From restaurant to grocery: Be prepared for the next generation challenger brand

 

www.mintel.com, October 22nd, 2020

The impact of COVID-19 and the recession marks an important moment for restaurant brands to use their brand reputation to enter the grocery space and fill the gap left by a struggling start-up industry.  

As COVID-19 restrictions increase across the UK, restaurants need to adapt to new consumer needs. Below are different ways restaurants can make the most of this opportunity to reach their consumer and survive. 

Now is the time for restaurants to enter retail 

As a result of the worldwide COVID-19 pandemic, markets are in flux, and consumer behaviours have dramatically changed. In addition, a heavy economic downturn has already begun, with consumers needing to cut back on their spending. Consumers are more likely to return to the mainstream brands that are more familiar as they look for some semblance of security in this fast-changing scenario. This consumer move is bad news for food and drink start-ups. In recent years, consumers have shifted towards smaller brands that fit an ethical but disruptive profile.

This will provide space for the next generation challenger brand, which will need the brand reputation of big brands while still proving to be disruptive. As the foodservice industry takes a huge hit on-premise, this may be the only solution for restaurants if they want to survive.

Investors will not be willing to take risks: An economic downturn means investors will have less capital and will be more willing to invest in ‘safe’ bets. Restaurants pivoting into grocery are therefore a suitable target for investment.

A gap will need filling: Currently, retailers and distributors are focused on keeping stores adequately supplied and are not adding new brands to their portfolios. Rationalising ranges on supermarket shelves will also be a key priority. Therefore, supermarkets will be less willing to stock unfamiliar products during a time of economic hardship.

Trade shows and start-up networking becomes harder: Major trade shows have shut down or moved fully digital as a result of the pandemic, robbing start-ups of the opportunity to properly showcase their brand or new products to buyers, the press and network with peers. But a restaurant brand does not need the same ‘first’ introduction.

Consider different routes to reach the consumer

There are various options for restaurants to move out of their kitchens and into consumers’ homes. Modern methods to reach the consumer can help restaurants innovate. Selling restaurant dishes and accompaniments through a supermarket range is one method. However, restaurants can also reach the consumer directly or via partnerships with other companies, such as meal kit services.

Retail brand: Leon’s dip product comes straight off the restaurant’s lunch menu and into supermarket aisles in the UK. The dip includes peas, dark lentils and spinach, topped with puy lentils & sundried tomato drizzle.

Leon’s ‘Pea-lentiful Dip’ (UK) Source: Leon 

Direct to consumer: US sandwich shop Potbelly Pantry reacted to the COVID-19 pandemic by selling its ingredients in a kit box so consumers can make their sandwiches at home.

Potbelly Pantry’s sandwich kit box (US) Source: Potbelly Pantry

In partnership: UK meal kit brand Mindful Chef partners up with Nando’s to bring their dishes into consumers’ homes via the meal kit format.

Nando’s x Mindful Chef meal kit collaboration (UK) Source: Nando’s 

Make the most of your restaurant’s reputation

Consumers are most likely to choose new foods when they are in a restaurant compared to when they are at home. If more restaurants are shifting into the retail space, they must maximise marketing their already established reputations. Any dish or retail product sold, such as a cooking sauce, must clearly link to a ‘famous’ menu item, as almost seven in ten UK sauce users agree that sauces that help replicate dishes they’ve eaten at restaurants are appealing.

Since the beginning of the COVID-19 outbreak, brands have switched their marketing focus to social media platforms. Restaurants have a history of advertising their dishes through social media platforms, tapping into Mintel Trend, ‘Eat With Your Eyes.’ Therefore, they can easily pivot their fan base towards a grocery product by using similar means.

Restaurants could also pair their grocery offerings with ‘how-to’ videos. If restaurants are to maximise their influence, they should use their chefs to advise consumers. For example, UK restaurant Dishoom did just that.