Restaurants are smart to nimbly pivot to today’s consumer’s needs by launching grocery service during the COVID-19 outbreak, which can also help operators maintain a sufficient cash flow to keep the lights on. According to Mintel research on international food trends, more than one-third of international food consumers want to see restaurant-branded international foods at grocery stores, which is just a taste of the appeal that foodservice grocery items can garner. This service must remain true to the restaurant’s core values and cannot be detrimental to longer-term brand trust and loyalty.
Potbelly, Panera Bread and Subway debut grocery services
Potbelly Sandwich Shop was the first major restaurant chain to launch grocery service, branded Potbelly Pantry, to appeal to the quickly growing number of consumers purchasing grocery products over foodservice during the COVID-19 outbreak. These grocery items include six servings of bread and Wreck or Italian sandwich deli meats (to easily make six sandwiches at home), as well as a variety of other meats and deli salads sold by the pound and bulk-packaged cheeses. Jarred hot peppers, bottled beverages and bags of mini cookies and chips are also all available, just as they are in the store.
Subway launched the Subway Grocery program at select stores, with more stores added daily. The chain states that it’s using its access to food distribution to offer Subway ingredients to local communities, including loaves of bread, bulk-packaged deli meats, egg patties, veggie patties, meatballs, cheeses, individual onions, spinach/iceberg lettuce, peppers, cookies and chips. Prices vary depending on if the item is individual or sold in bulk.
Panera Bread launched the Panera Grocery program, allowing customers to buy pantry staples such as gallons of milk, loaves of bread and fresh produce (eg blueberries, tomatoes, avocados) alongside standard Panera Bread prepared food items at participating stores. These staples include bagels and plain cream cheese. The pantry offerings are free of artificial ingredients just like the chain’s foodservice fare, and are available for pickup, drive-thru and contact-free delivery service. They’re also available via a new drive-up, contactless curbside service, which many restaurant chains have now launched, including Subway and Potbelly. Panera already offers a fairly extensive line of consumer packaged goods products, including soups, salad dressings, breads and coffee sold at many major grocers.
What we think
When offering grocery service, restaurants need to stay true to their traditional pricing and value proposition. Purchasing enough ingredients to make six sandwiches from the Potbelly Pantry costs a little bit less than buying the prepared sandwiches in the store (per sandwich), making it a fairly good value to consumers, who must assemble and toast their own sandwiches at home. The chain is helping customers have fun while making their own sandwiches by sharing chef-led how-to videos online. However, the Potbelly Pantry doesn’t allow customers to purchase other popular topping options such as tomatoes or lettuce, among other condiments. Therefore, customers must make sure to have these additional ingredients at home if they want to duplicate their favorite sandwich, which can take away from the overall Pantry experience and convenience.
Panera’s grocery program is a good way to publicly remind consumers that they’ve always specialized in grocery favorites at their restaurants, including bread, bagels and cream cheese. Consumers wishing to order a Panera meal for lunch or dinner during the COVID-19 outbreak may be more likely to think about ordering bagels and cream cheese at the same time for their weekday breakfasts, as a result of this program’s publicity. Panera is also doing a good job of maintaining consumer trust in its products by making sure its grocery products are held to the same clean standards as their foodservice standards.
At Potbelly, Subway and Panera, all of the ingredients available for grocery service can also be found somewhere on the menu, which makes sense because it’s what’s already available in their supply chain. While some independent restaurants are testing add-on sales of grocery products such as toilet paper or pet food, chain restaurants don’t likely have the capability to access these types of products on a large scale, and they probably shouldn’t sell them, even if they did.
Brand image should remain consistent to consumers during this COVID-19 outbreak, and hurting a brand’s perception with inflated prices, off-brand product assortment or subpar food ingredients that don’t taste the same when prepared at home could have lasting implications beyond the outbreak. For example, consumers may not be pleased to learn that Subway receives its bacon pre-booked, and Subway’s bulk order size is so large that the price tags (eg $35.75 for 150 pre-cooked bacon strips) may be off-putting for a value-centered chain. On the other hand, some chains that already have a strong CPG business, such as Panera Bread, may find that offering grocery-style or grocery-branded options at the store level helps drive incremental sales well beyond the COVID-19 outbreak.
