Ghost kitchens and meal kits: Kroger experiments with new ways to sell prepared food

Customers store on the produce part of a Kroger Marketplace in Versailles, Kentucky, U.S., on Tuesday, Nov. 24, 2020.

Scotty Perry | Bloomberg | Getty Images

As Kroger tries to woo clients, the greater than a century-old grocer is banking on an age-old query.

“A big part of our fresh strategy is helping answer the daily dilemma of ‘What’s for dinner?'” Chief Merchant and Marketing Officer Stuart Aitken stated.

At a digital investor day on Wednesday, Kroger stated it’s experimenting with new ways to provide clients fast, restaurant-quality meals from ghost kitchens or handy, preassembled dinner kits. Those investments in prepared food might assist the grocery store’s enterprise — significantly as Americans develop uninterested in cooking or return to busier lives and fuller calendars after getting vaccinated for Covid-19.

For grocers, the pandemic has created a chance to broaden into meal kits and prepared food, stated Krishnakumar Davey, president of strategic analytics at IRI. Consumers have been making an attempt to shortly throw collectively meals as they make money working from home. Many eating places have completely closed through the pandemic, giving grocers an opportunity to acquire market share. Plus, he stated, grocers can assemble meal kits from objects of their current deli and bakery departments.

The meal equipment business grew practically 13% from 2019 to 2020 to turn out to be a $9.13 billion market, in accordance to estimates from market analysis agency. The tempo of development will possible flatten this 12 months, however it’ll stay a scorching class as extra professionals work not less than a part of the week remotely, Davey stated.

“A few days of the week, people will be working from home and if you are working from home, you don’t have time to fix up a lunch,” he stated.

Kroger acquired meal equipment firm Home Chef in 2018. Its competitor, Albertsons, owns Plated.

Kroger is the nation’s largest grocery store chain, with practically 2,800 shops and quite a few manufacturers together with Harris Teeter and Fred Meyer. The firm’s same-store gross sales, excluding gas, grew 14.1% and its digital gross sales rose 116% within the 12 months ended Jan. 30.

However, the Cincinnati-based grocer’s forecast anticipates same-store gross sales will drop by 3% to 5% this 12 months. Its leaders laid out its technique to flip digital development right into a extra worthwhile enterprise and drive new income streams, reminiscent of by means of its promoting enterprise.

One key a part of that technique will likely be persevering with to take a look at new concepts, Aitken stated.

“Innovation is the lifeblood in fresh [foods],” he stated. “We may fail with some, but when we do, we’ll fail fast. That said, when we detect a home run, we’ll scale it at pace that matters, that will move the needle for Kroger.”

Among them, Kroger struck a deal with ghost kitchen firm ClusterTruck final 12 months. The firm opened two on-premise kitchens of about 1,000 sq. toes inside Kroger shops. Customers can order from greater than 80 meals, which they’ll decide up in shops or order for supply.

Some of its shops have a Saladworks inside, a fast-casual restaurant that makes custom-made salads and wraps.

Kroger is rising Home Chef, a meal equipment firm that competes with Hello Fresh and Blue Apron. Kroger has added the quick-cook options and an oven-ready model to a few of its shops. Sales of Home Chef elevated 118% in the latest fiscal 12 months and it’s poised to turn out to be Kroger’s subsequent billion-dollar model, Aitken stated.

And he stated Kroger has a new pilot that is coming quickly that’s targeted on household meals.

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