Dive Brief:

• Hy-Vee is switching seven of its Market Grille restaurants in the Des Moines area stores back to self-service eateries, according to the Des Moines Register. This will be a return to a similar model used by the grocer before introducing sit-down restaurants in 2012.
• The switch back to a Market Grille Express service model was in response to customer demand for “a quick-eating experience,” a Hy-Vee representative told the Des Moines Register. By the end of November, Hy-Vee will have 43 Market Grille restaurants and 76 Market Grille Express locations.
• Full-service bars will remain a part of the new Express locations, and Hy-Vee expects to retain all of their restaurant employees during the transition.

Dive Insight:

In-store dining is one of the fastest-growing segments of the grocery industry. Since 2008, sales of prepared foods, which include in-store and takeout dining, have increased 30%, according to The NPD Group. Many grocers see this a way to differentiate themselves, and to make the grocery store a place consumers want to go, not somewhere they have to go. They also allow the store to attract consumers in for a meal, and hopefully to grab a few items from the store while they are there.

Hy-Vee's Market Grille and Market Grille Express are two formats that are capitalizing on this trend. Both options feature sit-down dining and many of the same menu items. Both formats also feature a full-service bar area. But whereas Market Grille is a full-service experience, complete with wait staff, Market Grille Express features stations where customers place their orders, then have them delivered by staffers. 

The difference is subtle but meaningful. As a Hy-Vee official told the Register, its Express restaurants cater to increasing consumer demand for "quick meals." This includes faster service for customers dining in-store; it also opens up an additional revenue stream with to-go orders. The model is similar to ones being adopted by restaurants across the country, including Panera and McDonald's. Even convenience stores are beginning to roll out order kiosks to complement their made-to-order food options. 

In a crowded grocery industry, restaurants can help retailers stand out from the crowd. In June, Whole Foods opened its first standalone restaurant, a Brazilian fast-casual concept called The Roast, located in Atlanta. The restaurant lets customers order from digital kiosks and features a rotating lineup of seasonal dishes and ingredients. 

With their craft beer, wine and flavor-forward menu items, grocery restaurants also are courting high-value millennial consumers. According to a study by Bankrate.com, 54% of millennials say they eat out three or more times each week. Along with Hy-Vee and Whole Foods, H-E-B has taken advantage of this trend with its True Texas BBQ restaurants, which operate in several stores throughout the Lone Star state. The locations offer barbecue sandwiches, ribs and chopped meats as well as barbecue breakfast tacos, served daily from 6 a.m. to 11 a.m.

Restaurants can be a tricky business for supermarket operators used to stocking shelves rather than building menus. But when done right, in-store restaurants can draw in customers who may stick around to grocery shop. The trick is getting the ideal atmosphere and food offerings. And as Hy-Vee shows, it's also about striking the right balance between experience and speed of service.

Grocery representatives say they’re making the switch back to quick service due to consumer demand. So why do shoppers at some stores want to grab a sandwich on the way out the door, while others want to sit and enjoy their just-prepared noodle bowl?

Perhaps the trend is regional. Hy-Vee operates locations in the Midwest, where consumers may view their neighborhood market as just a place to pick up groceries. A sit-down meal at a restaurant may be more of a special occasion, not a pick-me-up on a weekday evening.

Conversely, it may depend on the individual consumer. Whole Foods was an early adopter of an in-store dining experience and has done well with the concept. It may just be that Hy-Vee shoppers don’t see the value in sitting down to eat with bags of groceries in the chair next to them with items that need to be put in the refrigerator.

Or, consumers may just be in a bigger hurry than they were even five to ten years ago. Whatever the reason, Hy-Vee is responding by giving customers the grab-and-go food service they want.

It will be interesting to see if other grocery chains start converting back to fast service restaurants in the coming months. Hy-Vee may be seeing a trend that other markets haven’t caught on to yet.