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The hype is real! Wildly popular food blogs, creative new concepts everywhere you look… The restaurant industry can’t exactly complain about not getting enough attention these days. The retail industry knows it, too, and the rise of e-commerce has many retailers scrambling to reposition, to find new ways to lure customers into brick-and-mortar locations.

Olaf Hohmann, Head of the Retail Catering research division of the EHI Retail Institute

Image: Olaf Hohmann, Head of the Retail Catering research division of the EHI Retail Institute

Olaf Hohmann, Head of the Retail Catering research division of the EHI Retail Institute in Germany, is interested in phenomena like these from a scientific perspective. The Retail Institute’s 800-plus members hail from all across the consumer, investment-goods, and retail industries, so they have a lot to say on the subject of retail catering.

Olaf Hohmann sat down to tell us about the questions retailers need to consider when deciding whether to expand into food service, and gave us some tips for culinary success with customers.

The marriage between retail and food service is a hot topic right now, not to mention a multi-faceted one. Can you define the term “retail catering” for us? How would you describe it from a scientific point of view?

We developed the term as a way of describing how the market is currently changing. We define retail catering as continuously offering restaurant services, along with drinks and ready-to-eat meals, in a place that is directly or conceptually connected to retail activities.

Retail catering - OPUS V

Restaurant OPUS V as part Engelhorn fashion retail store / Image: engelhorn


What are the main differences between retail catering and the traditional food service industry?

To us, the main difference is the variety. We’re seeing everything from kiosks at the hardware store to Michelin-starworthy cuisine. One good example in Germany would be Englehorn, where Tristan Brandt has started OPUS V, a place designed with sophisticated foodies in mind. Retail catering is everywhere, from major cities to country meadows. Many large department stores, for example, now offer meals to go or contain sit-down restaurants. It’s a wide continuum ranging from standardized production to a-la-carte preparation. As you can see, it’s a much broader field than the conventional restaurant industry.

What advantages does retail catering offer from a customer’s point of view?

Retail catering is mainly focused on speed and flexibility. On my lunch break, I can sit down for a leisurely meal or grab something to bring back to my desk. Snacks, free-flow buffet-style, a-la-carte… retail catering offers a lot of different options in that respect, too. Plus, the price point for retail catering is usually lower than for conventional restaurants.

 

 Gas station offering food

Gas station Lekkerland / Image: Lekkerland Frischwerk – Matthias Schmiedel

You’ve been emphasizing all the different options retail catering offers. Can you give us some more examples?

In 2017, Ikea Germany opened a new store in Kaarst bei Dusseldorf that emphasized sustainability. In addition to the usual Ikea restaurant, the store has a very nice cafe with a roof terrace. It’s a really relaxing place. Gas stations are changing a lot, too. Lekkerland has developed a concept called “Frischwerk” (fresh factory), which they’ve unveiled at two stations thus far: one in Aalen bei Stuttgart and another in Hamburg-Bergedorf. You should really check them out. Lots of wood, very cozy, and they’ve put a lot of thought into customer traffic flow. And then there’s “Zum Glück” (luckily), a concept designed by Westfalen AG. Among other places, it’s been realized in a 4300-square-foot space within a gas station in Gelsenkirchen, North Rhine-Westphalia. One notable example from the fashion world is the new Tommy Hilfiger Cafe, which has its own separate entrance, so it can even be run independently of the retail store. At Hilfiger, we’re seeing a strong trend toward digitization on both the retail and the food-service sides. It’ll be interesting to see whether that trend catches on.

Any international examples you think are worth mentioning?

