Grocers hit restaurants in the gut with hot bars
Photo: Wegmans

Grocers hit restaurants in the gut with hot bars

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.

With many relying on basic $5 or $6 meals such as chicken, a scoop of mashed potatoes and green beans to drive prepared foods sales, grocers aren’t doing enough to take share from restaurants.

That’s according to Bob Sewall, EVP at Blount Fine Foods, and it’s especially true if grocers want to attract Millennials.

“Millennials may go to the deli four times a week to pick up a meal for the family, generally a hot-to-go meal with a protein and a side or two,” said Mr. Sewall. “But if you want to grow sales, you have to elevate the dining experience.”

Grocers should “make eclectic and interesting” to-go options with premium offerings and quality sauces “like you’d find in a white tablecloth restaurant,” according to Mr. Sewall.

Emphasizing healthy offerings and using clean label product — organic, gluten-free, low-sodium, low-calories, non-GMO, etc. — is as beneficial in the prepared foods section as elsewhere in the store. But if it’s not called out with signage “you won’t reap the benefits,” notes Mr. Sewall.

More important aspects are reliability, variety and offering consumers items they wouldn’t make at home or generally find elsewhere.

“If I’m with a co-worker at lunchtime, do I go to Johnny’s Restaurant, or to a supermarket that is constantly innovating — where I can find a hot bar, soup, a cold bar and sushi?,” said Mr. Sewall. “If all that’s available in a supermarket, and my time is limited for lunch, guess where I’m going?”

The extra step that’s rarely done by grocers is cross-merchandising or driving sales to other parts of the store where the product is available. Studying meal kit packages and restaurant-combo offerings should offer some ideas.

“And by the way, you shouldn’t even be thinking about whether there’s risk of cannibalization between different parts of the store” said Mr. Sewall. “If you’re going to sell premium creamed spinach, sell it in the hot bar, as a packaged side and behind glass. Shoppers will try the product in one location and then graduate to buying it in other departments. Let them all help each other grow.”

BrainTrust

"High-performing retailers are now elevating the prepared foods departments into front and center in-store destinations."

Jeff Hall

President, Second To None


"Done well, grocers have an opportunity to serve the “in a hurry” market with attention to great ingredients and clean, well managed presentations."

Anne Howe

Principal, Anne Howe Associates


"Not 100% sure that a significant upgrade in prepared foods will pay off for grocers by itself. But it likely will attract a broader group of shoppers."

Michael La Kier

Vice President, Brand Development - IGA, Inc.


Discussion Questions

DISCUSSION QUESTIONS: Do you agree that a significant upgrade in prepared food offerings would pay off for grocers? Has cross-merchandising to other departments been a lost opportunity?

Poll

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Jon Polin
6 years ago

Whole Foods may not be the typical grocer (yet — though its commoditization under Amazon continues), but I see crowds of people around their expensive prepared food offerings. In Chicago, Mariano’s has done a noteworthy job of attracting shoppers to their prepared foods. In this era in which grocers need creativity to lure shoppers in the door and to keep those shoppers, prepared foods has a more logical connection to grocery shopping than other lures.

Max Goldberg
6 years ago

Consumers want fully and partially prepared foods. Grocers have the ability to offer a wider selection than restaurants. By upgrading these offerings grocers can drive sales across departments and overall. But to do this, the food must be fresh, visually appealing and transparent.

Lisa Goller
Trusted Member
6 years ago

Absolutely, grocers should invest more in prepared foods. Culinary experiences are in demand, including grocerants and international product diversity. Whole Foods collaborated with Top Chef finalist Melissa King for ready-to-eat meals at the hot and salad bars. (Plus, who can resist Whole Foods’ rainbow of healthy prepared foods?) Sales of fresh oven-ready meal kits and vegetable medleys have soared, as consumers seek the convenience of fast, easy and affordable offerings. Grocers can also cross-sell prepared meals by recommending their exclusive private label products (including sauces, dressings and condiments) to boost loyalty.

Neil Saunders
Famed Member
6 years ago

There is most certainly an opportunity here — and it’s one that most grocers are missing out on. Though there are some exceptions.

Wegmans is one of them. It has an extensive selection of prepared foods — from food bars with a range of cuisines to counters preparing foods to-go and off-shelf ready prepared meals.

Price Chopper’s Market 32 format is another. Here the food counters are always busy and are one of the focal points of the store.

Whole Foods does a good job with its food counters. However its hot food bar is below par. Very expensive for tasteless bits of rubbery food that has been sitting there for hours on end!

