In recent years, it has become increasingly common for restaurants to extend their brand beyond the walls of their establishment and into the aisles of retail grocery stores. From sauces and dressings to frozen entrees and snack items, restaurants are finding new ways to capitalize on their brand recognition and expand their revenue streams. While this approach has some obvious benefits, there are also potential downsides.
What should a restaurant consider before moving into the retail sector?
While it may introduce a new revenue stream, the margins on retail products may be slimmer than first anticipated. The costs associated with production, distribution, and marketing can eat into potential profits, making retail sector investment challenging. According to a recent report from Statista, the global market for retail food and beverage sales is projected to reach $7.7 trillion by 2025.
Expanding into the retail food industry can increase the restaurant’s brand exposure. However, there is a fine line to tread, as it comes with the risk of diluting the brand’s name or even cheapening its image. It could go either way; gaining some insight from focus groups may help in that evaluation.
Customer behavior is tricky to gauge. If the restaurant’s products or services can easily be purchased at the local market, foot traffic to the bricks and mortar store may decrease.
Maintaining a high level of customer experience and loyalty is crucial when transitioning into the retail sector. Ensuring that the quality and taste of products or services meet customer expectations is paramount.
Developing a comprehensive marketing strategy and executing effective marketing campaigns are essential for success in retail stores. Understanding consumer trends and aligning your marketing efforts accordingly is key to attracting and retaining customers.
Efficient supply chain management is critical for delivering high-quality products and services to retail stores consistently. Restaurants need to establish robust supply chains to meet the demands of the retail market.
Consider how the move into the retail sector aligns with the restaurant’s long-term goals and vision. It should complement the overall business strategy and contribute to sustained growth.
The decision to venture into the retail market is a complex one that requires careful evaluation of the potential benefits and drawbacks. While marketing teams may see it as an opportunity to enhance brand exposure, restaurant owners must weigh the financial implications and potential risks of diluting their brand’s name. The impact on customer visits and the challenge of maintaining product quality are essential factors to consider. If a restaurant decides to pursue retail expansion, it must navigate these challenges with a thoughtful strategy that preserves the brand’s integrity and aligns with its long-term goals. By striking the right balance, restaurants can capitalize on retail market opportunities while preserving the essence of what makes them unique and successful in the first place.
Developing a comprehensive plan to understand consumer trends, supply chains, and marketing dynamics, along with a solid insight into projected growth and unintended consequences, is a great foundation to begin the navigation of hitting the shelves with your own branded product line. Sundell & Associates is a Full-Service Supply Chain Management Company, a Part of The Buyer’s Edge Platform – The Most Comprehensive Foodservice Procurement Platform in the Country. Our Network is Vast, Collaborative, and Unmatched.