Grocers have been striving to tap into the growing trend of at-home eating by offering hot-and-ready meals, self-service stations and grab-and-go prepared foods. However, this still leaves a gap for those who crave preparing their own home-cooked meals, yet struggle with meal ideas and the labor of cooking. 

Startup grocer Marcellus Foods is targeting that middle ground by offering around 80 pre-prepared ingredients along with some grocery staples and personalized recipes that tie them together. Its omnichannel store, set to open in 2023 in Salt Lake City, will sell sliced, cubed, marinated and other value-added items that its staff has readied and packaged for shoppers. 

Eve Marcellus Cohen, a veteran of Shipt and Walmart who has closely researched consumer habits and who founded the company alongside her husband, professional prep cook Dana Berge, said Marcellus Foods’ approach can eliminate 85% of the time and effort of cooking from scratch.

“It's really that work, that labor, the effort of the cooking itself that needed a solution,” Cohen said. “And we didn't want people to have to sacrifice flexibility, customization and quality to save that time.” 

When it opens this spring, Marcellus Foods’ store will offer in-person shopping. But it’s focused on having shoppers order ahead via its app, either for curbside or in-store pickup. Delivery will not be an option for Marcellus shoppers. Having worked for years in the delivery sector, Cohen views pickup as more beneficial to customers and better for her company’s margins. 

Focus on flexibility

Marcellus’ prepped options include cooked grains, vegetables and proteins that are lightly seasoned to allow for more diversity in how the items can be prepared. All food prep will be done through what Cohen refers to as “human-scale food processing,” meaning the entire food preparation process will be carried out directly by Marcellus employees.

Once customers check out, the app sends them recipe options to follow based on the ingredients they purchased, maximizing the use of what’s in their cart.

To further this flexibility, Marcellus allows customers to either buy ingredients individually or in bundles that also come with a variety of recipe options. 

“The idea is that, if you have these basic building blocks that you know you like to eat and your family loves to eat, then you can add different elements here and there,” Cohen said.  

Buying pre-prepared ingredients alongside recipes isn’t an entirely new concept. Meal kit companies like HelloFresh and Blue Apron popularized this approach, and grocers like Trader Joe’s sell a wide range of value-added ingredients. But Marcellus Foods aims to make this process more local and customizable and offer more recipe options.

When curating a business plan and pinpointing a target market for Marcellus, Cohen discovered that 80% of women are the ones most responsible for meal prep in their household, according to the Pew Research Center. And, when speaking to potential customers, a majority of women expressed feeling guilt about not having time to cook during the day. 

“I can’t live in a society that makes women feel bad about themselves because they’re not cooking,” Cohen said. “That really became the impetus for me to figure out: ‘What could a solution look like?’” 

Women are not the only target consumers Marcellus Foods is looking to attract. With a quick shopping experience paired with a digital platform, Generation Z is predicted to be a key market once the first Marcellus location opens. 

Easing and speeding up the task of cooking is bound to draw in a younger generation, but Cohen believes that it is Marcellus’ growing sustainable edge that will entice Gen Z. Though the grocer will sell items from national CPG and packaged goods suppliers, it has made headway on securing regional relationships with small and mid-size growers in order to stock the store with “biodiverse” ingredients, Cohen said.

Cooking up a solution

Marcellus Foods was inspired by Cohen’s near decade in the food and grocery industry as well as a three-hour daily commute she experienced when living in San Francisco.

In 2013, Cohen began her grocery career at online grocer Good Eggs working as the local merchandise lead in the San Francisco Bay Area, building and onboarding the company’s initial marketplace.

From there, Cohen transferred over to Walmart’s online grocery pickup team, where the roots for Marcellus Foods took hold. Eight months into working for Walmart, Cohen’s in-depth research in meal planning took off. 

Cohen also struggled with meal prep and finding time to cook on a personal level. Commuting from Berkeley, where she lived at the time, to Walmart’s San Bruno offices left her and her husband stocking their fridge every Sunday with prepped ingredients so they had time to cook for themselves during the work week. 

Cohen went to work at Shipt from 2017 to 2019, founding its digital merchandising function and working with its CPG promotions business and partnerships. By the end of her time at Shipt, however, she was burnt out and went to work outside of the grocery industry. 

With the first location set to open in 2023, Cohen’s in-market expansion is set to begin in 2025 and 2026. This expansion includes bringing Marcellus Foods to new neighborhoods, maximizing its regional supply chains and moving into small retail stores for more real estate flexibility. From there, Cohen is “looking at 2027 as that kickoff for national expansion.”