This past summer, we went on a store check through London, which we consider Europe’s hotspot for food trends. The food halls at the luxury department stores of Selfridge’s and Harrod’s were obviously not to be missed. The flagship store of the Planet Organic natural-foods chain

Retail catering - OPUS V

Restaurant OPUS V as part Engelhorn fashion retail store / Image: engelhorn

offers hot food to go, soups, and what they call “high convenience” foods in addition to their retail products.  The Borough Market is worth checking out, as is the nearby Mercato Metropolitano. At its core, the Mercato is a Sicilian supermarket carrying Italian products; the area around it features various no-fuss food and drink options from around the world. There are several more places on and around Oxford Street: the H&M label Arket has its own cafe, as do the clothing chains Topshop and Primark. All of them offer coffee and smoothies as well as convenience foods like sandwiches and salads.

What goals do retailers have when they expand into food service?

Our research indicates that their main goal is to create  a relaxing atmosphere so customers can stop and rest for a minute. Their second goal is to differentiate themselves from online retail. Frequency and duration of customer visits are important as well. And recently, we’ve started hearing more and more about the social aspect—the desire to create a place for people to meet up.

 

Retail catering - OPUS V

Restaurant OPUS V as part Engelhorn fashion retail store / Image: engelhorn

Are you seeing more demand for meals to go, and if so, why would you say that is?

The NPD Group market research institute is, indeed, projecting that the to-go market will grow this year. This development is directly related to economic growth, increasing mobility, and an increasing number of smaller households. We’re probably going to see more than €80 billion in sales of meals-to-go in 2018, of which retail catering will account for over €9 billion—around 12 percent, in other words.

What do you predict the future will hold for retail catering? What challenges will the industry need to address?
We’re noticing that retailers are investing more and more in food service, especially non-mobile food retailers. We expect food service will eventually make up about 20 percent of the average shopping center. Quality is playing an increasingly important role, and not only in terms of the food, but also in terms of the furnishings and the ambiance.

What can retailers do to address these challenges? Are there any technological innovations out there that might help?

Broadly speaking, we break retail catering down into three main groups. The first group are the ones who have been serving food for years; they have a handle on their systems and processes, and they’ve enjoyed a lot of success with it. The second group are those retailers who have been using their concepts for three to five years, and may or may not be wondering the investment is paying off. They could be having trouble because they don’t have their quantities down, or because their processes aren’t really working, or maybe they’re shorthanded. The third group are the ones who

Street food in gas station

Gas station Lekkerland / Image: Lekkerland Frischwerk – Matthias Schmiedel

are currently thinking about expanding into retail catering, and they’re hoping it will help boost the retail side of their business. Well, retail catering and retail are two very different things. A lot of things have to be taken into consideration when it comes to food service, which is why we recommend people spend a lot of time looking into it… and be sure to bring in experts to help.

Do you think industrial manufacturers could become part of the equation? 
Yeah, the industrial world can certainly help. But there are other problems that need to be accounted for as well. Staff recruitment, for example, is a difficult subject in the food service industry. Retailers also need to plan for fluctuating traffic levels. Business is usually great during the lunch rush, but what about in the morning, in the late afternoon, in the evening? And then there are questions regarding productivity. What production processes am I going to use? Does my food concept fit my target audience? Does it fit the company’s image? What technological equipment might help me be faster and more flexible? If I’m hiring people that don’t have a lot of culinary experience to run my food service operations, how will that change my menu or the kitchen equipment I choose? These are all things that need to be addressed during the planning stages.

Do you have any more advice for retailers who are planning to venture into retail catering?
It’s important to use a modular structure with your kitchen equipment, or with your restaurant concept as a whole—that’s the only way you can really stay flexible. Choose kitchen equipment that will allow you to switch up your menu easily if you need to, and that can compensate for the personnel shortages we’re expecting in the food service industry. We recommend starting small: just try the concept out at first, and then expand it bit by bit. Other than that, one question everyone needs to ask themselves is whether they’re hoping to increase business profits directly by serving food, or if their goal is to create a cozy atmosphere that will encourage customers to stop by more frequently and stay longer. And do they really want to run the retail-catering operation themselves, or would they be better off bringing a partner on board? Professional planning and consultation can help you avoid wasting your investment, and can save you a lot of money in the long run.

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