7-Eleven, Albertsons Add to the List of Existential Threats
A pair of developments mean there will soon be even more existential competition for the restaurant industry.
First, 7-Eleven is investing heavily in food. The brand recently announced it is “turning up the heat on its prepared-food program,” and by proxy every restaurant in the local market. For now, 7-Eleven is testing 15 new prepared food items that range from Italian to Asian and Mexican flavors. The brand started offering the meals in select locations in North Texas on September 11, and they look a lot like the prepared meals that are popping up in grocery stores and in the cooler of restaurants and hybrid urban convenience brands like Pret A Manger or fresh&co. But now, they may pop up at the more than 10,500 7-Eleven locations across the U.S.
According to NPD, about two-thirds of consumers buy premade meals at least once a week. And that’s up nearly 70% from the firm’s 2010 data, when one in five consumers purchased a prepared meal in a given week.
“Consumers use QSRs, convenience, and grocery stores interchangeably for fast food, particularly when they find the same quality and variety,” said Bonnie Riggs, NPD restaurant industry analyst. “The lines between retail foodservice and QSRs are blurring for consumers, and these channels are competing for visits from consumers looking for a quick meal or snack.”
Certainly, c-stores have always had prepared gut bombs for sale, but 7-Eleven’s offering checks a lot of the boxes for what consumers say they want from a meal. They’re locally made near the location, they are value-driven at $3.99-$4.99 and cover the spectrum of trendy flavors and dayparts. And they actually look pretty good.
The brand said it’s adapting to the evolving world of food, especially to how younger consumers are eating.
“Dining occasions are evolving from traditional meals and mealtimes,” said Kelly Buckley, 7‑Eleven vice president of fresh food innovation in a release. “Younger demographic groups, in particular, are constantly snacking throughout the day vsersus eating three traditional meals.”
Buckley, formerly from Applebee’s and Pizza Hut, represents another existential threat. As c-stores try to gobble up the prepared food market, they are pulling talented executives from the restaurant industry.
And second, while everyone in the restaurant market is getting a bit of schadenfreude from Blue Apron’s stock performance, another meal kit development may not be so pleasing.
Albertsons, the 2,600-location-strong grocery chain based in Boise, Idaho, is acquiring meal kit company Plated. While the company isn’t the biggest or the most well known, the development represents a major change for the industry that is generally a cash-burning Silicon Valley money pit. This deal will make Plated the first omnichannel meal kit with national scale. Anyone who worries about the affects of both meal kits and prepared food on sales probably just got some shivers. With Albertsons' logistical framework and the culinary, technology and branding prowess of Plated, the partnership could be meaningful.
Albertsons said the deal, valued at just shy of $200 million, means another way the company is meeting consumer demand outside of restaurants.
“Today’s consumer is looking for a variety of personalized shopping alternatives, and this transaction is the latest example of Albertsons Cos. meeting our customers wherever and however they like to shop,” said Bob Miller, Chairman and CEO of Albertsons Companies. “With Plated, we’ve found a partner who shares our commitment to delicious, affordable food; superior technology and innovation; and world class customer service. Plated knows its customers better than anyone, and together we will accelerate our ability to serve them. We are excited to offer our customers more online options and fresh, quality ingredients along with distinctive recipes at their doorstep or through traditional shopping trips.”
Meal kits haven’t proven a major drag on restaurants. NPD reported that less than 25% of survey respondents said meal kits replaced a restaurant visit. But if synergies are found within the new partnership, the high cost of meal kits might come down and make cooking at home a more compelling choice.