Kroger has expanded its digital farmers market pilot partnership with Market Wagon, an online ordering and delivery service for items from local farmers and artisan food producers, to two more markets, Market Wagon co-founder and CEO Nick Carter said in an interview. 

Called Kroger Farmers Market, the pilot allows customers to place orders from a consolidated, scheduled delivery consisting of items from multiple local vendors, leaveraging Market Wagon’s supply chain infrastructure. The digital farmers market was expanded to the Knoxville Tennessee, and Columbus, Ohio, areas in January following a test in the Atlanta metropolitan area that began last June.

The idea for the Kroger tie-up came from one of Market Wagon’s advisors, who had formerly worked at Kroger and suggested the two companies talk about collaborating, Carter said.

The Kroger Farmer Market e-commerce marketplace launched in the summer to sell more than 1,150 items from local producers to customers within a 60-mile radius across 28 counties in the Atlanta metropolitan area. That test has shown that loyal Kroger customers are making repeat purchases through the Market Wagon pilot with the grocer, Carter said.

The pilot expansion areas were picked partly due to their different market sizes, allowing Market Wagon and Kroger to determine the success of a digital farmers market concept across small, medium and large metropolitan areas, Carter said. 

The Kroger pilot launched in the Knoxville area at the start of January, followed by the Columbus area last week, according to a Market Wagon blog post. In Columbus, the service is offering more than 1,400 products from more than 75 vendors to 2.4 million people across 14 counties. In Knoxville, the service offers more than 950 products from more than 60 vendors, according to Knox News. 

All three pilot locations are areas Market Wagon had already established supply chain operations as part of the more than 30 markets across the U.S. it services, Carter said. 

Market Wagon was started in 2016 by Carter, who grew up on a farm, worked as a tech entrepreneur in the food industry and become a farmer himself, and logistics expert Dan Brunner. Over the years, Market Wagon has become an online marketplace for more than 60,000 customers to shop local farmers and artisans. 

“We have a really unique grocery offering that complements — it doesn’t compete with — large grocers, like Kroger,” Carter said, noting that Market Wagon is providing differentiated products that are harder or impossible to find in supermarkets that customers care enough about to order separately. 

The Atlanta basket size with Kroger is typically around $65-$70 — about the same as Market Wagon has seen in its other markets and lower than a usual grocery shopping basket, which indicates Market Wagon’s assortment is supplemental, Carter said. 

Supermarket supply chains rely on uniformity and consistency across attributes like size, color and quantity, but local and niche suppliers don’t have the same rigid expectations, Carter said. Smaller vendors also often aren’t impacted by the national and international supply chain issues that can lead to higher prices or out-of-stocks with larger brands, he noted.

While the avian flu is causing high prices and out-of-stocks with eggs in traditional supermarket aisles, “I have 400 hens and we’ve got three acres of produce and my costs haven’t gone up,” Carter said, noting his eggs have been selling out. 

Kroger has still made efforts to boost its support of local and small brands, including hosting a Go Fresh & Local Supplier Accelerator in 2022 and in 2021. Other major grocers, including Sprouts Farmers Market, Whole Foods Market and Schnuck Markets, have also dialed up their local sourcing in recent years. 

In the future, Carter is hopeful the pilot can not only potentially expand into new markets for Market Wagon but also serve as a “developmental funnel” to help local vendors who want to scale to connect with Kroger’s buying teams. “Increasing the market access for small local farmers is why we do what we do,” he said.

United Natural Foods, Inc. (UNFI) said it will co-locate Square Roots’ vertical farming technology on-site at select UNFI distribution centers.

The first of these indoor farms is set to open in 2023 at UNFI’s facility in Prescott, Wisconsin. That farm will be approximately 20,000 square feet. 

The partnership with Square Roots allows UNFI to continue to expand its Better For All initiative, which aims to foster closer relationships between UNFI and its produce suppliers as well as create a more streamlined supply chain. 

Square Roots’ vertically-integrated indoor farming model can be set up almost anywhere “on a small footprint at quick speed,” the announcement states. The setup creates ideal conditions to grow fresh produce all year — including leafy greens, microgreens and herbs— that is then harvested, packaged and distributed within the Square Roots facility. 

In addition, Square Roots’ farms use less water than traditional field farms and its produce is pesticide-free. The company's facilities and greens are also Non-GMO Project verified and USDA Harmonized GAP+ Certified, the press release notes.

