Supermarkets Could Be a Super Pain in the Neck for Franchises

Running a successful business means keeping an eye on your competition. Unfortunately, today’s franchisees have more than just similar business concepts to worry about.

While quick-service restaurants are busy keeping tabs on one another, grocery and convenience stores may be carving out their own slice of the market share.

A new report from QSR stated that with more stores offering prepared meals, consumers may be skipping a trip to their local burger joint.

“Almost every grocery store I walk into now, some of the first things I encounter are their quick-meal solutions, their home-meal replacements,” Justin Massa, cofounder and CEO of Chicago-based market research firm Food Genius, told QSR. “Those products are aggressively priced compared with the restaurants around them and are designed to get you in the door in hopes that you’ll buy something else.”

Some companies are going well beyond prepared meals, implementing actual restaurants inside their stores as a way to attract customers and create a one-stop shop location.

“[Grocery store chain] Mariano’s takes that notion of foodservice in a grocery store to its logical conclusion,” Massa continued. “They actually have branded restaurants inside of their stores. So there is a sushi counter that has its own name and checkout. There is a wine bar, there is an oyster and lobster bar, and on top of that, their deli-prepared fresh section is bigger than anything you could possibly imagine. They have pushed the envelope so far that you can go to the meat counter, buy a steak, walk across the aisle, and have them cook it for you to order.”

Meanwhile, convenience stores have been shown to be quite popular with Generation Y.

Citing data from NPD Group, USA Today reported in February that C-stores are nearly twice as important to Millennials as fast-casual restaurants.

"Millennials are cheap — they're no different from anyone else," Harry Balzer, chief food industry analyst at NPD Group, was quoted as saying. "What we mostly do in our lives is get food as fuel — we don't usually go out for exciting eating adventures."

In short, it may be time for franchises to start taking a page out of the grocery/convenience store playbook. If some shoppers, especially young people, are favoring trips to their local stores over a visit to a quick-service or fast-casual franchise, there’s certainly room for savvy eateries to listen, learn and, hopefully, innovate.