Supermarket Perimeter - October 2019 - 32

Deli

Dining
dilemma
POPULAR MIDWEST RETAILER Hy-Vee has long been a leader in fresh,
ready-to-eat meal options. Since the 1960s, the West Des Moines, Iowabased supermarket chain has featured well-established foodservice
options, whether it was fresh breakfast in hot cases or full dinners.
Seven years ago, the company introduced its Hy-Vee Market Grille, a
full-service restaurant that began to pop up in many of its nearly 250
locations. While buoyed by some initial success, Hy-Vee has started
scaling back on these dining concepts in recent years.
Less than two years ago, the company began moving a number of its
full-service Market Grille locations to a new self-service concept called
Market Grille Express. By the end of 2017, Hy-Vee had nearly 80 Market
Grille Express locations compared to around 400 Market Grille spots.
While Hy-Vee is still showing signs of success with its eat-in concepts
- the company still has more than 100 Market Grille variations attached
to its stores - it provides perhaps the perfect illustration for instore
dining overall.
"Instore dining overall has probably done slightly better than
restaurants, but I don't think by any stretch of the imagination has it
been wildly successful," says Robert Goldin, partner and co-founder of
Pentallect Inc., a Chicago-based food industry consulting ﬁrm. "Most of
what I've seen is no real expansion. If anything, there's a slight scaling
back. You'll have a few seats near the sushi section or something, but
not much."
While prepared foods are undoubtedly a major part of current and
future supermarket success - prepared foods have grown nearly 30%
since 2008 - where exactly shoppers want to eat those foods is still up
in the air.
"I think overall it's modestly growing, but it's not anything crazy,"
Goldin says. "There's so much restaurant competition at so many price
points. The big advantage is ordering by the pound, the wide selection
of hot and cold. I just don't think the environment is that inviting in
many of these venues. It eliminates a lot of appeals. You're not going to
necessarily want to go there on a date."

Hefty challenges

32 - OCTOBER 2019

BY RYAN ATKINSON

service dining. That means workers with skill sets outside of the traditional supermarket employee's - waiting tables, delivering food, busing
tables - must be hired, tacking on ever more stress to an already tough
labor situation.
"It is taking up a fair amount of space and you're not generating revenue from that space an awful lot of hours per day," Goldin says. "They
don't capture the breakfast daypart. They really don't capture the midday crowd. If you're in a location where there's a lot of workers, maybe
lunch is better for you, but that's dependent on where you are."
In short, it's a lot of extra space and labor for an area that might not
bring in that much money.
Goldin speculates that consumers might not be as drawn to the idea
of dining in the same location where they buy their groceries and prepared foods as was once assumed.
"You also have to consider some consumer inconveniences," he says.
"You have to bus your own table for the most part. Most of it's just not
that conducive for a lot of consumers on a lot of occasions. Not to be
down on it, I just think the appeal is kind of narrow."

Still an appeal
While the scope of instore dining may not be as widespread as it once
looked to be, there's still a market for it, Goldin says.
"There are places where it can be very successful, and we've seen
some retailers - Wegmans, H-E-B, Hy-Vee - do some good things,"
he says. "If you have the right location with the right clientele, it can be
lucrative."
That might mean some experimentation with what you offer in
your instore dining areas. Family-friendly may not be as appealing as
expected. Perhaps a place to grab an adult beverage before getting
groceries kid-free is a better idea.
"I think you'll continue to see retailers experiment and come up with
what works for them," Goldin says. "A number of places have put in
wine bars or brewpubs and I think those are doing relatively well."
It's just another challenge facing the evolving supermarket, and
Goldin says it might not be the most pertinent.
"Quite frankly, there are other challenges and opportunities," he says.
"Expanding perishable sections, for example, and doing a better job
in that arena is a major challenge and opportunity that I think a lot of
retailers are focusing on a little bit more right now."

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WEGMANS

Perhaps the biggest things getting in the way of full-blown success with
more instore dining are simple labor and logistics.
Operating a separate dining space inside your retail location can be
like operating a separate business, especially if that space offers full

Fresh foods are the future
of supermarkets,
but where do consumers
want to eat them?

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Supermarket Perimeter - October 2019

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