Finding new ways to blur the line between retail and foodservice continues to be a great move for retailers who want to show their customers that the grocery store is a more-than-viable option to sit-down restaurants or take-out.

Hy-Vee, Inc. kicked off 2025 with a major change to its retail foodservice portfolio.

The retailer has transitioned its 79 Wahlburgers at Hy-Vee locations across its nine-state region to Market Grilles.

All locations are offering new menus featuring all-new breakfast items, a weekend breakfast buffet and new lunch and dinner offerings.

With Wahlburgers, there was some confusion among consumers about whether locations were open for breakfast (they were), and other consumers complained about pricing and selection, said Tina Pothoff, Hy-Vee’s senior vice president of communications. There also wasn’t the foot traffic in many locations the retailer had hoped for.

“We’re getting back to basics. Hearing from customers, they wanted a certain type of menu and price points, and they wanted some of the selections they had before” in the grocerants’ previous Market Grille incarnations, before they were converted to Wahlburgers, Pothoff said.

Now that they’re Market Grilles again, Hy-Vee also looks forward to seeing some of the “breakfast club” traffic that had been lost, she added. These are often groups of older men, often veterans, who gather for coffee and conversation in the mornings.

One thing customers have been raving about since the transition is the return of homemade hash browns to the breakfast menu, Pothoff said. Biscuits and gravy is another Market Grille breakfast favorite.

The retailer is also adding some new items, including a peanut Thai chicken sandwich and bacon-wrapped won tons.

Ham Steak and Eggs and Avocado Toast are other new breakfast items. The new lunch and dinner menu offers craft burgers and sandwiches, such as the Rise and Shine Burger.

Hy-Vee designed the new menus to offer a wider variety of choices that provide value for families. Weekday hours for all Market Grille locations will be 6 – 11 a.m. for breakfast and 11 a.m. – 8 p.m. for lunch and dinner. Breakfast will be available 6 a.m. – 2 p.m. on the weekends with a special brunch buffet offered in select locations.

All Market Grille locations will offer both dine-in and carry-out service, as well as third-party delivery. Most locations will have counter service where customers order at the counter and staff will bring their freshly made order to their table.

Hy-Vee has 221 Market Grille and Market Grille Express locations across its nine-state region. Nine of the 221 Market Grille locations will continue to operate as full table-service restaurants for breakfast, lunch and dinner along with bar service.

Looking at its other retail foodservice offerings, Hy-Vee expects to add new menu items to its Asian prepared-food roster later this year, Pothoff said.

A strategic imperative

In today’s rapidly shifting landscape, the convergence of foodservice and retail isn’t just a trend, said the National Retail Federation’s Robert Grimes — it’s a strategic imperative for businesses looking to innovate and thrive.

“Retailers integrating foodservice offerings are discovering new ways to elevate customer experience, boost brand loyalty and unlock additional revenue streams. The question is no longer whether foodservice belongs in retail but how best to implement and scale it most effectively.”

At the federation’s NRF 2025: Retail’s Big Show, attendees got a taste of game-changing tech at the Foodservice Innovation Zone through more than 50 food tech-focused exhibitors and sessions led by industry leaders and innovators. And immersive activations highlighted new customer experiences in C-store, autonomous retail and full-service restaurants.

Historically, retail and foodservice operated in silos, Grimes said — retail focused on goods, foodservice on meals. But today’s consumers demand more: convenience, personalization and experience-driven shopping. They expect a seamless blend of these experiences, where dining complements shopping and vice versa.

“Retailers embedding foodservice into their strategy recognize that customers now linger longer, spend more and leave with a stronger emotional connection to their brand. The data supports this shift, showing measurable gains in traffic, basket size and loyalty where foodservice integration is thoughtfully executed.”

In the grocery segment, Grimes said, chains like Whole Foods and Wegmans exemplify how premium prepared foods, seating areas and experiential wine bars redefine grocery shopping. And those who’ve figured it out also understand that technology is pivotal — whether it’s app-based meal orders, loyalty integrations or automated kiosks making this transformation possible.

“Technology isn’t just part of the equation — it’s the catalyst. AI-driven personalization, IoT-enabled food prep and predictive analytics for inventory are changing how retailers approach foodservice. Automation streamlines operations, while mobile apps and kiosks make customer interactions seamless. These innovations not only improve efficiency but also empower retailers to scale without sacrificing quality.”

The numbers tell a compelling story, Grimes said. The global retail foodservice market is expected to grow by 6%-8% annually over the next five years, and retailers integrating unique dining experiences report up to 20% increases in foot traffic. The combination of convenience, quality and technology drives these gains, illustrating why the fusion of retail and foodservice is a game-changer.

