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Food fight in the restaurant, grocery business

Glenda LeGendre Big

Cook what you can sell or sell what you can cook? This variation of a well-known sales strategy reflects the wholesale change experienced by the restaurant and food/grocery industries and the corresponding burgeoning marketing efforts. The changes are due in large measure to millennials’ eating habits and lifestyles, but other demographic groups are sharing in newer eating trends and driving the expanded marketing approaches.

Restaurants face competition from two major emerging segments. First, there are the “grocerants,” quality prepared foods for purchase at food stores/eateries with convenient eat-then-shop activities. In Maryland, Wegman’s embodies this trend. Customers can order from the Burger Bar at prices less than a restaurant and then save time and energy with shopping for later home consumption.

Home delivery has expanded a bit for grocery stores as well, but the second major food trend is having a “meal kit” delivered to your door. This evolving approach continues to gain attention on Wall Street and may have prompted Amazon in part to buy Whole Foods. Experts predict this will be a multibillion-dollar market by 2022 (Money magazine) and 19 percent of people surveyed said they had tried such a service. USA Today more grandly predicts the meal kit business will reach $2.2 billion with 25-30 percent growth in the next five years.

The prepared meal kit business has its own competitors and differentiators. This business model frequently uses celebrity influencer marketing techniques with such spokespeople as Tom Brady, Martha Stewart and even retired Baltimore Raven, Ed Reed (by locally based but nationally distributed Tara’s Kitchen). Why this growth? According to Jamie Ellwood, chief marketing officer of Tara’s Kitchen, meal kits are essentially the last e-commerce disruptor and now impacting the grocery business more than restaurants, “a game changer.” She adds that, “Rapid growth of this segment is due not just to the shopping and menu-planning convenience factors for the 35-55 age market that Tara’s serves, but to the healthier eating desired by many.”

Tara’s offers locally sourced fresh premium food with an important element of nutrition and food safety.  And not just dinner meal kits anymore — the segment for Tara’s has expanded to include a dessert kit and products like coffee and hand-made granola by local producers.

Restaurants’ response

So what marketing efforts are restaurants using to fight back against these trends? Many have joined for-fee services like Groupon and Open Table to help them promote their specials and offerings. Newer free-to-restaurants online booking and ordering systems are also popping up.

Restaurants have increasingly focused on delivery services like UberEats and GrubHub to get restaurant take-out directly to customers. Specializing rather than offering generic menus, use of local ingredients and ethic flavors have helped some restaurateurs compete.

According to food marketer and blogger Dara Bunion, who offers creative solutions for the food industry, “restaurants need to use all tools available — that’s the reality.” Social media is a big help to some; videos and food photography create demand. Instagram, Facebook and Snapchat are all engaged in “foodie” posts and have taken away much of the print advertising budgets of the past. Dara further comments that dining out is still a growth segment. She notes that downtown Baltimore’s Italian favorite Sotto Sopra hosts well-attended, customer-focused events and describes them through e-newsletters, blogs and FaceBook ads. In fact, the marketing tool of creating customer databases — a customer relationship engagement management approach — is helping restaurant owners connect with their customers and entice them to their websites for favorite wines, new specials and so forth.

Competition is a good thing. It enables analysis of what customers like, which is, of course, the essence of good marketing.

Glenda LeGendre is principal of Strategic Marketing and Communications and can be reached at [email protected]

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