Camille P. Schuster, PhD.
Member
6 years ago

Consumers look for a place that offers freshly prepared hot food for lunch and dinner at reasonable prices. Grocers could take part of that market if they offer fresh, interesting, good tasting options. Cannibaliztion of other grocery items is not the most important question. Losing business to competitors who offer what consumers want is a more important concern. Attracting consumers to your store at meal time would be a good thing for business.

Jeff Hall
Jeff Hall
Member
6 years ago

We are seeing a significant level of investment in the prepared foods areas across all of our grocery clients. Those with a particular focus on offering a broader selection prepared with organic and premium ingredients are realizing a marked lift in sales. Today’s grocery shoppers seek convenience, variety and healthy prepared options. High-performing retailers are now elevating the prepared foods departments into front and center in-store destinations.

Lyle Bunn (Ph.D. Hon)
Lyle Bunn (Ph.D. Hon)
6 years ago

Hot prepared food is the next line of attack by grocery for a larger share of $1.5 trillion in annual food spending. The prepared food areas from Whole Foods in Avalon, GA to Sobey’s in Canada tell the story that hot whole chickens are only an opening salvo.

Hot foods are a natural extension of deli and this offering can generate more traffic and conversion in locations that can offer better nutritional value and alleviate the time inefficiency of a restaurant visit. The consumer is the winner with plenty of benefits to the grocer.

Zel Bianco
Zel Bianco
Active Member
6 years ago

Location, location, location! If there are not many choices near a grocer, then it makes total sense to elevate the hot bar area and to cross-merchandise. In a major city like NYC, it is very difficult to compete with the number of options available but not impossible. What most shoppers look for is the quality of the food and quite frankly how fresh it looks. Maintaining hot bars is a critical component of this and only those that do so consistently will have a shot at being successful in competing with restaurants.

Ben Ball
Member
6 years ago

Absolutely — IF grocers know how to handle the waste/margin issues of prepared food. Running a successful hot bar is much more complex than doing rotisserie chickens. We used to have an office across the street from a complex that featured Mariano’s and about six or seven fast casual dining places ranging from Fuddrucker’s to Chipotle to Roti Grill. Selecting the day’s lunch location usually involved determining if anyone had a strong taste for something specific. If not, Mariano’s hot bar won the day every time. They do an excellent job.

Anne Howe
Anne Howe
Member
6 years ago

Done well, grocers have a great opportunity to serve the “in a hurry” market with attention to great ingredients and clean, well managed presentations.

In the Charlotte market, Earth Fare gets my vote for a fresh and healthy hot food lunch bar. They disclose key ingredients and are transparent about GMOs and gluten, etc. Harris Teeter does a great job on its breakfast bar and salad bar, but is mediocre at lunch. They could make the “Asian bar” way healthier! Whole Foods needs to have more staff cleaning up after the traffic during lunch.

Joel Goldstein
6 years ago

There seems to be a growing divide between those who prefer the higher quality fast casual food and those who are more and more often eating at home or bringing lunch to the office. I think as brands try to decide on which side of the fence to lean they will have to go after one segment or another, as the desires of each group differ greatly.

The Costco model of sampling is the strongest example of having customers try before they buy, however that has yet to be extended to the hot bar from what we’ve seen in retail.

Ryan Mathews
Trusted Member
6 years ago

Prepared food isn’t a magic wand.

Between three of my local area markets — Holiday Foods, Westborn Market and Papa Joe’s — you can pick up a variety of prepared food options ranging from Smokehouse products to fresh salad made to order, sushi, full or partial meals, house-made soups and a variety of plain and gourmet protein in every form imaginable.

Holiday also just introduced a “Blue Apron” style boxed meal program (Lobster Alfredo for two — $28 a box). No bars — except for Westborn’s Soup Bar — but you get the idea. The results are mixed, most of the soups for example are a bit too salty, but the quality is generally competitive with most moderately-priced restaurants and superior to almost all lower-priced dining options.

And all three places seem to be doing a land office business.

Why?

Because the quality is there and they are located in trading areas that can afford to meet the pricing model needed to properly support a quality hot foods program. Steam table pasta? Don’t waste your money. Buffet meat loaf? A non-starter.

So I guess my bottom line is that dining alternative programs can work if you are in the right trading area; if you have the right program; if you build your program correctly and if it is consistent with your brand.

But that’s a lot of ifs for many supermarket operators — maybe too many.

John Karolefski
Member
6 years ago

I really doubt Mr. Blount’s assertion that “Millennials may go to the deli four times a week to pick up a meal for the family, generally a hot-to-go meal with a protein and a side or two.” Who are these people? Was this insight from a national survey or just in his store? I know plenty of Millennials and they don’t do that four times a week for their families.

