Prepared foods are typically some of the most profitable items in a grocery store, so grocers are eager to expand that area of their business. But as they do, they find themselves going head-to-head with a new competitor: local restaurants.
A report from FMI-The Food Industry Association (FMI) suggests "grocers are positioned to be the ultimate mealtime solution in that 39% of consumers view retail foodservice as a substitute for ... both a home-cooked meal and a restaurant meal."
Here are nine ways grocers can compete more effectively with restaurants for prepared foods and catering orders. Some are so easy you can even put them in place before the coming holidays.
- Offer individual, two-person and four-person meal packages to capture a wider customer base. For many years, grocers have provided a few standard options such as large sandwich trays or fresh fruit and vegetable platters. Diversifying that offering by adding new, smaller packages will help grocers appeal to a much broader set of customers who don't have a meal planned for dinner or are fatigued from cooking.
- Advertise and promote your meal-time options, via in-store signage, inclusion in email newsletters, and social media posts. Grocers who have a solid social media following should also promote these options during actual meal times to pique customers' interest in real time. Awareness and being at the front of your customers' minds are key to competing with restaurants.
- Offer group online ordering, so your customers can easily all order together, such as families, groups of friends, or office colleagues, and pay for delivery only once since it's all on one order.
- Create meal promos similar to restaurants' deals, such as spend $30, and get a free appetizer or even offer a punch card where the 10th item ordered is free. This helps add repeat customers; furthermore, promoting these discounts during peak meal times will also create a sense of urgency.
- Create seasonal menus or dishes to keep customer interest high with new things to try, and to capture seasonal tastes in your area. Try repurposing items that are already being sold in-store to reduce overhead.
- Create full meal packages including starters, mains, sides, drinks (including alcohol, if allowed in your area) and desserts. Combine this with Tip 5 for Valentine's Day packages or July 4th BBQ boxes to make it easy for customers to order everything at once, and with bundled discounts.
- Offer a rewards program that applies to groceries, catering and prepared meals, so no matter how customers are spending at your store, they are earning points. Restaurants can't offer this, so it's a major advantage for grocers.
- Enable online and in-app ordering. Remember, you're not only competing with restaurants, but also all the restaurant-delivery apps. Most grocers offer online ordering for center aisle items, and many already have an app for ordering – make sure your catering and prepared meals options are all listed there, to keep in front of customers and make it as easy as possible for them to order.
- Provide real-time order tracking. Thanks to delivery apps, customers are now accustomed to pickup and delivery tracking for their orders. Providing this feature could put you on more even footing.
Grocers have the convenience advantage over restaurants, and should take full advantage of it. Whether your customers are currently shopping in-store or via e-commerce, they are likely doing business with you one to three times a week already. Stay in front of them with a variety of prepared meal offerings, and make it easy for them to combine those orders with their usual grocery shopping.
If you can make prepared meal shopping a habit and part of their usual grocery shopping, you'll be in a better position to capture business from local restaurants.
Heather Kirchner is head of market strategy for Foodstorm OMS at Instacart. She is responsible for overseeing the U.S. business development strategy including new sales, customer relationships, marketing and operations support. Foodstorm was acquired by Instacart in October.
This piece originally appeared on Supermarket News, a New Hope Network sister website. Visit the site for more grocery trends and insights.