Jeff Baskin, Senior Partner | December 3, 2024
Grocers are embracing convenience
Large or small retailers have no excuse not to be investing in technology in order to improve their chances to grab a piece of this market. Getty Images
I have been working in retail and more specifically with grocers, restaurants, convenience-stores, and big box retailers for close to 25 years. Never have I seen such a crossover between these verticals. Have you noticed how your grocery store feels more like a restaurant these days? Salad bars, made-to-order sandwiches, and fresh pizza slices are becoming as common as aisles of canned goods.At the same time, quick-service restaurants (QSRs) are adding healthier menu options and expanding their reach into neighborhood locations once dominated by grocery stores.
The lines between grocery stores, convenience stores, and QSRs are blurring, driven by changing consumer preferences and industry competition. This is not just a passing trend—it’s a seismic shift in how we eat and shop.
Blurring the lines
The U.S. grocery industry is worth an eye-popping $1.5 trillion, and fresh-prepared meals now account for a significant slice of that pie. This segment exploded during the pandemic, when 57% of Americans increased their takeout orders for safety and convenience. Grocery retailers quickly stepped up, offering fresh-prepared, grab-and-go options like MTO (made-to-order) sandwiches, meal kits, and ready-to-eat meals.
Meanwhile, QSRs are riding their own wave of growth. The global QSR market is projected to reach $1.6 trillion by 2027, fueled by rapid location expansion and the rise of specialty chains like Cava, which grew from a single Mediterranean eatery in Bethesda, MD, to over 400 locations, plus a successful IPO worth $1.5 billion—all in just 12 years.
Even gas stations are getting in on the action. Chains like Wawa, Sheetz, and Casey’s have evolved far beyond “Cokes and smokes.” Today, they compete directly with QSRs and grocery stores, offering fresh salads, customizable pizzas, and even artisanal sandwiches. Casey’s alone is the 5th largest pizza chain in the U.S., selling 30 million pizzas a year.
Remember Clark Griswold from the National Lampoon’s Vacation movie? (The original version starring Chevy Chase, not the disappointing remake!) Clark has been in the car for so long that he says, “I’m so hungry I could eat a sandwich from a gas station.” Well, Clark wasn’t wrong back in 1983, but I think he would be now. The Shorty Hoagie and Philly Pretzel from WaWa are both delicious!
The consumer factor
Why the shift? It boils down to three consumer demands:
- Convenience: Busy lifestyles have increased the need for quick, high-quality meal options
- Value: Rising dining-out costs make fresh-prepared meals at grocery and convenience stores a more attractive choice
- Health: Shoppers want healthier, fresher alternatives to traditional fast food
Today, the average American spends $1,200 annually on QSRs, continuing to demonstrate a strong appetite for this category. Grocery stores are leaning into this opportunity by integrating foodservice offerings, while QSRs are doubling down on convenience and expanding into grocery-like offerings such as meal kits and fresh produce.
Opportunities for growth
The company I work for, NexChapter, has been working with our retail clients on this convergence of grocery, QSR, and convenience retail as the potential growth in this area is enormous. For retailers looking to thrive in this space, focusing on the following areas is critical:
- Made-to-order (MTO) meals: MTO sandwiches, salads, and pizzas are growth drivers, meeting consumer demand for fresh, customizable options. Adding MTO offerings can significantly boost basket sizes while appealing to on-the-go shoppers
- Upselling opportunities: The “fresh food halo” can drive additional sales. For example, a shopper grabbing an MTO sandwich might also pick up a drink, chips, or dessert, increasing the overall ticket size. How about adding a cup of coffee or a donut to a curbside pickup from your grocery store. Huge increase in revenue
- Loyalty programs: A seamless digital experience—mobile ordering, personalized offers, and rewards—is key to retaining customers and driving repeat visits
- Inventory optimization: Leveraging AI-powered forecasting ensures fresh food is available without creating waste. For example, Costco sells 100 million rotisserie chickens annually, proving that precise demand planning can lead to staggering results
The role of technology
Large or small retailers have no excuse not to be investing in technology in order to improve their chances to grab a piece of this market. There are plenty of technology providers out there that can help retailers get to market faster and many are inexpensive compared to the return. None of this would be possible without technology. Retailers must invest in:
- Integrated order fulfillment platforms: Streamline operations for grocery items and fresh-prepared foods
- Mobile apps: Enable easy ordering, payment, and loyalty rewards
- AI forecasting tools: Minimize waste by accurately predicting demand
- Ecommerce systems: Handle everything from online grocery shopping to made-to-order meal customization
A restaurant company like Cava has proven that embracing technology can fuel growth. Their app-driven experience, combined with in-store tech, has helped them scale rapidly while maintaining quality. They’ve also expanded into CPG and grocery.
What’s next?
As grocery stores, convenience stores, and QSRs continue to blend, competition will intensify. Success in this landscape requires more than just great food—it requires innovation, personalization, and a relentless focus on the customer experience.
The next time you grab a sandwich from a grocery store or notice fresh produce in a QSR, think about the transformation happening in retail. These blurred lines aren’t just reshaping what’s on the menu—they’re redefining the entire industry.
Jeff Baskin; link to story: HERE