“For retailers, the future lies in embracing this synergy. Whether it’s through AI-powered kiosks, app-based ordering or innovative partnerships, those who lean into the convergence of retail and foodservice will not just survive but thrive. This isn’t just about keeping up — it’s about setting the pace in a world where experience is the ultimate currency.”

Continuous evolution

In grocery and other channels, retail foodservice operations must continually evolve to meet changing demands, according to the North American Association of Food Equipment Manufacturers.

With rising generations taking hold, global uncertainty and increased digitalization, it’s becoming even more crucial for these operations to modernize and stay ahead of the curve.

“The retail foodservice industry faces challenges around changing customer preferences and purchase patterns, supply chain issues and technology. Customers crave healthier options, global flavors and convenient, ready-to-eat meal options, and grocery and convenience stores must strike the right balance between price and quality to meet consumer expectations in the age of value shopping.”

New technologies and automated solutions are helping retailers optimize efficiencies in addition to better forecasting and managing inventory, according to the association.

And while shoppers are back in stores and many retailers have found ways to navigate changing and hybrid (physical and digital) landscapes, the retail industry has three key hurdles ahead:

Changing preferences. There is a growing trend toward convenient and ready-to-eat meal options. Striking the right balance between price and quality is crucial to meeting these expectations.

Supply chain. To avoid overstock or low inventory and ensure consistent quality, develop strategies to manage inventory and maintain a reliable supply chain effectively.

Digitalization. Beyond investing in advanced technologies, it’s vital to prioritize training staff, ensuring data security and protecting customer privacy.

Customers are looking for fast, friendly food options like made-to-order (MTO) meals, meal kits and meal shortcuts, according to the association. Retailers should provide easy access to freshly prepared meals and ingredients with foodservice counters and a strategically designed floor plan.

To do so, retailers can offer pre-packaged entrees, sides, salads and desserts for easy pick-up or pre-order for consumers who want to assemble their meals without the hassle of prep. They can also stock pre-cooked vegetables, portioned proteins, seasonings and sauces. Accomplish it all using cook-chill tools, such as tumblers, compact blast chillers and sous vide equipment.

Adding large-format temperature-controlled display cases to show off meal solutions is another must. And if investing in upscale, merchandisable cases isn’t possible now, consider converting an unused self-service hot/cold bar to stock with pre-packaged goods.

Blurring the lines: lessons from across the pond 

Traditional boundaries between foodservice and retail are becoming increasingly blurred, according to a report from consumer research leader Circana.

The research, based on Circana’s comprehensive CREST data, reveals that European consumers spent 888 billion euros on food and beverages in the past year, with 37% of that dedicated to ‘immediate consumption’ options across both retail and foodservice channels.

The immediate consumption category includes food and drinks purchased for immediate use, like ready-to-eat meals and snacks such as sandwiches, salads, hot foods, and beverages, requiring no further preparation from store employees.

Notably, non-commercial segments within the foodservice industry, are gaining market share in this category, reshaping the competitive landscape as consumers increasingly turn to ready-to-eat options beyond traditional foodservice outlets.

As consumers increasingly seek convenience, ready-to-eat (RTE) options — ranging from pre-packaged salads and sandwiches to warmed meals like lasagna, paella, and roasted chicken — have expanded beyond restaurants and are now available through channels like supermarkets. convenience stores, and service stations.

Circana’s research shows that ready-to-eat meals purchased from retail stores once considered a minor option, have now emerged as significant competitors to commercial restaurants.

This shift is fueling growth for other channels including retailers, while traditional commercial restaurants (including full and quick-service restaurants) are losing ground, particularly in the post-pandemic environment where convenience and quick access to food are key drivers of consumer behavior.

Commercial restaurants saw their market share decline from 79% in 2021 to 77% by the end of June 2024, while other retail channels experienced growth, increasing from 21% to 23% during the same period.

“Consumers are no longer bound by traditional categories,” said Edurne Uranga, vice president of Foodservice Europe for Circana. “They make decisions based on convenience, value, and experience, whether that’s from a quick service restaurant (QSR) or a ready-to-eat section in a supermarket.”

The integration of retail and foodservice is rapidly evolving, with supermarkets now offering restaurant-quality meals in-store. Additionally, partnerships with brands like Starbucks and Costa Coffee are becoming common within retail locations. Other innovations include bakery vending, salad bars, and hot food lines, further blurring the lines between traditional retail and foodservice.

The growing demand for RTE options provides significant opportunities for both retailers and foodservice brands. Retailers are capitalizing on this trend by expanding their in-store foodservice offerings, with supermarket chains like Tesco and Mercadona leading the way in providing freshly prepared meals.

At the same time, commercial restaurants are exploring new ways to engage customers, including partnerships with retailers and the development of their own RTE product lines.