Trends

While the pandemic has had a rollercoaster effect on grocery stores, you could almost say that grocers have had it easy compared to what many foodservice providers are experiencing. The most obvious trouble area is restaurant divisions, but the problem is far bigger than that. Some of the largest and historically most reliable buyers in the industry – including schools, retirement facilities, stadiums, and major corporate campuses – have all but dropped off completely as the individuals that they serve stay at home.

It won’t be enough to rely on upcoming soft restaurant openings, and many foodservice companies see themselves facing a choice: accept the losses and push through until the traditional buying channels return to what they used to be (which could take years), or experiment with alternative ways to get products to consumers.

One such company is Aramark, which announced last week that they were opening more than one hundred pop-up grocery stores inside of healthcare facilities to serve front-line workers. This is an interesting and ingenious group to target, for several reasons. For one, front-line workers are part of a group that has to be especially cautious about spreading disease within public grocery stores, so these pop-ups meet their needs for basic items like eggs and milk without forcing them to endanger others.

Second, many healthcare workers are also working odd and extended hours to help combat the effects of the pandemic, making it more difficult in general to find time to run errands. By meeting them where they are, Aramark helps them save a trip. Thirdly (and morbidly), with national unemployment rates over 20%, healthcare professionals are among those who still have the disposable income for impulse grocery purchases – something that other established grocers will need to recapture for shoppers who have switched to online ordering.

Panera Bread, long beloved by office workers on their lunch breaks, has also had to find creative new selling avenues. The company launched Panera Grocery in April, which allows consumers to order produce and bakery items along with their traditional soups and salads. The items are available for curbside pickup or delivery via Grubhub, meaning that consumers now can have a limited number of everyday grocery items delivered in the same amount of time as takeout. In terms of convenience and rapid delivery, this could actually be an interesting alternative to Amazon and Walmart.com for shoppers who live close to a location.

Panera invited Eduardo Luz, former US CMO and Global Brand Officer for Kraft Heinz, to join the team in May to help develop and execute this new strategy. Just as grocery stores were told that they needed to become experience hubs in order to stay relevant, foodservice brands are now facing the opposite challenge – bringing the experience into the home.

Even at the micro level, some mom-and-pop restaurants have even transformed themselves into mini-groceries, including partnering with farmers markets to provide fresh produce alongside their takeout offerings. Even Sysco, which is one of the largest players in the restaurant supply chain, offers support and resources to buyers that wanted to start their own “Sysco Pop-Up Shops” to sell off the bulk ingredients that they themselves can’t fully utilize. While these improvised grocery stores have not made up for the volume of lost customer sales, it is helping some restauranteurs stay afloat, while also cutting down on food waste in a time when some families have struggled to access common ingredients like flour and yeast.  

While this is not the direction that anyone would have predicted that the grocery industry would have taken, it’s ultimately all a part of the general trend that the most flexible, creative, and nimble players are often the ones who survive. As of yet, these new options have not had the impact on traditional grocers that online providers have had. However, it’s likely that it will lead to further innovation down the line – for both grocery stores and foodservice providers, who are, for possibly the first time, true competitors.