A QSR coming to a grocer near you

1/16/2013

With traditional storefront locations becoming increasingly scarce in a highly saturated market, quick-service restaurant (QSR) chains are looking to supermarkets and convenience stores for expansion opportunities.

Partnerships between retailers and QSRs are nothing new.

In Canada, Walmart and McDonald’s first partnered in 1994, and the fast-food chain now has more than 300 outlets in Walmart locations across the country.

Other longstanding retail/QSR partnerships include Chapters/Indigo and Starbucks, The Home Depot and the Second Cup coffee chain, and Metro and Tim Horton’s.




However, a recent report in the U.S. trade publication Nation’s Restaurant News said that smaller U.S. chains like Checkers Drive In, Fazoli’s and Philly Pretzel Factory are also embracing the strategy, partnering with Walmart, Target and regional chains like Jewel-Osco.


“You’re definitely seeing a trend towards having quick-food options, and quick-service restaurants fit with that,” said Robin Sherk, director of market insights at Kantar Retail in New York. “The idea of having these quick, fresh options makes sense for both sides.”

Grocery stores are a weekly destination for most families said Sherk, providing an attached restaurant with crucial foot traffic.

The trend is not as prevalent in Canada, but Target Corp. spokesperson Lisa Gibson said the Minnesota-based chain plans to extend an existing U.S. partnership with coffee giant Starbucks when it opens its first Canadian stores this spring.

Gibson said that “majority” of Target’s Canadian stores would feature a licensed Starbucks offering.


“Starbucks has been a long-time partner of Target in the U.S., and we know from feedback from our guests that they value having the offering onsite,” said Gibson. “It adds to their overall shopping experience. Our goal for Canada is to bring the true Target brand experience, so partnering with Starbucks was a natural fit.”

Target also recently partnered with Prêt à Manger (“Ready to Eat”) – a U.K.-based chain that specializes in fresh food made daily – to bring the concept to one of its newest Chicago stores, although Gibson said the company has no plans to bring the concept to Canada.


Toronto retail consultant Ed Strapagiel said it is common for larger superstores to sublease space for services it doesn’t offer, such as fast food, wine, dry cleaning and optical services. “A formal co-marketing arrangement may not be needed, but just two companies with a good working relationship,” he said.

Such partnerships benefit both parties, said Strapagiel.

Retailers can benefit from having customers linger longer in their store and the halo effect of providing a welcome customer service.

At the same time it also enables them to provide food services for staff, particularly helpful for stores located in suburban areas.

The restaurant chains, meanwhile, benefit from increased customer traffic and exclusivity with a “captive audience.”

They also typically receive a high-exposure location at the front of a store and don’t have to worry about providing parking or washrooms, said Strapagiel.

“Non-traditional” locations can also make financial sense for restaurant chains, with the Nation’s Restaurant News report quoting a Checkers representative as saying that build-out costs for an in-store operation are “significantly lower” than the $500,000 required to build a standard store.

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