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.
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 11,000 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.
“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 90% 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.
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.
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.
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.
“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?”