“Our unique approach to indoor farming is fully optimized to support forward-thinking, large-scale distribution partners like UNFI,” Tobias Peggs, Square Roots co-founder and CEO, said in the announcement. 

Indoor and vertical farming is a growing trend among grocers and other food retailers as they continue to seek efficient ways to offer consumers fresh produce.

With vertical and indoor farming growing in demand among food retailers, Square Roots’ technology has been enlisted beyond UNFI. In late March 2022, URB-E, a last-mile delivery provider, partnered with the indoor farming technology company to deliver Square Roots’ freshly grown and picked greens. 

Walmart invested in the $400 million Series E round by Plenty, another vertical farming company, back in January 2022. In September 2022, Plenty, which has a partnership with Albertsons, announced plans to build what it claims will be the world’s largest indoor farm.

Food waste prevention initiatives are becoming mainstream practices throughout the grocery industry. Since most grocers know they cannot take on this endeavor alone, partnerships are sparking between retailers and food banks, donation centers and third-party companies that find alternative uses for food otherwise wasted. 

Increasingly, grocery chains are turning to technology companies that help them connect consumers to discounted food that would otherwise go to waste. Companies like Albertsons, Sprouts, Kroger and others have linked up with companies like Afresh, Flashfood and Too Good To Go to sell off soon-to-expire goods while also boosting their sustainability credentials.

But food waste initiatives like these aren’t only accessible to chain grocers. Independent operators, who have fewer resources compared to large players and whose stores may not generate enough waste collectively to qualify for pickups from local organizations, are also plugging in with food waste technology systems. 

In the U.S., food waste is about 30-40% of the food supply and makes up the single largest material category in landfills, per U.S. Food and Drug Administration reports. Grocery stores produce around 16 billion pounds of waste annually, according to waste and recycling service provider RTS.

Selling surplus food by the bag full

Gourmet Garage, a four-location grocery store chain in New York City, faced a number of challenges kick-starting food waste initiatives, and it wasn’t until opening its newest location in the city’s West Village in April 2022 that the grocer discovered To Good To Go’s program, said Amanda Fischer, marketing, business development and outreach manager with Village Super Markets, which oversees the gourmet grocer. 

Too Good To Go, a business to consumer marketplace for surplus food based in Denmark, provides food retail partners a platform to sell unsold excess food through its mobile app, primarily consisting of bakery goods and ready-to-eat meals that are still of edible quality but cannot be sold the next day. Through the app, customers are notified when stores have available bags and confirm they will pick up the food and meals that same day for one-third the retailer’s price, said Tyler Simmons, head of U.S. key accounts at Too Good To Go. 

Too Good To Go has nearly 1,000 grocery partners in 13 active marketplaces across the U.S. and 45,000 grocery partners globally, Simmons said. 

 

Too Good To Go’s model has served Gourmet Garage’s smaller footprint well, Fischer said, with stores able to offer on average 10 bags of food each day that would have otherwise been discarded. The bags consist of excess fresh food items and ready-to-eat meals, Fischer said. Employees, who each go through a short training program showing them how to bag and manage the excess food, take 15 to 20 minutes each morning to pack the bags.

Prior to Too Good To Go, Gourmet Garage had tried going through donation centers and food banks to combat food waste. And while fellow Village Super Market banner ShopRite was able to find success with these methods, Gourmet Garage could not always meet the demand, oftentimes making pickups sporadic and inconsistent, Fischer said. 

“[Food rescue organizations] have minimums they need to fulfill. So they are not going to schedule a pickup if it’s not worth the time and effort as they travel around New York City,” Fischer said. “Some of our other [Village Super Market] stores might have enough for a big partner like City Harvest to provide pickups but that just wasn’t the case at Gourmet Garage.”

In late 2022, after a successful pilot run of the program at its West Village store, Gourmet Garage introduced Too Good To Go’s program at its other locations in Tribeca, Soho and Lincoln Center on 66th Street, Fischer said. The program has helped introduce new customers to Gourmet Garage’s stores, she noted.

“[The Too Good To Go partnership] really does allow us to have that consistency of we always know that we have an outlet for the food instead of the garbage,” Fischer said.

Consistency is [the missing] key

Like many grocery chains, Gourmet Garage needed a third-party company to successfully apply food waste initiatives but struggled with consistency from partners often used by larger grocers.

Smaller grocers often lack resources grocery chains with larger footprints can secure, Fischer said. But third-party companies are beginning to step in to bring grocers the technology needed to track the amount of food waste accumulated and how to best reduce it.

