Eating Their Lunch?

Supermarkets are making significant inroads into the restaurant business. Here's why.

During last fall's 2012 Multi-Unit Foodservice Operators (MUFSO) Conference, in Dallas, at a presentation entitled "Stealth Competition: Who's After Your Share of the Market?" a panel of experts branded grocery stores the biggest threat to restaurants, particularly targeting quick-service and fast-casual outlets.

"Supermarket delis and prepared foods departments have traditionally been completely different from restaurants," says Alan Hiebert, education information specialist at the Madison, Wis.-based International Dairy-Deli-Bakery Association (IDDBA), "but the line has been blurring in the past few years. Many chains now have executive chefs who have developed menus that rival restaurants, complete with comfortable areas to sit, [where people can] enjoy a high-quality meal and stay for a while. There is still a perception, however, that supermarket prepared foods offerings are inferior to restaurants. It seems odd that one is categorically inferior to the other, since both restaurants and supermarkets often start with the same ingredients from the same suppliers."

Supermarkets have advantages over restaurants, Hiebert asserts, though consumers may not always see them. "When it comes to a variety of products available under one roof, supermarkets beat restaurants, hands down," he says. "If a consumer is trying to get a quick lunch or is trying to bring home dinner for a hungry and busy family, the variety may be secondary to convenience. Consumers are often unwilling to take the time to walk through an entire store and then spend time at the front end when they can get takeout or drive-through service at the restaurant down the street. Supermarkets need to address the perception that they are less convenient than restaurants."

This perceived convenience disparity is being addressed by progressive grocers like San Antonio-based H-E-B's pioneering Central Markets, which have long made meal shopping a pleasant, convenient experience. Kevin Blessing, Central Market's director of food service, says, "Convenience, timeliness and flexible portions are keys in creating a meal solution that is a competitive advantage when compared to a restaurant experience."

Central Market's product quality is extremely high, Blessing says. "Our recipes are created by chefs, and each dish is prepared in a similar manner to that experienced at any top restaurant."

This parity is communicated to customers, Blessing says, by merchandising, which he considers one of the most important methods. "Our customers buy what they see," he explains, "and the chef-crafted messaging and communication start with product appearance. Signage supports the product and is the next method of communication. Descriptors and attributes help generate the desired message. The retail staff communicates this message as well. Just like any restaurant, the service provided to the customer is what strengthens the product image. That's another reason why our food is great: pride."

This pride is reflected in Central Market's "Dinner for Two" menu, which is billed as "restaurant quality" and changes daily, featuring such items as eggplant Parmesan casserole, almond-crusted tilapia, honey garlic flank steak and lemon-thyme chicken breast. Promoted as "the best seat in the store," Central Market's café lists "restaurant-worthy" dishes from the Chef's Case, hot food line or custom sandwich bar. Central Market's Signature Platters, touted as "platters for when it matters," include smoked salmon, quesadillas and roasted tenderloin. There are even Rosh Hashanah and Yom Kippur dinners available at Central Market, with such entrées as apricot-glazed chicken, braised brisket, and roasted salmon with onion and fennel, as well as a menu for the holiday eves boasting traditional New York chicken soup with matzo balls, noodle kugel and carrot tzimmes. No wonder Central Market calls its associates "foodies."

At AJ's Fine Foods, a division of Chandler, Ariz.-based Bashas', Kristy Jozwiak, director of communications, says, "While we may share customers and compete for food dollars with restaurants, we believe that AJ's offers a different experience. AJ's is not a sit-down-and-be-served type of environment. We've developed weekly Pasta Night, Stir Fry Nights and Taco Nights with fresh-to-order entrées."

AJ's has a team of chefs in each store's kitchen, making everything from scratch to create "what you'd find in a gourmet restaurant," Jozwiak says. "We also offer a wonderful outdoor barbecue area and patio seating. Customers also love the freshly prepared pizza from AJ's wood-burning pizza oven, and the sushi bar."

AJ's Bistro features lunch or dinner entrées like prime rib, pork tenderloin, beef Wellington, and grilled salmon with mango salsa.

Thus it can be seen why deli prepared foods account for more than 53 percent of sales in that department, according to Nielsen Perishables Group in Schaumburg, Ill., whose Jonna Parker, director of account services, points out that there's a trend toward larger, family-sized meals in the deli, echoing a trend unfolding at quick-service restaurants such as McDonald's, Burger King and Taco Bell.

Rochester, N.Y.-based Wegmans Food Markets features fresh meals cooked to order in three price ranges: $6 meals like beer-battered fish fry, $8 meals like chicken saltimbocca and $10 meals like pan-seared salmon, all with a Wegmans potato roll and condiments, plus a choice of two of the following items: seasoned fries, creamy cole slaw or the freshly prepared vegetable of the day.

Draeger's Market in South San Francisco, Calif., has taken restaurant-style fare to its logical high-end conclusion with the Viognier Restaurant, where aptly named Executive Chef Preston Dishman blends classic French techniques with California's bounty of fresh food in a dining room with plush booths, a cozy fireplace and a wood-fired brick oven. There's even the private Amphora dining room.

Draeger's also offers seven deli-box lunches, including two All-Americans, the second featuring a choice of a roast beef, turkey breast, baked ham or tuna salad sandwich; one cup of spring salad; one cup of Greek salad; one small bag of chips; and a brownie, for $13.50; and the Parisian, which is turkey breast and Swiss cheese on a croissant, one cup of fruit salad, a half-pint of gazpacho soup, one cup of spring salad, and a piece of carrot cake, for $13.50.

D&W Fresh Market in Grandville, Mich., has an innovative Romantic Dinner for Two for Valentine's Day, where couples come together, prepare fabulous recipes and enjoy dining by candlelight. Priced at $40 per person, the program offers such recipes as Petit Fillet Crostini with a dollop of Steakhouse wild mushrooms, Fontina Pancetta Souffle, and chocolate Po De Crème.

The noted West Seattle Thriftway is also capitalizing on special seasons with its array of Holiday Classics, including the Morgan Street Turkey for $59.99, a 3- to 3 1/2-pound turkey breast that serves up to eight people and can be sliced on request; a roasted turkey dinner for $84.99, featuring a 10- to 12-pound fully cooked Butterball turkey; and a spiral sliced bone-in ham serving up to eight, for $74.99. All holiday meals include 2 1/2 pounds of crème fraiche mashed potatoes; 2 pounds each of old-fashioned stuffing, corn medley and sweet potato casserole; 24 ounces of traditional turkey gravy; 15 ounces of cranberry sauce; and 12 dinner rolls.

Robert Fresh Market in New Orleans offers a wide variety of Louisiana classics, like cornmeal-crusted catfish with jalapeño tartar sauce and Cajun potato salad, dressed po-boy sandwiches, muffalettas, and crawfish étoufée.

Coast to coast, border to border, America's supermarkets are becoming destinations for an ever-increasing variety of fare that has long been the province of restaurants. They are indeed the "stealth competition" that the panel at the MUFSO Conference bemoaned.

For more information on this year's hot culinary trends, visit Progressivegrocer.com/menutrends.

"When it comes to a variety of products available under one roof, supermarkets beat restaurants, hands down."

—Alan Hiebert, IDDBA

"Just like any restaurant, the service provided to the customer is what strengthens the product image."

—Kevin Blessing, H-E-B's Central Market