Grocery chains are stocking their shelves with food from fancy restaurants, turning popular menu items into profitable products as consumers seek higher-quality home-cooked meals.
During the pandemic, restaurants had to think creatively to survive. Some establishments decided to turn their offerings into products that home-bound consumers could make on their own.
The gourmet entrees and premium sauces allowed restaurants to enter retail and provided them with a new sales outlet at a time when many of their competitors were going out of business, Joan Driggs, vice president of thought leadership at IRI, told Food Dive.
“It may not have been the same experience, but it did give new life to out-of-home experiences in the home,” Driggs said.
Nearly five years later, the move from restaurant to retail shows no sign of abating. Several higher-end restaurants such as Carbone and Momofuku are amassing more space in stores, enabling them to generate millions more in revenue and expanding their customer base in the process.
Marguerite Mariscal, CEO of Momofuku in New York City, said the company saw an opportunity to diversify by selling its air-dried ramen, sauces and seasoned salts in grocery stores.
It launched its first products in 2020 to capitalize on the surge in home cooking during COVID-19 before expanding two years later to big-box outlets such as Target and Whole Foods. The company is now prioritizing both its restaurants and retail, with plans to be in 10,000 stores by the end of this year.
Mariscal said a presence in CPG stores is a way to “future-proof” a business that previously only competed in the uber-competitive restaurant industry.
“The grocery aisle was still the same products that had been there for the past 20 years, and we thought there was the biggest opportunity in the most untouched area for us to explore,” Mariscal said.
The pandemic, she added, provided a major boon to the global flavors section of stores. This created an opportunity in retail for Momofuku — but it wasn’t one that everyone embraced.
“We talked to people from Pepsi, people from Campbell’s, and they all said to go anywhere else, that grocery aisles were the sleepiest place to be,” Mariscal said. “But we heard that and we saw an opportunity.”
Momofuku developed products for retail like Sweet & Spicy Noodles and Black Truffle Chili Crunch by tapping into 20 years of consumer data it had collected. It also leveraged the popularity of its founder, David Chang, who gained prominence with his Netflix series “Dinner Time Live” and boasts 1.8 million Instagram followers.
The company discovered 80% of the people who followed Momofuku and Chang on social media did not live in cities where they operated restaurants. The retail launch allowed the company to connect with people and generate sales it otherwise wouldn’t have.
Mariscal said Momofuku faced challenges in reformating its restaurant flavors to make them shelf-stable. The company hasn’t figured out a way, for example, to get its popular ginger scallion to maintain its flavor profile. Other innovations have been abandoned because Momofuku hadn’t found an ideal taste or price point.
“Navigating that and just making sure we’re both making a premium product but not something inaccessible, that’s really the balance,” she said.
The increase of items from fancy restaurants sold in stores correlates with the jump in market share for premium foods as many consumers seek a higher-end experience at home.
Jeff Turnas, senior vice president of culinary at Whole Foods, told Food Dive earlier this year that shoppers are still purchasing products they perceive to be of higher quality — such as sauces and breads — despite their price tag.
Driggs from IRI said even as cash-strapped consumers pull back on spending, restaurant brands are poised to benefit because demand for premium offerings continues to grow. To succeed in stores, the Circana executive said restaurants must get optimal placements on shelves and online, while leveraging the power of social media influencers.
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Courtesy of Carbone Fine Food
Carbone’s pasta sauce pursuit
Two New York City-based restaurants, Carbone and Rao’s, have successfully expanded into the grocery market with premium tomato sauces. Both establishments at some point employed food industry veteran Eric Skae as the CEO of their retail divisions.
Rao’s — which was the crown jewel of The Campbell’s Company’s recent $2.7 billion acquisition of its parent Sovos Brands — debuted its sauces at retail stores in 1992. Rao’s has since expanded into soups, pasta, pizza and lasagna. Rao’s has just under $1 billion in annual sales and is posting double-digit growth. Its products were purchased by half of all U.S. households last year.
Carbone Fine Foods debuted its sauces in 2021, bringing the popular offering to shelves with premium ingredients and a higher price tag than most of its competitors.
Skae, who joined Carbone Fine Foods ahead of its launch, told Food Dive the goal was to replicate the restaurant’s recipes in a jar. In doing so, the CPG brand let the people who understand what made the restaurant’s formula work best chart its path.
The dining establishment’s founder Mario Carbone and his business partner Rich Torrisi were heavily involved in developing the product for retail.
“Both were very, very active in that process to a point where they would leave Manhattan at 3 a.m. and would be at our production facility in central Pennsylvania at 6 a.m.,” Skae said.
Carbone posted 80% year-over-year sales growth earlier this year, and it has expanded its lineup to include Alfredo sauce and pizza sauces.
Skae said Carbone Fine Foods is pursuing additional innovations in the sauce category. But like Momofuku, he said the company is still working on bringing certain flavors from its menu to the shelf without compromising quality. Skae pointed to pesto, which he can make taste “amazing” at his home kitchen, but is challenging to scale.
“If you’ve ever noticed, the pestos on the shelves get very brown. The leaves oxidize immediately, and the ones that are not very brown have something in them that I wouldn’t consider food.” Skae said. “Pesto is not a giant category, just one that makes sense for our brand.”
Skae believes his success with Rao’s and Carbone came from identifying that consumers would pay more for a higher-quality pasta sauce.
“There’s a big shift from value and middle of the road to premium categories, he said. “If I was looking at other categories I’d be looking at similar dynamics: where’s the opportunity, where’s the white space?”