Divert, a food waste prevention company, is another example of these efforts being brought to grocers. The company collects food waste from nearly 5,400 U.S. retail stores and bring it to one of its 10 facilities to be sustainably broken down through aerobic digestion, according to CEO and Co-Founder Ryan Begin. In addition, Divert’s Internet of things (IoT) technology provides grocers with a waste data tracker system to track their food waste output, Begin said.

 

“What you want for these programs to work is it has to be simple,” Begin said. “You have to make it very simple for your partners. And then we also have to help them understand how they are going to reach their objectives as a business producing wasted food.”

Divert has implemented its IoT technology for larger grocers, like The Giant Company, as well as smaller grocery chains. For smaller, independent grocers, Begin noted that it may not be to their advantage to apply this technology to their stores because facility data is collected on a regional scale, and may not account for a smaller grocer’s footprint. 

As the practice becomes more widespread, however, and more facilities are introduced to different regions of the U.S., this can change, Begin said. 

​“No single retailer has the scale to solve this problem on their own,” Begin said. “Every [grocery partner] has their own wants and needs, but the baseline solution is universal and they understand that.”

Kroger has introduced on-demand sushi and floral delivery from its banner stores via DoorDash, according to an announcement from the grocer in mid-Decemer. Items availabel will include custom-wrapped Bloom Haus bouquets as well as an array of fresh sushi, such as rolls and combos, dumplings, poke and bottled sauces. 

The new service, which was piloted in select areas throughout fall 2022, will source items from over 900 of the grocer’s sushi locations and 1,600 of its floral locations, according to the press release. Orders for these items can be placed directly through the DoorDash app or website to be prepared and packaged by in-store sushi chefs and floral associates at Kroger stores. 

The grocer’s selections are also available through DoorDash’s membership program, DashPass, which offers members unlimited free delivery as well as reduced service fees on eligible orders over a minimum subtotal, the announcement notes. 

Thorughout 2022, both Kroger and DoorDash have worked to expand their business models.

This is Kroger’s latest initiative to expand delivery services and include more product variety. Last year, Kroger Delivery, its service powered by Ocado technology, entered a number of new areas, most recently including in the greater Detroit; Birmingham, Alabama; and the greater Nashville and Chicago metro areas. 

On the fresh front, the grocer has opened two Kitchen United Mix locations, one in Dallas and another in Houston, in 2022. These ghost kitchens are meant to bundle food from multiple brands into one pickup or delivery order. 

In an effort to keep up with the growing competition in the grocery delivery sector, DoorDash has continued to create partnerships with grocery brands. In its 2022 third-quarter earnings, the delivery company reported its convenience and grocery businesses, combined, grew 80% year-over-year in marketplace gross order value.

In September 2022, DoorDash grew its partnership with Raley’s to offer on-demand delivery services. DoorDash’s latest tie-ups also include same-day delivery services with BJ’s Wholesale Club and Dollar General, as well as an updated partnership with Schnuck Markets under which DoorDash is providing prepared foods delivery from more than two dozen of the grocer’s locations. 

Food Lion announced it is working with a hospital in Wilmington, North Carolina, to pilot a program designed to encourage people to develop healthy eating habits.

Over the course of the two-year collaboration, Food Lion and Novant Health New Hanover Regional Medical Center will distribute almost 3,000 boxes of nutritious food to eligible patients when they are discharged from the hospital.

The ‘food pharmacy’ program reflects growing interest among food retailers in playing a role in community-based initiatives to improve public health through nutrition. Food Lion is using the joint effort with Novant Health to draw people’s attention to the connection between grocery choices and their well-being.

Each of the packages of food the grocer is providing through the project will contain an assortment of shelf-stable goods such as milk, pasta with sauce, oatmeal, black beans, tuna and cans of sodium-free vegetables. In addition, the packages will include information about nutritious foods Food Lion sells and the nutrition labeling program used by the chain and other Ahold Delhaize-owned banners, Guiding Stars, according to the announcement.

Dietitians at New Hanover Regional Medical Center will determine people’s eligibility to receive the food pharmacy boxes based on whether they face food insecurity, defined by the USDA as a “limited or uncertain ability to acquire acceptable foods in socially acceptable ways.”

“This partnership with Novant Health is an opportunity to help our neighbors eat healthier by using food as medicine,” Matt Yates, vice president of brand strategy for Food Lion, said in a statement. “Through the food pharmacy program, we are providing our neighbors with nutritious food that helps them manage chronic illnesses and helps them thrive, setting them up for success.”

