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The Spoon

Daily news and analysis about the food tech revolution

Kroger

How Kroger’s Data Arm is Bringing Food as Medicine to the Masses

Ever wonder how a company as huge as Kroger can possibly tap into a trend as focused on the individual as personalization? The short answer: lots and lots of data.

That’s why we’re so glad to have Brian Kathmann, Director of Commercial Platforms, Healthcare for Kroger’s data arm 84.51°, on board to speak at our food personalization summit Customize later this month. He and Bridget Wojciak, a nutrition expert for Kroger Health, will do a deep-dive into how the grocery giant is analyzing data to help consumers eat to meet their specific health goals using nutrition scores, food recommendations and more.

It’ll be a fascinating discussion into how big corporations are starting take concrete steps to capitalize on personalization, specifically within the food-as-medicine realm. (Hot tip: Use code SPOON15 to get 15 percent off your tickets.)

If you want a taste of what’s in store, check out our Q&A with Kathmann. Enjoy, and we’ll see you in New York!


Tell us a little bit about 84.51° (which is part of Kroger)
Our interesting name, 84.51°, represents the longitude of our headquarters in Cincinnati, but it’s also a nod to our longitudinal approach to understanding our customers and personalizing their experiences.

We excel at challenging convention and pushing beyond the limits of what’s comfortable with fearless hearts and limitless minds. Our goal is a relentless customer-first commitment; we put customers first in everything we do.

At 84.51° you guys are all about data. How do you collect and leverage consumer data to better optimize product offerings?
We look for ways to serve up unique and amazing customer experiences using cutting-edge science and technology. We gather and analyze data from more than 60 million U.S households across 35 states, resulting in meaningful insights and executions that drive business results.

Using a proprietary suite of tools and technology, we deliver unparalleled data science and predictive analytics to transform customer data into actionable knowledge. And we deliver personalized marketing strategies for our Kroger customers and more than 1,400 consumer-packaged-goods companies.

Food as medicine is a growing trend in the grocery space. How are you working to tap into that at 84.51° and, by extension, at Kroger?
A great example of how we’re (Kroger and 84.51) enabling customers to bring “Food as Medicine” to life is through the OptUp score and App. We know with nearly endless food options; it can be challenging for our customers to make healthy choices.

The science and personalization behind OptUp is to solve that customer problem and make it easier for our customers to shop. OptUp simplifies healthy shopping, by providing easy to use nutrition scoring and food recommendations based on what YOU buy.

OptUp enables users to also track their nutritional progress overtime, offer healthier coupons and incentives, and allow users to make wholesome choices for the entire family, right through the app, and soon – through our APIs to other partner platforms and Apps.

What do you think personalized food or drink will look like 5 years down the road?
A great question… if only I had a crystal ball! We know it will continuously evolve and must be unique to the individual, and personalized to their choices, their goals, on their time, and through their preferred channel. We will remain relentlessly customer first focused and utilize our science to meet them where they’re at AND make it easier for them to live healthier!

Kathmann will join Bridget Wojciak of Kroger Health on the Customize stage to do a case study on how the grocery giant is tapping into personalization. Get your ticket to join us (use code SPOON15 for 15 percent off).

Kroger Is Testing ‘Food as Medicine’ With Food Prescriptions for Customers

Kroger is testing a new concept where doctors can write food prescriptions their patients then fulfill at one of the grocery chain’s stores with the help of a Kroger Health professional, according to an article from Supermarket News.

The pilot launched last spring in Kroger’s hometown of Cincinnati, OH. In its current form, diabetes patients work with a local physician who makes dietary recommendations they can then take to a nutrition expert at a Kroger in Forest Park, OH. The prescription itself is actually just a shopping list of food items that have been tailored to the patient’s specific medical condition.

But as Bridget Wojciak, RDN/LD, a nutrition expert at Kroger, told Supermarket News, the program is much more comprehensive than a shopping list of food items. An in-store dietitian can make recommendations based not only on the food items on the prescription but also around the individual patient’s lifestyle, budget, and skill level when it comes to cooking. 

“We find that a lot of physicians give difficult-to-follow nutrition advice — along the lines of ‘You should improve your diet’ or ‘You should eat better.’ And that becomes very difficult for a patient to understand and implement,” she said, adding that a food prescription is a way to “fill the gap” between a doctor’s recommendations and the actual food customers will take home.

