Closing the Digital Foodservice Gap

Most grocers today have some type of e-commerce presence to give their customers the option of shopping anywhere, anytime. If they didn’t have all of their ducks in a row on this front by 2020, the pandemic certainly pushed them forward, as most people were looking for online order and delivery options to take the place of trips to the physical grocery store.

What grocers are still behind on, however, is how to properly monetize their catering and prepared food business. The U.S. catering market is roughly $60 billion and growing about 2% annually. While catering and prepared foods are among a grocer’s most profitable offerings, many grocers still manage these orders using spreadsheets, paper order forms and sticky notes. If they do have some type of catering software, it tends to be more of a legacy system, and their existing inventory and point-of-sale (POS) systems don’t support the complexities of catering and prepared foods, including lead time, departmental production reports, multiple store locations, shelf life and managing ingredients. Many of the catering software options available don’t offer a way to centralize orders from multiple channels such as in store, over the phone, via email and online. 

Complexities Abound

It hasn’t been easy to find a technology platform to manage the catering and prepared food business. Among the many reasons that grocery catering and prepared meal operations are complex to manage are the following:

• Large grocers will operate across multiple store locations, often with varied pricing, taxes and menu items per location.
• A single order will often be made up of items produced by multiple departments, e.g., deli, bakery, produce and grocery items.
• Operations require a multichannel approach to customer ordering: online, in store, kiosk, customer service representative and call center.
• Grocers need to be able to support in-store customer pickup and checkout at the register/POS.

The urgency to bring catering online became even more pronounced during COVID-19 as the demand for prepared foods dramatically expanded. As the threat from giants like Amazon and Walmart continues to increase, catering and prepared meals provide further differentiation for independent grocers, which becomes even more important during peak seasons such as holidays.

Grocery businesses really need to think through a multichannel approach in managing their catering operations. Customers are expecting to be able to order online, in the store on a kiosk or by phone with a customer service person. Grocers need to support pickup of orders from customers and have their catering orders integrated with POS systems.

Checklist for Success

When making decisions about technology solutions to support omnichannel foodservice capabilities, there are six things that should be on every grocer’s checklist. The technology should:

1. Support online and in-store ordering
   Having a central system to manage all order channels — in store, online, over phone or email — allows grocers to have a clear picture of their entire catering business. This helps facilitate production reporting and stock forecasting, therefore allowing them to better execute on the customer experience. It also enables them to meet their customers where they prefer to order; some customers may prefer the online experience, but others still prefer to have the in-person/human-touch experience when they place a catering order for an upcoming event. A centralized system supports both of those experiences.
2. Provide powerful order management and production capabilities
   Having a central place to manage all catering orders (i.e., pointing back to No. 1), allows grocers to have a full view across the entire catering operation. It also allows them to generate production reports across every single department — bakery, deli, etc. — so that each team is clear on what it needs to make for a day of catering. Also, by giving customers the ability to edit their own orders online, grocers eliminate calls into their team to make changes. For customers that do require assistance, the team can easily get into the system and edit orders on their behalf.
3. Offer centralized menu management
   Being able to easily edit menus across all locations in one place is powerful. With strong software, grocers are able to easily adjust the catering offerings per location, provide varied pricing and even get more creative with seasonal menus when everything can be managed in one place.
4. Include POS integration options
   Grocers should look for features that will let them export catering sales data — item info, pricing, customer info, etc. — back to their POS, allowing them to have central reporting across every store and department. Having all of the data in one place makes reporting easier and will enable them to make more informed business decisions.
5. Provide delivery abilities or integrations with third-party logistics (3PL) delivery services
   Strong catering systems can offer ways to export order data and streamline the customer delivery process, or integrate directly with a third-party delivery software to support the customer delivery process.
6. Offer customer relationship management (CRM) features
   Grocers should find a system that accurately tracks customer spending behavior — when they last had an order picked up/delivered — to proactively market to shoppers and drum up new business. For example, if a customer hasn’t placed an order in the past 90 days, grocers can create a promo code to entice them to come back and reorder. Another important feature is the ability to pull historical seasonal orders and promote upcoming holiday menus/orders for repeat customers.

Now is the time for grocers to start effectively monetizing this highly lucrative piece of their business, as demand for prepared foods will only increase over the next year. Bringing catering and prepared food products online doesn’t have to be a clunky process; understanding the importance of a centralized ordering and management system, integration with POS and 3PL delivery services, and CRM features is crucial and will save grocers a lot of headaches down the road.