RISE OF THE GROCERANT
How grocery stores are stealing the best ideas from restaurants
The full-service dining sector has just begun to emerge from a decade-long slump, beset by competition from more innovative fast-food rivals and the trend of nesting consumers who prefer Netflix and pizza over a night out. Now, the low-margin grocery industry is out to eat the restaurant industry ’s lunch — and dinner.
So-called “grocerants” — grocery stores with sit-down dining areas and a lineup of ready-to-eat or take-out meals — are becoming more ubiquitous as large retailers such as Loblaw Cos. follow in the footsteps of boutique supermarkets such as Whole Foods, Longo’s and Ottawa-based Farm Boy.
Traditional grocers have been looking to diversify their businesses under intense competitive pressure from Walmart and Costco, which have broadened their food market share dramatically in Canada over the last decade.
As of the third quarter of 2017, traditional grocers’ share of retail food sales in Canada had declined to 75 per cent, according to Statistics Canada, from 85 per cent in 2007, thanks to market share growth at mass merchants such as Costco and Walmart.
At the same time, the grocerant trend has been fuelled by consumers’ need for convenience and desire to eat fresh, high-quality family meals rather than dialing up Domino’s every instance they are pressed for time.
“People have less and less time and want to sit down with the family for dinner,” Toronto chef and entrepreneur Trevor Lui told an audience at last week’s annual RC Show restaurant convention. “But when they do so, it’s more often a meal from the grocerant, or UberEats or Foodora,” the latter two being foodservice delivery companies that bring fresh restaurant meals to consumers’ homes.
According to NPD Group Canada, the fastest-growing meal segment last year was ready-prepared meals at grocers, meal kit companies and other retailers, with an eight-percent market share and sales growth of 20 per cent.
“In this business you have to evolve, and we have evolved into a food ‘experience’, because grocery shopping is boring and nobody does it anymore,” said Jeff York, co-CEO of Ottawa-based grocery chain Farm Boy. “We do it because we want to remain relevant.”
Farm Boy opened its 24th store in the province last week, a 20,000-square-foot space in Toronto. Whereas older Farm Boy locations incorporated an eating area into existing outlets, the retailer’s newer stores are designed around the restaurant, York said, with seating areas and chefs cooking inside the store.
“We want to bring what is great about restaurants into our store,” he said. “You want to see food being prepared, to smell it being prepared, you want it to be clean, you want great service, and those things are generally not what retail stores are that good at. All of the great ideas we got started with great restaurants — clean eating, getting all of these horrible preservatives out of food. Being cognizant of what the great restaurants are doing raises the bar for Farm Boy.”
Tony Cammalleri, director of culinary innovation at boutique Ontario-based grocery store Longo’s, said the company began offering rotisserie chicken as a take-home meal in the early 1990s and now the retailer’s stores include a marketstyle restaurant with a salad bar and a broad lineup of hot dishes and sides, as well as a seating area.
“We want the customer to come in and to see the ingredients and see that we can actually teach them how to use it,” Cammalleri said. “In a supermarket, you can test the waters and showcase things that you wouldn’t showcase in a restaurant, where it is more of an a la carte experience.”
The chefs at Longo’s focus on instore tasks that highlight the visual appeal and rich cooking smells of the food — frying up fragrant dishes in a pan or roasting a prime rib, for example — rather than performing smaller prep work such as peeling potatoes, which is done in a commercial kitchen off site.
Both Cammalleri and York see the pending arrival of Eataly to Toronto in 2019, a hybrid Italian marketplace with grocery and eating areas, sumptuous fresh food displays, and on-site cooking classes, as an indication that the experiential grocery trend is really taking hold.
In the meantime, Loblaw, Sobeys and Metro have increased their selection of ready-made meals, and have urban store models with seating so people can eat a hot meal or a snack on site.
Metro chief executive Eric La Fleche said on the company ’s firstquarter conference call in January that the company will continue to expand its offering of ready-to-eat, ready-to-heat meals because the business has been growing steadily.
“We’re not a restaurant, we don’t pretend to be a restaurant, but we are selling more and more meals, that’s for sure.”
Lui, culinary director and partner at a number of Toronto restaurants including Kanpai Snack Bar, Yatai Japanese Street Food, La Brea Food and Fat Rabbit Foods, said the restaurant food trend appears to be branching into new industries.
At food shows and conventions around North America, commercial oven vendors used to focus exclusively on restaurants as customers, he said. “Now you talk to them, they are talking about doing deals with (movie theatre chain) Cineplex.”
We have evolved into a food ‘experience’, because grocery shopping is boring and nobody does it anymore.