The program also involves using Kroger’s OptUP mobile app, which scores food items in the store based on their nutritional value and lets users track their progress when it comes to improving their diets over time. 

Kroger joins a growing number of companies across the food industry making products and services that address everything from lifestyle choices to dietary habits to chronic illness. Meal kit-like services, such as those from Epicured, are another tactic to getting healthier to consumers’ homes, as is prepared meal delivery from virtual restaurants that focus on food as medicine.

Food prescriptions filled at grocery stores provide a unique and arguably more enticing introduction to the food-as-medicine concept because they can be tailored to an individual’s needs and preferences when it comes to food, cooking, and dietary preferences.

For now, Kroger Health is focused on diabetes patients but could eventually expand to include other conditions, such as cancer and heart disease. And one can easily envision a future where Kroger is able to use its muscle in the grocery delivery area to fulfill food prescriptions and deliver the items to patients who may not be able to leave the house due to illness. 

Nor does the concept and Kroger Health have to be restricted to treating illness. Though rather a broad term, food as medicine can also be as much about preventative care as it is about treating existing illness and chronic disease. Kroger doesn’t yet offer prescriptions for those looking for more preventative food solutions. However, given the chain’s focus of late, which has included launching its own line of plant-based products and putting vertical farms in stores, that day is probably not too far off in the future.

Wojciak will be speaking at Customize, The Spoon’s upcoming daylong summit on food personalization, in just a few weeks in NYC. Grab your tickets to the event here.

Food Tech News: Nestlé’s Plant-based Partnerships and a Kroger Podcast

Happy winter weekend, all. Hopefully wherever you are has some fresh Snow, clear skies, or a fire in the fireplace. One thing it definitely has: some food tech news.

In this week’s roundup we have stories on Nestlé’s new plant-based partnerships, a fresh podcast from Kroger, and a personalized nutrition report. Enjoy!

Nestlé partners with Canadian plant-based ingredient makers
It looks like Nestlé has taken another step into the alternative protein space. This week the New York Times reported that the Swiss CPG company has teamed up with two Canadian plant-based ingredient manufacturers: Burcon and Merit Functional Foods. The deal will give Nestlé new resources to expand and improve its alternative protein products, such as the soy- and wheat-based Incredible burgers which are currently available in Europe.

Kroger unveils new podcast “Noshtalgia“
For those who love their podcasts with a side of groceries, there’s a new option to add to the listening queue. Kroger has launched a podcast called Noshtalgia which features stories of people sharing their food memories (h/t GroceryDive). Hosted by cookbook author and TV personality Danielle Kartes, the podcast is intended as a medium for people to share their favorite family recipes — and, ya know, promote a place to buy the ingredients for said recipes (cough, Kroger, cough). The first episode, “Poppy’s Waldorf Salad,” is already live wherever you get your podcasts.

Report indicates huge potential for personalized nutrition
This week USB released a report stating that personalized nutrition could generate annual revenues of $64 billion by 2040 (via CNBC). The report calls out big-name companies, like Uber and Amazon, who should be investing more in the space.

There’s a ton of buzz around this topic, which is why we’re organizing a food personalization summit in NYC next month! Called Customize, the event will feature speakers in CPG, grocery, restaurants, and more talking about how they’re harnessing personalization to create the future of food. If you’d like to join use code SPOON15 to get 15 percent off tickets!

Kroger Building Next Ocado Automated Fulfillment Center in Frederick, MD

Looks like grocery shoppers on the west coast hoping for an automated warehouse to fulfill their grocery orders will have to wait a little bit longer. Kroger announced today that its next Ocadao-style robot-powered fulfillment center will be in Frederick, MD.

Kroger is building 20 of these smart warehouses, but none so far have made it out west. Other cities getting automated fulfillment centers include Monroe, OH, Groveland, FL, Forest Park, GA, Dallas, TX, and Pleasant Prairie, WI. Frederick appears to be the vague “mid-Atlantic” location the company had previously announced.

These automated fulfillment centers use robotic totes on rails to assemble online grocery orders. Kroger, which is an investor in Ocado, is taking more of a standalone approach to automated grocery fulfillment, building out entirely new, separate facilities. Other retailers such as Albertsons are building out automated micro-fulfillment centers in the back of existing retail locations.

Online grocery shopping is still a small percentage of overall grocery shopping, but its growing. Automated fulfillment centers like the ones Kroger is building have the potential to boost online grocery’s slice of the pie by offering faster turnaround of online orders (and thus, create more orders).