But sure, supermarkets should upgrade their prepared food-to-go if they want to compete with restaurants. Maybe even open a dining option adjacent to the supermarket, if they have the resources to do so. Cross-merchandising with the products in-store is an obvious tactic.

Herb Sorensen
6 years ago

It’s basic humanity. People need air-water-food to survive and the FOOD (and beverage) drives traffic at retail. Beginning in the ’80s, Walmart used grocery to drive its traffic (and business) to global dominance. Moreover, food leverages both of the unassailable advantages of brick-and-mortar retailing: immediacy (I can get it RIGHT NOW,) and experiential (I can see the actual item, smell and at least have it in my personal orbit — a two to three foot radius.) Those two brick-and-mortar advantages are also behind the fact that any store in the world sells ONE item, more often than any other NUMBER of items, two items being second, etc.

Retailers focused on big baskets and stock-up shopping are sitting ducks for Amazon, whose entire system is built on single-item sales (and logistics) but with an INFINITE offering — “The Everything Store.” Everything in their business is focused on that first, single-click purchase — what everyone is mostly buying anyway.

I must share with you an experience from my hammering this point (with little effect) around the world. At a presentation in Norway several years ago I pointed out these HARD facts of retailing. On another engagement a year or two later, a super-marketer told me that they had checked their 400+ stores, and found that what I said was true — except for a half dozen stores where two was the most common number! So there you have it. I stretch things a bit, sometimes. 😉

And folks find me insulting at times. I try to keep that down, but it is better to be told the truth than to have reality smack you. The world of brick-and-mortar retailing is being properly “smacked” by reality. If you think the principles and practices of the past will carry you in the future, reality is patient, and can wait until others fill your shoes. And some of those are NOT so patient! Trust me. Reality has smacked me plenty, and I’m still trying to pay attention. 😉

Georganne Bender
Noble Member
6 years ago

If a hot bar makes the customers’ lives easier, why not? Plus, it makes the store a destination; retailers can sell shoppers something else while they are there.

The article mentions the importance of signage and I agree. Without signs that point out what’s unique about the food — vegan, organic, gluten-free, low-sodium, prepared fresh in-store, etc. — it’s just another buffet.

Dave Bruno
Active Member
6 years ago

Whether it is grocery, specialty, or big box retail, assortment strategies are more important than ever to differentiation and conversion rates. My own instincts tell me that this move will appeal to Millennials, particularly in urban markets. Also, we all know the sales lift that happens when people shop for groceries when hungry, so I would expect this to be beneficial to basket size as well, but I mostly hope these retailers are relying on data-supported assortment plans to drive these decisions.

Craig Sundstrom
Craig Sundstrom
Noble Member
6 years ago

Certainly the perception is that the likely target markets — seniors, people living alone, Millennials who can’t do anything but push on an app — are growing. But as Tony O — who, gosh, actually has experience in this area — reminds us, it has to be done right. So “significant” is probably the right word here, as in a dedicated staff and proper promotion, not just sticking a warming tray off in some corner and thinking it’s gonna sell.

Ken Morris
Trusted Member
6 years ago

Prepared foods is a hot opportunity for grocers. Busy consumers value the convenience and many are willing to pay premium prices for upscale options. Prepared foods is also a high margin segment for grocers. Many upscale grocers, like Whole Foods, have been offering a creative mix of unique and tasty offerings in their prepared food sections and it shows by the massive crowds at lunch time.

For any grocers that haven’t tapped this segment, it is a prime opportunity.

Michael La Kier
Member
6 years ago

Not 100% sure that a significant upgrade in prepared foods will pay off for grocers by itself. But it likely will attract a broader group of shoppers then its current state. This will benefit retailers through added traffic if it delivers better quality and greater shopper convenience. Cross merchandising is a requirement for success.

Ralph Jacobson
Member
6 years ago

“What’s old is what’s new … again.” I remember in the ’70s, a major grocer had “Patio Shops” and they were in-store, higher-end food courts. Now, we’re finding success with better-quality RTE meals in food stores. Yes, I think it’s imperative for grocers participate in this “new” category and define an intentional strategy with desired business outcomes, rather than just “me-too-ing” it.

Ricardo Belmar
Active Member
6 years ago

There is absolutely an opportunity for prepared food in grocery stores. The key is to provide unique preparations, both finished and partially finished (a la meal kits), that leverage other private line products in the store. Whole Foods and Wegmans do this well in our area. There have been many occasions in my household where we have tried a Wegmans prepared dish, only to seek out and buy some of the private label ingredients in the store the next week to cook ourselves. Wegmans further supplements this with their food magazine offering recipes and other preparation ideas to their customers. The cross-merchandising potential is tremendous.