CPG Trends Suggest Food Service is Spilling Over Into Retail Grocery

As high-end grocers continue to separate themselves with unique prepared offerings and customer service, is there an opportunity for more of retail grocery to win on food service?

Let’s look at the facts:

Millennials and non-Millennials Fast Casual Spend
Source:  BCG/SMG/Barkley Millennials Study

Combine this with the fact that more adults are eating “take out” at home, and there is definitely an opportunity.

Known for prepared offerings and a cult following, Whole Foods is exploring layouts that are more food court than retail space for its flagship store. As highlighted by NewHope360 and CultureMap Austin, the renderings further cafe-ize the shopping experience with stations and bar seating.

Hy-Vee also wants a larger piece of the food service pie. Over the next three years Hy-Vee will open Market Grille restaurants in 75 remodeled locations.  The sit-down-style restaurants will feature a full bar, extensive wine lists and a menu with everything from breakfast to steak dinners.

In other locations, Hy-Vee is creating more casual experiences titled Market Cafes. These cafes will still have a bar and table service and aim to offer a unique experience.  Rather than running in to grab an ingredient, consumers will now be able to sit down to brunch.

Here is the gap: Most grocery retailers are not approaching their prepared foods section as a restaurant. Most CPG brands are not approaching retailers with a foodservice strategy. Thus the gap. Once retailers and brands start approaching the foodservice as a restaurant opportunity more innovation and growth will continue.


Brad is an expert in private label and challenger brand food marketing for Barkley, an integrated marketing and advertising agency. He specializes in working with manufacturing-driven food companies that have aspirations to develop a consumer insight-led strategies to help drive innovation and growth.

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