All these systems are just coming online over the coming months, so it remains to be seen how people will engage with them. Additionally, we’ll have to see if there is a difference in convenience and shopper adoption between standalone facilities and in-store ones (or some combination of both).

Kroger shoppers living in Baltimore, Washington D.C. and Philadelphia being served by the new Frederick facility won’t actually be that far ahead of the west coast. The new warehouse won’t open until 24 months after groundbreaking.

Vertical Farms Will Become Key Parts of Your Grocery Store and Your Kitchen Cabinets in 2020

At this point we can expect vertical farming to play an important role in our future food system — one that goes beyond selling greens to upscale markets in gentrified urban neighborhoods. Exactly what that future role looks like is less certain as we move into 2020. Commercial-scale vertical farms, which grow millions of heads of greens in warehouses and shipping containers, still has a lot to prove in terms of economics and scalability.

While the industrial-scale model continues trying to prove itself in 2020, the place we may see the most compelling developments for vertical farming in the next year is actually in the consumer realm. E. coli outbreaks and bleached salad (among many other factors) have contributed to an uptick in consumer demand for fresher food that’s traveled fewer miles between the farm and the table. If the last year taught us anything, it’s that putting the farm is right next to your table, or at least at your local grocery retailer, is becoming a popular strategy for providing healthier, more traceable greens to consumers, and that trend will continue in 2020.

With startups, grocery stores, major appliance-makers, and others now exploring this area, some of these developments are already happening.

In your grocery store.

Many companies are now looking to shorten the supply chain between the farm and the consumer when it comes to produce. One way is to put the farm right in the grocery store. These aren’t massive facilities growing millions of heads of lettuce. Rather, they’re typically standalone, highly modular pods or units that can be set up right in the produce section. 

German startup InFarm highlighted this approach in 2019 when it partnered with Kroger to place units in 15 of the grocery retailers stores. The company also partnered with UK retailer Marks & Spencer for a similar venture in Britain. 

Another route is for farming startups to partner with major food distributors, as Square Roots has done by building farms near or on Gordon Food Service’s distribution centers. Gordon operates 175 of these across North America, and proximity to those facilities means Square Roots can get its greens distributed to a larger selection of grocery retailers.

In your kitchen cabinets. 

Indoor farms that fit in the home aren’t new. There are plenty of standalone, tabletop, or wall-mounted devices out there that let the average consumer grow greens year-round. What is new is that major appliance-makers are now exploring the possibilities of indoor farming as not another gadget for the kitchen but an integral part of that space’s design. 

We saw this recently when Miele acquired the assets to Agrilution, whose automated Plantcube farm is meant to be built right into the kitchen cabinetry. Just yesterday, LG announced it will be showing off its own in-kitchen smart farm at CES 2020 in a couple weeks.

These aren’t going to be cheap products. Plantcubes cost €2,979 (~$3,300 USD), and that doesn’t include the extra money tacked onto your energy bills each month for things like water and electricity. (LG hasn’t released pricing details yet.) Most likely, these in-cabinet farms will debut in new, single-family homes with ample amounts of space in the kitchen. As more appliance-makers develop products and team up with home retailers (IKEA, I’m looking at you), we’ll likely see the price point on these farms come down and the concept go a little more mainstream. 

Spoon Market Map: Ghost Kitchens in 2019

Just half a decade ago, the phrase “ghost kitchen” referred to restaurants that looked legit on Grubhub and Seamless but were actually digital fronts for unregulated kitchens. In other words, chicken tenders from what appeared to be a local restaurant might actually have been cooked in someone’s apartment.

Then the delivery boom went off, thanks largely to the growth of third-party services like Grubhub and DoorDash, and by the many digital channels through which customers could suddenly get food. Order tickets proliferated for restaurants, but so too did the stress around how to fulfill those orders without over-burdening the in-house kitchen staff.

The answer to the problem? Take the restaurant out of the kitchen.

In the last few years, restaurants have been moving many of their operations around delivery and to-go orders to dedicated kitchen spaces outside the main restaurant location. The name “ghost kitchen” has stuck around, but now it’s a health-department-friendly term for these spaces that act as hubs for off-premises orders.

