Can Foodservice in Retail Environments Succeed?

More retailers continue to turn to foodservice as a way to enhance their customers’ experiences. This approach, however attractive it may be, is also rife with challenges. Consultant Juan Martinez explains.

Is there anyone out there not getting into foodservice?

Most of us in foodservice feel that the answer to this question is no. Based on the actions of retailers, we can also conclude that retailers believe the answer to the question in the article’s title is a resounding yes!

A Washington Post article nicely explores the way furniture retailer Ikea has made over its restaurant to drive sales in its stores. Like anything that Ikea does, it is big and coldly calculated.  Ikea sees the opportunity to enhance customer experiences and even enhance revenues through its food offerings. Company representatives even talk about guiding the design process by using an imaginary customer.

Just like this one, there are many other very recent articles and write ups on this topic, including:

So how can retailers compete in the very competitive foodservice arena?

Hire experts in the design area that have foodservice experience. Experience is key to truly driving efficiency in foodservice operations that maximize the “unit economics” of the concept. A key aspect of unit economics, and likely one of the more challenging ones, is labor. And given the current political and social climate, labor will remain a hot button issue. The application of Industrial Engineering (“lean”) principles can help with this challenge.

Similarly, bringing in retail design expertise with foodservice experience is also important, to ensure the customer journey fits well with the concept deliverables. Keep in mind that the right customer journey will drive sales, a key component of unit economics.

Learn from competitive benchmarks that exist in the industry. Many concepts have taken bumps and bruises getting to where they are, so why do you want to go through these yourself? Trust me when I tell you that you will have your own mistakes to get over.

Decide what type of foodservice you would like to offer: ready to heat/serve, which requires C-store expertise; ready to eat and made-to-order, which requires restaurant expertise; ready to cook, which requires grocery expertise or any other option you can consider.

While determining the appropriate type of service and as you are deciding, be careful with wanting to become a “Jack of all trades” and “Master of none” to drive sales by going after too many menu offerings.  The goal is to be the best at whatever you decide to do, so you don’t get lost in the “sea of sameness” that exists.

Define what service modes you want to offer. This relates to the previous point about menu composition, since the two are somewhat linked. Service options include traditional quick service, fast-casual, casual dining and other approaches.

Further complicating matters is the fact that these service categories no longer exist in their purest forms. To that extent, most QSRs now offer higher quality menu items, fast casual offers faster service and full service operators have become more value conscious.

Follow a rigorous, objective and disciplined discovery and design process. In some respects, forget what you know about the retail business and change your mindset to apply what is right for the foodservice business. There will be a significant set of paradigms that you will have to change in order to succeed. Do not try to “retailize” foodservice.  Design to your strengths and competitive advantages that being inside a retail environment brings, and design out the inefficiencies and weaknesses that may exist as you dive or refine your foodservice offering.

Retailers can definitely succeed in foodservice and have a piece of the very large foodservice pie. But remember that being in foodservice is about more than just driving sales. You have to drive profits to the bottom-line. The best way to do this is to mind the “unit economics” as you go along the way. Some are already doing it very successfully. I assure you that they arrived at this success following a careful process of design.

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