Dive Brief:

• In October, Niemann Foods Inc. opened The Farmhouse, a locally sourced restaurant inside its Harvest Market store in Champaign, IL, according to Supermarket News.
• The restaurant serves three meals a day and uses ingredients sourced from growers as close to the store as possible. Workers also bake bread and churn butter in-house.
• Many of the same products used in the restaurant also appear in the store, offering customers a chance to sample items before they buy.

Dive Insight:

With this ambitious new restaurant concept, Niemann Foods seems to be emulating the likes of Whole Foods, Wegmans, and Mariano’s. These retailers have had major success with what are essentially high-end cafeterias inside their stores, offering everything from sandwiches to salads and custom-order sushi to brick-oven fired pizza.

What makes these supermarkets meal destinations? In a word: quality. Whole Foods uses fresh, locally sourced and unique ingredients in its salad bar. Mariano’s pizza makers hand pull dough and top each pie with fresh ingredients. Wegmans offers restaurant-quality sushi, pizza, sandwiches, salads and more.

Doing foodservice this well takes a major commitment. It requires recipe development, fastidious sourcing, top-notch worker training and organization — and, of course, lots of money. But the payoff is huge: According to the NPD Group, supermarket prepared food sales have increased 30% since 2008, and accounted for $10 billion in 2015.

The Farmhouse seems to be hitting some of these marks. The restaurant is cooking omelets with locally sourced, cage-free eggs and baking made-from-scratch biscuits. Lunch crowds can also spring for a Farmhouse Burger or a salad with grilled salmon.

But are these dishes and the overall dining experience better than what local restaurants offer? Fast food and quick service restaurants haven’t slowed down their recipe and service innovations. When it comes to deciding between a drive-thru breakfast and walking into a supermarket, the choice is simple for many consumers. The same goes for lunch and dinner; many fast-food companies are offering fast, artisan-quality meals. 

Supermarkets have a huge opportunity in foodservice, but they'll need to convince customers to eat a meal at the same place where they buy their bread, milk and eggs in order to get off the ground.