But actually, there are many names nowadays for the concept: ghost kitchen, virtual kitchen, cloud kitchen, the (slightly nauseating) description “kitchen as a service.” All those phrases amount the same thing: a kitchen facility that exists solely for the purpose of helping restaurants cook and fulfill to-go orders and get them into the hands of delivery couriers. There is no dining room or front-of-house staff in a ghost kitchen, the tech-stack is more streamlined than that of a full-service restaurant, and, increasingly, the location is completely separate from a restaurant’s dine-in location(s). Now, too, there are also kitchens on (literal) wheels, which add yet-another piece of mobility to the business model. 

To help you navigate the evolving world of ghost kitchens, we’ve created a market map for your reference. This market map is intended to be a snapshot of the current ghost kitchen landscape in 2019. It’s not comprehensive, and we expect both it and the overall landscape to change drastically over the next 12 months. That means you can expect to see this map updated regularly. As always, we welcome suggestions for additional companies and players in this space.

Have suggestions? Drop us an email.

1. Kitchen Infrastructure Providers

The largest category in ghost kitchens right now, Kitchen Infrastructure Providers can be likened to cloud computing providers: they rent companies the space and tools needed to run a business, either as a flat-fee model for on a pay-as-you-go basis. 

Kitchen United, for example, charges a monthly membership fee that includes rent, equipment, storage, and services like dishwashing. Reef, which originally made a name for itself reinventing the concept of the parking garage, offers these things as well as direct partnerships with major third-party delivery companies like DoorDash and Postmates.   

Normally these facilities are large, warehouse-like buildings that hold multiple “restaurants” under a single roof. For large restaurant operators with multiple chains looking to fulfill extra demand brought on by delivery or test out new concepts without incurring too much risk, these are ideal.

Multi-unit chains can also use these spaces to reach customers in areas where they might not have a brick-and-mortar store. Chick-fil-A is widening its reach in the SF Bay Area by working out of DoorDash’s newly opened facility.

2. Restaurant-operated Kitchens

For some restaurants, running a ghost kitchen operation themselves makes more sense than teaming up with a third-party kitchen provider. This is often the case with smaller, independent restaurants, whose ghost kitchen might consist of nothing more than an area of the restaurant’s existing location(s) dedicated to fulfilling off-premises orders. Or it might apply to multi-unit chains who simply want to expand to new areas and don’t have the capital or inclination to deal with the burden of a full-service restaurant. Colombian chain Muy is one such company, having started as a dine-in restaurant before expanding its ghost kitchens to serve more areas of Latin America.

The most notable of all the companies in this category right now is Starbucks. In addition to building out “to-go” stores that exist solely for the purpose of fulfilling off-premises orders, the company has also partnered with Alibaba to turn parts of the latter’s Hema supermarkets into ghost kitchens in China.

The boundaries around this category are especially fluid. In other words, just because you operate your own ghost kitchen in one part of the country doesn’t mean you can’t team up with a third-party provider in another, as The Halal Guys and Chick-fil-A have done.

3. Virtual Restaurant Providers

This is where the lines really start to blur between restaurant, kitchen provider, and delivery company. Anyone can make a virtual restaurant, and as the category in our map shows, more than just restaurants are trying their hand at food concepts that can only be ordered through digital channels and are prepared in a ghost kitchen. Whole30, for example, is a diet concept better known for its cookbooks than its dealings with the restaurant industry. The folks behind that brand teamed up with Grubhub and restaurant company Lettuce Entertain You to create a virtual restaurant offering meals with Whole30-approved foods. 

On the other hand, a company like Keatz runs a network of virtual restaurants it houses beneath the roof of its own ghost kitchens. Taster, based out of France, creates native restaurant brands for food delivery companies like Uber Eats and Deliveroo. Food is cooked in Taster-run kitchens.

4. Mobile Kitchens

In slightly more its own category, companies like Ono Food Co. and Zume are creating robotic, self-contained kitchens on wheels that offer restaurant experiences that can be tailored to specific neighborhoods in a city and also plug into third-party delivery services.

Restaurants can also partner with these kitchens on wheels to expand their reach into new markets, as &Pizza has done by teaming up with Zume.

What’s Next for Ghost Kitchens

Ghost kitchens will become the norm for multi-unit chains. With off-premises orders expected to drive the majority of restaurant sales growth over the next decade, multi-unit brands (think Panera, Chipotle, etc.) will find ghost kitchens a cost-effective way to meet this demand without overburdening existing restaurants. The majority of them will rent space from kitchen infrastructure providers, as Chick-fil-A is currently doing with DoorDash. 

