Specialty food retailers are offering premium experiences at their 
prepared foods counters, tapping into popular menu trends and 
high-quality ingredients and offering dedicated in-store dining areas.

Prepared, ready-to-eat foods are a bigger draw at retail than ever. Driven by convenience, price point, and ramped-up offerings, consumers are increasingly turning to these counters for meal solutions. Retailers have taken note, offering upscale menus and creating in-store dining experiences that are turning them into a destination for breakfast, lunch, and dinner. And they are poised to take a bite out of restaurant profits along the way.

The Rise of Ready-to-Eat

According to “Growth and Composition of the Retail Prepared Food Market,” a study by Chicago market researcher NPD Group, restaurant growth is being eclipsed by retail prepared foods to go, which have grown 5 percent from 2008 to 2013 as restaurant sales declined for two years and are now flat. Retail prepared foods eaten at home (versus eaten at work or other locations away from home) climbed 12 percent from 2008 to 2013, and NPD forecasts another 10 percent increase by 2022—double the growth that restaurants will see.

“Consumers tell us they use [retail prepared foods] because there is more variety, they feel they have healthier options. They feel it’s reasonably priced and is a lot less expensive than going to a restaurant,” says Bonnie Riggs, an NPD restaurant industry analyst.

A changing consumer profile is helping to drive some of this prepared foods growth. According to Steven Johnson, a grocerant guru at restaurant and hospitality consultancy Foodservice Solutions, 50 percent of Americans over the age of 18 are single. This group is buying prepared foods, rather than dining out or cooking large meals for themselves, says Johnson.

Many retailers are capitalizing on this movement by updating prepared food menus with trendy ingredients and flavors, and offering more options for special-interest diets like vegan, gluten-free, and paleo. Creating in-store signage and online promotion of menu items are simple ways to remind current and potential shoppers of their additional offerings, Riggs notes.

Providing on-trend menus is only the beginning. More retailers are creating in-store areas with seating and table service like a traditional restaurant, if not operating full restaurants in, or adjacent to, their stores. Non-food retailers have proven the success of this model, Johnson notes: in-store foodservice at Nordstrom’s can rake in nearly $1 million in sales a year per unit, and Ikea’s casual dining operations do well over $2 million per store.

Here’s a look at what these three food retailers are doing to expand their foodservice offerings.

Roche Bros.: Channeling a Beloved Diner

Many of the Roche Bros. specialty markets in suburban Boston have in-store seating where customers can eat meals prepared on-site. The retailer took the foodservice element one step further last July when it opened a Brothers Marketplace in Medfield, Mass., complete with a full-service diner that seats 12.

The site had previously been home to a diner that the town had grown nostalgic about, says Aimee Morgida, director of operations at Roche Bros. “We wanted to honor their town history and felt it would be a great fit within our concept,” she says. So they built their own.

The diner’s menu is influenced by the season and the availability of local ingredients, with winter options including comfort foods like chicken parmesan. Popular menu items include a breakfast combo served with two eggs any style with choice of French toast, pancakes, or waffles, and sweet potato home fries; a hormone-free beef burger served on a brioche roll; and a raspberry lime rickey or frappe, which customers continued to order even through the cold winter months. In addition to the diner seating, Brothers has tables located in an adjacent cafe, where guests can bring prepared meals and other foods purchased in-store.

Traffic at the diner is steady during all meal times, as well as when area schools let out for the day, Morgida says. With its own 10 employees, the diner holds the same hours as the market.

The retailer hopes to mimic the success of the Brothers Marketplace diner at its new Roche Bros. store in Boston’s 
Downtown Crossing, scheduled to open this spring. The 25,000-square-foot flagship supermarket will offer traditional departments including deli, specialty cheese, bakery, floral, grocery, dairy, produce, and meat and seafood, as well as a wide variety of ready-to-eat meals, snacks, and prepared foods.

Prepared foods will have a prominent place in the store, especially given the volume of commuters seeking value and convenience, says Dena Zigun, director of marketing at Roche Bros. The store will also feature home delivery and full-service catering.

“The increased growth in dine-in and prepared foods to go over time aligns with macro-level consumer trends,” Zigun says. “We are giving customers what they are looking for.”

Harbor Greens Market: Differentiating from the Competition

Harbor Greens Market, with locations in Gig Harbor and University Place, Wash., has become a destination for customers in search of satisfying sandwiches and other prepared foods to go. The retailer’s menu includes hot soups, fresh salads, pulled-pork buns, tamales, and hot pizza by the slice, all made in-house.

