Kroger Restaurant Supply Activity Could Disrupt Foodservice Distribution

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Image courtesy of The Kroger Co.

Kroger tries his hand at food distribution.

The grocer recently launched a catering supply business that offers next-day delivery to businesses in the greater Dallas area.

Kroger Restaurant Supply offers an alternative to ordering large quantities on a set schedule, according to a press release. The service offers “competitive wholesale pricing” by the case or by the unit for seven-day delivery.

The news comes as supply chain bottlenecks affect nearly every restaurant and could be particularly helpful for smaller independent restaurants.

The Food Institute explored the impact this development could have on the foodservice distribution industry.

HOW COULD THIS MOVE THE MARKET?

“The foodservice distribution industry has evolved over the decades, proving resilient to market entry, territory expansion, consolidation, and more,” said Taylor Crown, industry veteran of the restoration. The Food Institute.

Crown noted that if the move offered customers different sources of value or a highly differentiated experience, it could affect the market.

“Conceptually, there’s something interesting about a 360 approach to food – traditional retail grocery, prepared foods, retail foodservice, foodservice distribution; but to be truly compelling, it needs to add additional value to B2B customers,” he said.

WHAT ABOUT EXPANSION?

For now, the service is limited to businesses in the Dallas area. If it were to expand, it could create new channel partners for suppliers, Crown noted, but it really depends on the approach to national brand, private label, product assortment and the category management.

“Ironically, Dallas is one of the best served markets when it comes to generalist foodservice distribution,” he said. “If value-creating innovations survive there, in the crucible of such a competitive market, expansion could be imminent.”

DEVELOPMENT OF THE “GROCERY” TREND

This decision also builds on the “grocer” trend that has accelerated during the pandemic in which restaurants have acted like grocery stores and vice versa.

“Grocery and restaurants compete for the same slice of stomachs, especially now that so many grocers have become ‘grocers’, with a huge range of prepared foods and a restaurant-style seated experience,” Scott Moses, head of grocery, pharmacy and restaurants at Solomon Partners, said The Food Institute.

Moses compared Kroger’s expansion into restaurants to Costco, BJ’s, Sam’s and Restaurant Depot.

“This is yet another manifestation of the vast American food retail landscape, which goes well beyond supermarkets and clearly demonstrates the continued convergence of grocery stores and restaurants,” he said. .

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