There will be an explosion of delivery-only brands. Since ghost kitchens provide a cheaper, faster way for food entrepreneurs and small restaurants alike to test-drive new concepts, we will see an influx of delivery- and pickup-only brands come out of these kitchens over the next year. Many will be born inside the walls of facilities like Kitchen United or CloudKitchens. Meanwhile, the number of virtual restaurant networks like that of Keatz will increase. 

Artificial Intelligence will be designed into the kitchen. AI is a really broad term that’s often misused. That fact aside, its presence in the restaurant industry is here to stay, and in ghost kitchens, it will prove itself valuable for everything from tracking ingredients to helping staff curb food waste. On the consumer end, we expect to see the technology more deeply integrated into the apps and websites from which customers order, improving recommendations and upselling opportunities.  

More non-restaurant food brands will launch virtual restaurants. In keeping with a trend recently made popular by Whole30 and Bon Apétit, food brands, diets, celebrity chefs, and other non-restaurant businesses will team up with third parties to launch delivery and pickup concepts. Grubhub and Uber Eats are two such third parties already doing this. Expect many more such partnerships — soon.

Bonus: The tech stack will get pared down. No front of house means no POS, right? Quite possibly. With less (or no) customer-facing technology like digital menu boards, self-order kiosks, and tabletop ordering, much of the restaurant tech on the market today becomes irrelevant in a ghost kitchen setting. As the folks at Reforming Retail noted recently, “under this scenario the POS is just an ordering node in the cloud that outputs your menu to a consumer and sends orders to your kitchen.”

That doesn’t mean restaurant tech is going by the wayside. Some ghost kitchens, like those of Muy, have a walkup option where customers order at kiosks onsite, and there will doubtless be new solutions created that are specifically for the ghost kitchen. But the tools of tomorrow’s ghost kitchen won’t look a thing like today’s bloated restaurant-management tech stack. For everyone involved, that’s a bonus.

Kroger Partners With Meal Delivery Service ClusterTruck to Launch Ghost Kitchen Operations

Kroger joins the growing list of non-restaurant food companies trying their hand at ghost kitchens and virtual restaurants. The grocery retailer announced today it has partnered with Indianapolis-based food delivery service ClusterTruck to launch multiple ghost kitchens that serve up delivery-only meals.

Through the partnership, ClusterTruck will sell its restaurant-quality meals via the Kroger Delivery Kitchen website. Customers can browse the service’s extensive menu, which covers considerably more food types and dietary preferences than many regular restaurants, place an order, and pay online, just as they would with any other food delivery service. From the looks of it, ClusterTruck has essentially taken its existing menu and placed it within the Kroger Delivery Kitchen shop, making it accessible to a wider number of potential customers.

That’s only one aspect of the partnership, though. As we wrote earlier this year, ClusterTruck, which has been operating virtual restaurants since 2015, controls the entire delivery stack of its business, from creating recipes and managing menus to building the software that powers the whole operation. It even employs its own fleet of drivers. The service will bring all of these elements to the new ghost kitchen operation with Kroger, who, as mentioned above, is basically just providing the virtual storefront.

The partnership will launch with four kitchens, one in each of the following cities: Carmel, Indiana; Indianapolis, Indiana; Columbus, Ohio; and Denver, Colorado.

Customers in delivery zones for Carmel, Indianapolis, and Columbus can now go to KrogerDeliveryKitchen.com to browse menus and place orders online. In Denver, where the operation is being handled by Kroger subsidiary King Scoopers, customers access the service through KingScoopersDelivery.com.

Whether Kroger and ClusterTruck will expand this operation to other U.S. cities remains to be seen. We have reached out to ClusterTruck and will update this post with more details as they arrive.

While the partnership is a high-profile one for a regional company like ClusterTruck, which is available mostly in the Midwest at this point, it’s also a smart move for Kroger. The concept of operating virtual restaurants out of ghost kitchens appeals nowadays to not just restaurants but also lifestyle brands, diet concepts, and celebrity chefs. Grocery stores were bound to follow at some point.

In fact, Kroger isn’t even the first supermarket chain to dabble in this area of the food industry. In China, Starbucks is operating ghost kitchens out of Alibaba’s Heme supermarkets as a way to fulfill more delivery orders. Expect more grocery store chains to follow with similar moves soon.

Kroger Partners with Infarm to Grow Greens in Grocery Stores

Kroger announced today that it has partnered with Berlin-based Infarm to install modular, indoor vertical farms in some of its grocery stores.

