Remember prior to the pandemic how many grocery stores allowed customers to go beyond purchasing the traditional ready-to-eat or commercially packaged products and even eat the hot meals right there in the store?
The National Restaurant Association calls these types of establishments “hybrids” or “retail-host restaurants.” Only five years ago, The NPD Group called in-store dining “one of the fastest-growing segments of the grocery industry.” And it wasn’t just that industry, as some news stories declared it “one of the fastest growing segments for restaurant food.”
How big was this trend? Sales by these in-store restaurants in 2015 topped $40 billion. Hybrids took in about $3 out of every $4 in revenue generated by the retailer. And five years ago, they were growing at a rate of nearly 6% per year. In 2014, sales of prepared foods, including in-store and takeout dining, had seen an increase of nearly 30% since 2008.
These types of establishments existed more than a century ago and well into the 1960s and 1970s (think drug store and dime store counters, as well as Woolworth Department Store’s lunch counters.)
Modern examples included Whole Foods Market, Wegmans Food Markets and Mariano’s that had restaurants offering hot meals, as well as beer and wine service — some with their full-service pubs. Many 7-Eleven stores offered sit-down food services.
The variation of shape and nature of these establishments was wide, as the National Restaurant Association definition of retail/restaurant hybrids included health and personal care store restaurants, general merchandise/variety store restaurants, food store and grocery store restaurants — including a portion of deli and salad bars, and even gasoline service station restaurants.
This was all at a time when U.S. retail sales had experienced a radical shift. The Commerce Department reported in 2015 that sales at restaurants and bars overtook spending at grocery stores for the first time in U.S. history. This indicates a larger consumer preference for ready-to-eat foods than for raw ingredients to be used for cooking from scratch in the home.
This trend seemed unstoppable. In fact, one observation noted that in-store dining was an “upward trend” that showed “no signs of petering out.”
Enter the COVID-19 pandemic.
Public health concerns and widespread measures around social distancing and safety of customers (as well as employees) forced several notable changes that included a complete reversal in this hybrid retail model. No longer, at least until some unforeseen future date, are customers able to have this option of purchasing and consuming foods.
As a result of the COVID-19 pandemic, consumers are avoiding large public spaces to prevent infection, including in-store grocery shopping. In a March 2020 study, about 75% of American consumers surveyed stated they would likely purchase grocery store items online if they were confined to their homes due to the virus.
In its place, however, can be found the rapid growth of safe options through new models and new tech platforms.
Customers can order groceries or restaurant food online and pick up outside with contact-free service. Customers can place orders for a service to go into the grocery store and shop for them, then deliver to the home. Customers can have restaurant-to-door delivery of food orders. So many third-party options have flourished over the past year.
Statistics from around the middle of 2020 reveal that Americans increased their use of online shopping for food in huge numbers. More than 2,100 survey respondents indicated that their purchases of restaurant delivery/takeaway because of the COVID-19 pandemic increased by 31% while food and drink delivery (e.g., from supermarket) increased by 24%. These figures are similar to those found in the United Kingdom, where the increase in online use for restaurant delivery/takeaway has increased by 19%, and food and drink delivery has increased by 30% — also because of the COVID-19 pandemic. Some restaurants report that third-party orders have replaced in-person credit card sales by up to 80% in the past year.
The consumer perspective on trust with these changes must remain in the forefront of those deciding to engage with these options for their business. Regardless of the modality of restaurant or retail sales, the paramount importance of food safety will only continue to be a challenge.
The Centers for Disease Control and Prevention reports that 40% of foodborne illness cases are related to retail food consumption. As the growth continues in American consumers’ preference for ready-to-eat foods (over shopping for raw ingredients to cook at home), food safety must be re-imagined to include these third-party companies and their drivers or other independent labor force. These participants must be considered in terms of the role they play in safe holding temperatures, food allergens and other food safety factors.
This concern must also be addressed by those leaders in the retail and restaurant industry. I attended a 2019 meeting where a lawyer argued that third-party food delivery created a scenario where those who try to file a lawsuit against a restaurant (for a food safety failure that resulted in harm to a consumer) would be able to benefit from the third-party food delivery company creating a shadow of a doubt in terms of who was at fault. Along with many in attendance, I agree that avoiding legal risk is not an ethical replacement for avoiding non-compliance and responsibility.
The need for Herculean efforts behind food safety exists today just as they did more than a century ago. The technologies involved may have changed, but the true burden of disease has not.