When business partners Chad Roy and Scott Teodoro opened the first location in Gig Harbor eight years ago, they included a small, full-service deli area with seating for 16 but had to remodel quickly once they saw how much traffic it pulled in. Constrained by the layout of the store, they decided to open a second location in University Place in 2013 with a bigger emphasis on dining and 24 seats. Prepared foods now comprise 10 to 12 percent of sales at each store, a stat that has been a pleasant surprise, says Roy. He estimates about half the customers eat their meals in the store.

Harbor Greens competes with local restaurants to some degree, he notes, and the retailer’s premium menu is what sets it apart. But the merchant’s high-quality sandwiches have little to no competition in other local retailers, Roy asserts. “You get a good sandwich on unique, good breads,” he says.

Harbor Greens offers 10 signature sandwiches that retail for $7.99 and are made on breads from Seattle bakeries including Franz and Essential Baking Co. Grilled panini are the top menu items at both locations, the most popular being The Warrior, made with turkey, bacon, havarti, ranch dressing, avocado, spring mix, onion, lettuce, cucumber, and tomatoes on sourdough. Popular items also include soups and pizzas made on-premise, says Roy.

Prepared meals are present throughout Harbor Greens. 
The retailer offers ready-to-cook entrees in the meat department, with up to 20 items such as marinated chicken, stuffed pork 
chops, and chicken kebabs; a smaller menu is available in seafood, with up to seven items such as stuffed Dover sole or bacon-wrapped scallops. The RTC items change with the season, 
Roy says, and account for 30 percent of meat and seafood 
department sales.

“People don’t want to think when they get home; they want to make it super simple,” Roy says of the success of the store’s prepared foods. “It’s a lot less work, and in my experience that’s the direction a lot of grocery is, and will be, going.”

Green Zebra Grocery: Convenience Curated

A new direction—specialty convenience—is what inspired the opening of Green Zebra Grocery in Portland, Ore. Owner Lisa Sedlar, the former CEO of premium grocery chain New Seasons Market, decided the small-scale convenience model was a void that needed to be filled.

“We’re redefining what convenience means,” says Peter Koehler, Green Zebra’s business development director, of the concept. “Imagine Whole Foods Market and 7-Eleven had a baby—you’d get a Green Zebra.”

That baby has learned to walk in the foodservice direction, which has become the No. 1 trip driver for the retailer. Customers are fiercely loyal, some eating at the in-store dining area several times a day, says Koehler. “We know our customers really well. It’s an intimate space,” he says.

The ready-to-eat foods area occupies 15 percent of the store and contributes approximately 20 percent of store sales. An outside patio houses a covered, heated seating area that seats 30. Menu options are diverse and driven by customers’ desire for healthful, convenient foods, whether they are following a vegan or paleo diet, Koehler explains. In fact, the business uses a clearly labeled “Dietary Preference” system for vegetarian, vegan, gluten-free, and dairy-free offerings.

A hot-food bar offers six items as well as four hot soups daily, and all meals are prepared using specialty ingredients found in the store. Dishes include chicken cacciatore, sushi, and vegan options such as stir-fry tofu or jerk tempeh. One of the top-selling menu items is the breakfast burrito, with potatoes, eggs, beans, bacon or sausage, and cheese; a vegetarian version (with onions, zucchini, carrots, peppers, and cheese) and a vegan option (with potatoes, beans, and salsa) help to make it a top pick.

Green Zebra has incorporated a theatrical element into its foodservice area, with an open kitchen that lets customers watch the preparation. “We definitely pride ourselves on the kitchen area,” Koehler says. “You walk in and people see right into it—it makes for fun display of food.”

The store itself is also designed for convenience, with only three grocery aisles in the 5,500-square-foot space, and customers are typically in and out the door in 10 minutes, Koehler notes. The tight format makes for a carefully curated selection of products from local producers, including gourmet salts and chocolates, local craft beers, and micro-roasted espresso. Still, an entire wall is devoted to wine.

The first Green Zebra opened in North Portland’s Kenton neighborhood in October 2013, and the store is raising funds for a second location to open this year in the South Tabor area on SE Division Street. The next store’s footprint will be slightly bigger, Koehler says, and the owners are considering indoor seating and additional space for prepared foods.

These retailers and more are cementing their role in the foodservice realm, carving out a new niche that doesn’t compete with restaurants so much as offer a new experience that grabs more of what analysts call “share of stomach.” As consumers spend more time working and less time cooking, NPD’s Riggs predicts future success for retailers developing craveable foodservice options to draw new and repeat customers.

Fiona Robinson has written about food for over 20 years and is a regular contributor to Specialty Food News.