According to the press release, the deal will place Infarm units at 15 of Kroger’s QFC stores, starting with two locations this month in Bellevue and Kirkland, Washington.

Infarm creates high-tech pods that can be installed in locations like grocery stores or restaurants. These pods use a combination of hydroponics and cloud-connected software to monitor growing elements like light, air, nutrients, etc. Right now, Infarm units can grow leafy greens like lettuce and a variety of herbs.

The promise of indoor vertical farms like Infarm’s is reducing the environmental footprint of produce by eliminating the need for transportation. This proximity also translates to fresher food for the consumer as it’s picked on-site.

That all sounds great, but as my colleague Jenn Marston wrote recently, the promise of vertical farming has yet to pay off:

As an industry, vertical farming has yet to prove itself as an environmentally and economically efficient piece of the agriculture system, and along with the hype are more and more stories about complications or outright closures of vertical farms. Already, a company called FarmedHere shut down in 2017, Plantagon went bankrupt in March of 2019, and just recently, MIT halted work on its controversial Open Agriculture Initiative project after reportedly exaggerating results of its vertical farming experiments.

Those disappointments, however, were around larger scale vertical farms. Perhaps Infarm, with its smaller, in-store approach can succeed where others have failed.

Infarm continues to, well plow ahead. The company raised a $100 million Series B round earlier this year, and announced a partnership to bring its vertical farm pods to Marks and Spencer stores in the U.K.

Bellevue and Kirkland aren’t that far from The Spoon HQ, so you can expect one of us to make the trip and pick some in-store produce soon.

Kroger Launches Own Line of Plant-Based Meat and Dairy

If you’re shopping at Kroger, you have a plethora of plant-based meat and dairy options to choose from. Today the retailer announced that this fall, consumers will have one more — this one coming from Kroger itself.

At the Good Food Conference in San Francisco today Gil Phipps, Kroger’s Vice President for Private Brands, announced that the Cincinnati-based retailer would be rolling out a new plant-based line under its Simple Truth brand. This will make Kroger one of the largest retailers to introduce its own branded line of meatless meats.

Photo: Kroger

The grocery chain’s new product line goes far beyond just burgers and sausages (though it’ll have those, too). The Simple Truth Plant Based line will also include pasta sauces, cookie dough, deli slices and creamy dips, all based around pea protein.

The Simple Truth Plant Based line will debut at 1,800 Kroger stores this fall with new products arriving every month. Pricing details have not been disclosed but presumably the retailer will try to undercut other animal alternative products already on its shelves.

If Kroger’s new line proves popular — and based off of rising consumer demand for plant-based options everywhere and anywhere, I’m guessing it will be — you can bet we’ll see a lot more retailers developing their own alternative protein brands.

Kroger Looks to Build Next Robotic Warehouse in Dallas, Texas

Kroger wants to build its next Ocado-powered robotic smart warehouse in Dallas, TX. The plans aren’t finalized, and as the Dallas News reported:

The Cincinnati-based grocer will ask the Dallas City Council on Wednesday for $5.7 million: 10-year and five-year property and business personal property tax abatements totaling $3.7 million, and $2 million from 2012 bond money designated for economic development in southern Dallas, according to the city’s meeting agenda.

Kroger confirmed with the Dallas News that it is working with the Dallas city council on the approval process.

Kroger has plans to build 20 of these automated fulfillment centers, or “sheds” as the grocer calls them, and Dallas would be the fifth announced location, joining, Monroe, OH, Groveland, FL, Forest Park, GA and one unspecified in the Mid-Atlantic region.

These smart warehouses use technology from UK-based Ocado (in which Kroger is an investor) and combine robots and logistical software to automate fulfillment of online grocery orders. The automated system uses a series of totes on rails to shuttle around a grid system, picking up items and assembling them for orders.

Though the vast majority of Americans have still never bought their groceries online, the number of people who do is steadily growing, and retailers like Kroger are building out the infrastructure now for when it (eventually) becomes mainstream. Kroger, in particular is investing in an online ordering future, as my colleague, Jenn Marston wrote about Kroger’s Q1 earnings report in June:

[Kroger’s] digital sales grew 42 percent over the quarter, making delivery and/or pickup options available to 93 percent of Kroger’s customers. Online grocery delivery is now available at 2,126 Kroger locations and pickup at 1,685 locations. The company plans to have those options available to “everyone in America” by the end of this year…

But Kroger rivals aren’t sitting still. Walmart is testing robotic fulfillment, launching a grocery delivery subscription service and experimenting with in-home delivery. Albertsons and Ahold Delhaize are testing their own robotic fulfillment solutions, too. Given the competition, Kroger has to push its own innovation efforts. For example, just a few hours south of Dallas, down in Houston, Kroger is experimenting with self-driving delivery vehicles.

