties that can include sit-down service with waiters, full bars and even sushi chefs.

"The market has become very blurred," said NPD restaurant analyst Bonnie Riggs. "The competition was just the restaurant down the street, but it’s also now places that offer prepared meals that compete directly with restaurants."

Driven by Millennial customers -- teens to thirtysomethings -- more than 40% of Americans buy freshly prepared foods from grocery stores. Besides being fast, it can be cheaper than traditional takeout. A grocerant meal costs $4.22 on average, according to NPD, compared to $7.96 at a fast-casual restaurant, a 53% difference.

For years, fast-casual restaurants snatched sales away from supermarkets by catering to busy workers looking for a quick hot meal after a day at the office or harried moms and dads who didn't have time to make a home-prepared dinner. Now the roles have reversed. "Retailers started looking at what restaurant operators were doing," Riggs said.

Now stores have developed cutting-edge dining choices like these:

•The Market Grille in 103 Hy-Vee supermarkets in eight states offers high-end selections like blackened shrimp tacos with house-made salsa. There is table service and a full bar. Couples can "have a bottle of wine and appetizers and meet friends there," said spokeswoman Tara Deering-Hansen. She said it is perfect for a "night-out option."

•The pizza ovens are wood fired at two Coborn's supermarkets in Sartell and Isanti, Minn. The best seller is the Whole Hog Pizza, topped with pepperoni, sausage, Canadian bacon and regular bacon. "This is an opportunity for us to provide a fresh option to our guests where they can see it made right in front of them," said spokesman Kevin Hurd. "The wood-fire element isn’t something you get everywhere."

•The Kitchen at the 24 Lucky's Markets in 11 states offers a "sip-and-stroll" program that lets shoppers enjoy $2 pints of local tap beer and $3 glasses of wine while sauntering the aisles. "It's to make grocery shopping a more enjoyable experience so it’s not a chore," said spokeswoman Krista Torvik.

•Wegmans , with more than 90 supermarkets across half a dozen states, has a Burger Bar at some of its Maryland and New York stores. They typically feature eight types of burgers made fresh to order, ranging from the maple-onion burger to the vegetarian falafel burger. It also serves up fare like crab cake sandwiches with remoulade and herb-seasoned Tuscan fries.

For many, Whole Foods Market remains the model grocerant. The chain's offer a spectrum of numerous ready-to-eat options, whether it's barbecue, fresh pasta, gourmet hot dogs or ramen. About 15% of a store's sales usually comes from its eateries, said Andy Sasser,  the chain's global culinary operations coordinator.

On an afternoon last month, the takeout counter at the Whole Foods on Manhattan's east side bustled with workers on their lunch break. Some schlepped takeout food in brown cardboard boxes to the cash register while others stayed put in a dining area on the second floor of the store.

"It's quick and easy to get something to eat," says Sean Devlin, 27, of Brooklyn, who was forking his way through a plate of quinoa salad and orzo with feta and olives. "You can get something that's healthy."

The rapid rise of the grocerant has raised questions about how well some of them maintain food safety standards.

The Centers for Disease Control's most recent data shows that outbreaks of foodborne disease stemming from grocery-store food more than doubled, jumping from 20 to 41 between 2013 and 2015. Related illnesses rose more than 500%, from 158 to 1,048, and hospitalizations, more than 600%, from 14 to 120.

While food safety creates a new challenge for stores opening grocerants, the prospect of higher sales is hard to resist. The Food Marketing Institute, a trade association, said 61.9% of its members say in-store dining gives them a competitive edge. It also can fatten profits compared to the razor-thin margins in much of a grocery story.

The goal is to attract customers like Jamie Lippe,  who was enjoying a locally-brewed beer as he made his way through the aisles of the Lucky's Market in Naples, Fla., on Tuesday afternoon. Between sips, he loaded up on items like potatoes and chicken sausages, sushi for dinner and a calzone for his wife's lunch the following day. He says spent more than an hour in the store.

"It lets people sit back and relax a little more. They’re not in such a rush," said the 37-year-old Naples, Fla., resident. "They’re making people more comfortable with the situation, like standing in the lines and having to deal with factors they no control over."

He said the longer-than-normal trip resulted in his spending more. But why not?

"You don't mind grocery shopping as much if you have a drink in your hand," Lippe said.

Follow USA TODAY reporter Zlati Meyer on Twitter: @ZlatiMeyer

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