Kroger latest grocer to plan restaurant

Kroger’s business is food, not just groceries.

This is playing out in all sorts of ways, from the Cincinnati-based company testing meal kits in a few stores to investments in online ordering and a new concept store here in central Ohio, Fresh Eats.

The latest twist for Kroger is a full-service restaurant attached to a new store in northern Kentucky, according to online job postings and various media accounts.

Kroger, which released its

second-quarter earnings Friday, declined to discuss the restaurant. However, a recent discussion its chief financial officer, Mike Schlotman, had with analysts at investment firm Oppenheimer points to the company’s strategy of tapping into as many foodrelated opportunities as possible.

“One of the things we have been talking about is, anything, anytime, anywhere,” Schlotman said during the talk, which is available on Oppenheimer’s website.

According to a report from market-research firm Mintel, the gigantic grocery industry — $649 billion in sales last year — is beset with all sorts of competition, from new store formats and concepts, upstart companies looking for niche openings, meal kits and restaurants. A meal eaten out or delivered by, say, Blue Apron, one of the bigger meal-kit companies, is one that wasn’t purchased at Kroger or another grocer.

Supermarkets are looking for restaurant meal replacements, said Darren Tristano, a Chicago-based food service analyst formerly with Technomic.

“If customers don’t get those meals at Kroger, they will get them somewhere else,” Tristano said. The company’s stores attract a lot of traffic, so why not try something that keeps customers under their roof a little longer?

That customer base was one of the things Schlotman talked about with Oppenheimer. Kroger stores, which span the country, draw more than 8 million customers every day, he said.

The idea of a restaurant is not a long stretch from the prepared-food courts that most grocers have been adding in recent years. Some grocers have some sort of food service. Wegmans, a chain based in New York state has had pubs in some of its stores for years. Giant Eagle has a full-service restaurant in its store in Bexley and other markets.

“They need to find additional ways to generate revenue, and they have a customer base coming in anyway,” Tristano said.

Case in point: Costco, a warehouse club chain, rang up $670 million in sales last year at its 455 in-store restaurants, which mostly serve hot dogs and pizza, according to Nation’s Restaurant News, a trade publication. That made Costco No. 62 on NRN’s Top 100 list of restaurants by sales, bigger than Tim Hortons, White Castle or Ruth’s Chris Steak House.

The test of a restaurant also shows how Kroger is always looking for ways to compete. Schlotman talked to Oppenheimer about how competition has gotten tougher through the years and how Kroger, the biggest traditional grocer in the U.S., wants to be the one taking it to its competitors.

“We have pivoted and transitioned a lot,” he told analysts. “There isn’t a competitor that we don’t know a lot about.”