More consumers are opting to dine on prepared foods at their local grocery store over traditional QSR locations.
$10 billion in sales. That’s what “grocerants”, the term coined for grocery stores offering ready to eat and prepared foods to those who are food shopping, racked up in 2016. How? Promoting their restaurant-quality prepared foods.
Who’s eating these prepared foods?
You guessed it. Millennials.
Since 2008, grocerant visits have increased by nearly 30%, according to NDP.
The trend, driven by Millennial customers, has resulted in more than 40% of Americans opting to purchase prepared foods from grocery stores.
It’s fast. It’s convenient, but it’s also cheap.
NDP reports that, on average, a meal from a grocerant costs $4.22. When you compare that to the average meal cost of $7.96 at a traditional fast-casual restaurant or QSR – a 53% difference – it appears that restaurants are pricing themselves out of QSR.
What’s the catch for grocerants?
The purchase rate. Loyalty is the weapon of choice in this fight.
While grocery is more than half the size of QSR reach (there’s a heck of a lot more grocery stores than restaurants), the purchase rate in grocerants (or visits per person) struggles to catch up to restaurants.
It’s a nearly 10 visit difference.
Despite the fact that prepared foods purchased at grocery stores are purchased less often than foods purchased from QSRs, there are a core group of QSR consumers who visit grocery stores seven or more times in a month.
While only 9% of buyers, these consumers account for 30% of the grocery visits for a ready-to-eat meal.
Could grocery stores be the death of the QSR? It’s certainly a battle for market share. Now, more than ever, monitoring competition and tracking sales and spending will be the difference for QSRs hoping to price themselves back into the market.