Grocery stores are expanding prepared-meal offerings to grab restaurant market share

Table for two… by the frozen section. With prices rising faster at restaurants than at grocery stores since early spring (7.1% vs. 3.6% YoY in July), consumers are eating out less. Grocers like Kroger, Giant Eagle, and Costco are seizing the opportunity to take a bite out of restaurants’ lunch by ramping up their meal offerings (picture: ready-to-eat salads and wraps). 40% of diners say not wanting to cook is the reason they choose restaurants over grocery stores, and grocers are taking note. 

• Deli 2.0: Kroger, the US’s largest grocery operator, has expanded its prepared-meal section, offering entrées bundled with sides and drinks. Giant Eagle said it’ll triple its # of prepared meals this fall. Walmart has taken things further with in-store ghost kitchens.

• Pushing the cart: Prepared-food sales grew 12% last year to over $23B, led by lunch favs like soup and chili, as workers RTO’d in droves.

Convenience vs. experience… Faced with competition from grocers, restaurants are launching meals that would be a pain to re-create at home. Taco Bell made its Grilled Cheese Burrito (cheese baked on top) permanent, and KFC introduced hand-breaded nuggets. Chipotle is testing grills that it says will make a sear that can’t be easily done at home. McDonald’s and Burger King have invested in making restaurant interiors more appealing and speeding up orders. Still, it may prove difficult to beat a premade meal placed right by pantry staples.