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Supermarket Meals: A Threat To Restaurants

Astute restaurant owners know other restaurants are not their only competition. Supermarket meals from grocery stores can be a real threat to restaurant sales.

Off-Premise Dining

There are many businesses attracting ‘would-be takeout customers’ from restaurants. Among them are local supermarkets and convenience stores.

People spend a lot of money on dining out. In fact, for the first time in history, Americans just started spending more money at restaurants than at grocery stores. According to Quartz, “retail sales at U.S. eating and drinking establishments have outrun those of grocery stores [over the last year], upending a longstanding pattern in which the bulk of American spending on food occurred at the supermarket.”

While customers are still purchasing items at grocery stores, many of their purchases are from the prepared food section. These “HMRs” (a.k.a. “Home Meal Replacements”) are an alternative to buying whole/raw ingredients.

The challenge is that most supermarket meals are purchased while customers simply do their regular grocery shopping. Business Insider reports that millennials, in particular, are spending money at grocery stores offering freshly prepared, restaurant-quality meals.

So, how do you compete against this level of convenience from savvy supermarkets?

Well – it’s an interesting challenge, and can be hard, but it’s not impossible.

Convenience

You have to battle convenience with convenience.

This is why mobile ordering for takeout and delivery is so important for restaurants. Customers need to be reminded that ordering from your restaurant is easy and accessible.

First, think about what you have on your side.  Most customers carry the perception restaurants can provide higher quality meals (and hopefully better value) than a grocery stores. This is especially true if your restaurant offers a unique menu.

Second, recognize that convenience is the top reason people order online.

So, spread the news about your convenient mobile ordering and remind customers your food is high quality. Stress the fact your online site offers access to your full menu (compared to a very limited supermarket menu). Also, make pickup easy for customers coming to your restaurant to get their order.

Jon Luther, former CEO of Dunkin’ Brands, once described supermarkets and C-stores as “the new elephant in the room” for restaurants, and reminded restaurant owners: “You (supermarkets and c-stores) win people with service and convenience…”

Restaurants just have to do it better.

NetWaiter Team

Author NetWaiter Team

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