The Rise of the Grocerant​

The grocerant, or grocery store-restaurant hybrid, is an amenity that's becoming more prolific in affluent, urban core neighborhoods—and also in premium food markets in smaller cities and suburbs. People's taste for specialty food is matched by their need for convenience, and they'll pay a premium to avoid traveling, cooking, or making multiple stops to procure their upcoming meals.

What differentiates the grocerant from a service deli, or a bodega with a sandwich counter? What level of service must one provide to bring in customers? And how can independent operators find a niche in the city or the suburbs

Precursors to the Grocerant

When we asked a group of retail and food marketing professionals to name their favorite grocerant, a surprising number of choices had been around since long before the word was coined. From Mothers Market in southern California to Midwestern family fave Hy-Vee, grocery markets have been blurring the lines of retail and fast-casual dining for more than three decades.

The grocerant-as-marketing ploy took off a few years ago. Service delis in big-name grocery stores like Whole Foods and Wegmans had already turned into easy takeout stops, and the companies saw sit-down dining as their next big move. In an effort to compete with fast-casual restaurants, grocerants became a way for retailers to turn the tables—literally. They began serving dinner in a restaurant-like setting, and then nudging customers into the main retail space to do a bit of shopping after their meal.

Kristin Steuber, who owns and operates The Gruff in Covington, Ky., says that strategic furniture placement to create a navigable layout and ease the flow of traffic between the restaurant and retail areas is essential.

"Find a way to encourage browsing while waiting on dinner, with a drink in hand, or after dinner," she says. "It's a hard balance, as you need to create an atmosphere that caters to restaurant customers as well as those trying to see details on a product they want to buy."

Grocerant vs. Deli – What's the Difference?

One of the key things that distinguishes a grocerant from a deli is the level of service. Some, such as Hy-Vee Market Grill and The Pub by Wegmans, actually offer table service with waiters; others, especially the specialty food retailers in cities, opt for the easier counter service with food delivered to tables.

Dallas-based grocerant pioneer Eatzi's Market & Bakery found more than two decades ago that letting customers have a look inside the kitchen was a key draw.

"The 'theater' element at Eatzi's sets us apart," says CEO Adam Romo. “Customers enter through our kitchen, where they can see our chefs cooking and baking in real time."

Plus, Romo is well aware of how much the sense of smell influences a person's eagerness to eat.

"The open room allows the aromas of bread, pastries and other freshly made dishes to flow through the market, often sparking customer cravings," he says.

While the smell of freshly baked bread might inspire customers to see what's on the menu, Romo says the breadth and variety of offerings is Eatzi's true strength. The chain of six markets has created 4,000 proprietary recipes, and Romo says 1,600 products are available for purchase at any given point in time.

“Our menu includes traditional American comfort foods, Italian, Mexican, Mediterranean and Asian [cuisine] to name a few," he says. “Eighty-five percent of our sales are from the high-quality foods prepared by our chefs from scratch every day."

While only 15% of sales are specialty items, the easy availability of wine, olive oil, snacks, fresh seafood and meat can certainly tip the balance in Eatzi's favor for customers who want to go to one venue to pick up both that night's dinner and groceries for the week.

Another way to enhance the experience, for those with the proper licenses, is to offer wine or beer while dining and shopping. Some retailers, such as Midwestern foodie-favorite Plum Market, have introduced full-service wine bars into their stores. Other grocery stores, like Lucky Market, are experimenting with programs where customers can sip while they shop, or come in for a special pop-up tasting at stores like Baron's.

Specialty Foods

One way that independent operators manage to compete with the larger chains is simply by finding a specialty niche within food service.

This has long been a differentiation point for organic and natural food retailers in competitive or spread-out markets. In Los Angeles, where health food consumers prefer to get their vegan and gluten-free products from a specialty store rather than a general grocery store, they will typically drive out of their way to shop at their favorite local health food store. These consumers also often prefer the prepared food from those stores, which offer more diet-friendly options than many restaurants.

International and imported food stores have typically been independently owned and modestly sized, without much room for people to congregate, but there has been a shift in recent years. From family-owned businesses like San Diego's Northgate Markets, which has a reputation in the city for its in-store tamale bars and cooking classes, to the vast Italian food mecca that is Eataly, international food stores are learning how to utilize their space and bring in extra services that promote customer engagement in the store.

Outside the Urban Core

Although the concept might seem to target millennial city-dwellers, grocerants thrive in the suburbs, too. Wegmans, which was one of the trend's pioneers, started experimenting with retail-adjacent restaurants in 2002 and first tested The Pub—now its most successful sit-down concept—in 2009, in Collegeville, Penn. While beloved chains use their brand reputation to bring in customers, a lot of independent stores target locals who enjoy building and supporting neighborhood businesses.

"The thing that can help set you apart is to create an outlet for other small vendors to sell their products and unique items that can not be found in the larger stores," says Steuber. "In addition, providing excellent, specific product knowledge will cause someone to consider your space over the larger chain."