At some point, Kroger will connect the automated warehouses with the automated vehicles for round the clock delivery to get you the groceries you want when you want them.

More Walgreens to Get Kroger Grocery Sections

Kroger and Walgreens announced today that they will expand their joint retail pilot program into Knoxville, TN. The program, which sees select Walgreens drug stores selling Kroger groceries, started in October of last year in northern Kentucky.

The program will begin this fall in 35 Walgreens stores in Knoxville, and according to the press release:

The assortment will vary by store and can include fresh meat, produce and dairy, frozen foods, shelf-stable products and Home Chef meal solutions to provide customers with a fill-in grocery shopping experience. Most locations will feature a full Kroger Express assortment, with up to 2,700 products, and other stores, on average, will offer 2,300 products.

Additionally, the press release said that most locations will accommodate Kroger Pickup, which means orders placed online can be picked up curbside by customers.

It’s also worth noting that Home Chef was name-checked in today’s announcement. The Kroger-owned Home Chef meal kits were introduced at Walgreens in December last year. At that time, the two companies announced they would roll out Home Chef meal kits to the stores in the Kentucky pilot, as well as 65 Walgreens in the Chicago area.

The evolution of meal kits is something we’ve been following at The Spoon, as they have migrated from mail order to retail, including non-traditional food outlets like drug stores. The fact that Kroger mentioned Home Chef specifically seems to indicate that sales of meal kits at Walgreens are robust enough to keep expanding their availability.

Between retail experiments like this one with Walgreens, building out robot warehouses and testing self-driving vehicles, Kroger’s willingness to try just about anything to get you groceries is the main reason we added them to our Food Tech 25: Twenty Five Companies Creating the Future of Food in 2019 list this year.

Blue Apron Ends Its Jet.com Partnership to Focus on Its ‘Core’ Business

Meal kit company Blue Apron announced this week it is terminating its partnership with e-commerce site Jet.com.

On its August 6 Q2 2019 earnings call, Blue Apron CEO Linda Findley Kozlowski said the company needed to focus on its core business, which is its direct-to-consumer sales of meal kits.

“We have not kept up with the ever evolving needs and preferences of our customers over the past couple of years, and we are behind it,” Kozlowski said on the call, adding that part of the reason for that is because the company “redirected attention of way from innovating in our core offering as we tested alternative distribution channels for the past year and a half.”

Blue Apron made its meal kits available for delivery via the Walmart subsidiary Jet.com in 2018 in NYC. At the time, the company appeared to be looking for ways to revitalize its struggling business through third-party sales channels (the company sold meal kits for a time at Costco stores, too).

But based on this week’s call, that move appears to have been a distraction, and Blue Apron seems to believe stepping away from these third-party sales channels and tapping “unrealized opportunities” within its core business model is the place to invest time and resources at the moment.

To that end Kozlowski outlined a new strategy on the call for the company’s future that includes focusing on fresh food, offering more convenience and flexibility in terms of menu options, making Blue Apron’s various digital touchpoints easier to use, and increasing marketing efforts.

But even if Blue Apron is able to pull its subscription-model business back on track, the company’s long-term viability is still uncertain. Right now, meal kits only account for 21.9 percent of online grocery services used in 2019. NPD recently reported that 93 million adults in the U.S. want to try a meal kit, but the same research also highlighted a shift away from traditional dinner-only mail-order meal kits towards ones that can be found in retail stores and/or cater to other eating times, such as lunch and snacks.

Some meal kit companies have already responded to these trends: Kroger and Home Chef started piloting new meal offerings like “heat and eat” and lunch options, which they sell in Kroger stores. Sun Basket, too, expanded its options to include breakfast, lunch, and snacks, though the company remains a direct-to-consumer subscription service like Blue Apron.

Meanwhile, Blue Apron itself has always had an issue with customer churn, partly because its kits tend to be expensive and time consuming, even for people who love to cook. That means what the company winds up offering customers in terms of more flexibility and convenience in the future will surely give an idea of how successful the company’s renewed focus on its core business will be.