Food Lion said it has also donated the equivalent of 1,800 meals consisting of the same items included in the food pharmacy boxes to the Food Bank of Central and Eastern North Carolina, Wilmington branch.

The food pharmacy program Food Lion has launched in conjunction with New Hanover Regional Medical Center comes as the federal government steps up its efforts to end hunger and diet-related health problems in the United States. In September 2022, the White House hosted a conference to draw attention to the connection between what people eat and their health. The Biden Administration also published a national strategy that calls on the private sector to help achieve that mission.

Ahead of the conference, the Food Industry Association laid out a set of recommendations designed to spur federal support for programs that could make it easier for people to access and afford nutritious foods.

In a sign of just how hard inflation hit shoppers’ wallets in 2022, Sprouts Farmers Market’s otherwise unassuming $4.99 deli sandwiches became a viral sensation on social media.

In a little over a month’s time last summer, the #sproutssandwich hashtag on TikTok garnered nearly 10 million views as shoppers shared videos of their mealtime selections — oftentimes from their cars right after visiting a Sprouts store. The sandwiches, which are available as preset choices or made-to-order, are notable for their hefty size and for their generous helping of fresh ingredients, including bacon, avocado and provolone cheese.

One thrifty TikTok user noted that she likes to split the sandwich across two meals. Another broke open his sandwich, showing off its stack of ingredients for viewers. “They definitely do not shy away from stuffing this sandwich,” he said.

The viral trend surfaced in mid-July 2022 and grew particularly intense later that month and into early August, said Jeff Nachreiner, Sprouts’ director of deli sales and merchandising. The craze died down somewhat in the following weeks, but it had a significant impact on sales. He said unit sales of the sandwiches increased in the “double digits” after the viral trend began.

So what did Sprouts do to prepare its sandwiches for stardom and fan the flames of social media adoration? 

Nothing, said Nachreiner, except to stay stocked up on ingredients.

“It's been kind of a grassroots thing,” he said, noting that the most popular selection is a signature sandwich that includes turkey, provolone, lettuce, mustard and red onion on multigrain bread. “The videos got people talking and it has just grown like wildfire from there.”

Sprouts’ deli sandwich program dates back several years. In 2020, the company set the price at $4.99, thinking that could help draw people to the department, but unaware of just how much that would prove out two years down the line. 

Within the past year, Nachreiner and his team improved the quality of the bread, which includes sourdough, artisan roll and marble rye as options.

The fresh-made sandwiches are available at all Sprouts locations. At some stores, shoppers fill out an order form specifying their selections, and an associate makes the sandwich in the back-of-house area. Other stores feature a Subway-like sandwich bar where workers assemble each selection in front of the customer.

At a Sprouts store in the Seattle area, an island deli counter situated near the front of the store had an entire side dedicated to fresh-made sandwiches. The $4.99 selections include six bread options and eight protein options, including roast beef, ham and albacore tuna, along with several toppings. The department also advertised $4.99 ciabattas and wraps, and $5.99 “signature sandwiches” made with Boar’s Head meat.

A sign at the deli counter noted that shoppers can add chips and a bottled water to their order for $1 extra.

The sandwich surprise came as Sprouts was working to deepen its investments in prepared foods, offering more grab-and-go as well as fresh-made options to compete with restaurants. At the Seattle store, a case in front of the deli counter included packaged meals like street tacos and a Thai peanut chicken flatbread kit, while a display of fresh sushi sat nearby.

Prepared foods is one of the fastest-growing categories at Sprouts, Nachreiner said, and the company’s management is sizing up new opportunities in packaging, ingredients and other areas. The specialty grocer has reported underwhelming sales since the pandemic hit and is looking to improve its fortunes by offering better meal options, more niche products and a reinvigorated “selling culture” in its stores, CEO Jack Sinclair has said.

Grocers like Kroger and Albertsons, meanwhile, have noted that, with significantly more consumers now working from home than before the pandemic, they’re seeing a lot of consumers who are interested in grabbing a meal along with their groceries, and then taking it all home to eat. 

Nachreiner said Sprouts’ culinary team is currently looking at ways to update the toppings available in the sandwich program. Currently, the company’s delis incorporate various seasonal sandwich ingredients each quarter.

The biggest benefit of the viral trend, he said, has been its ability to boost traffic to stores and introduce a lot of first-time shoppers to Sprouts.

“When you watch some of these videos, you see people like, ‘Hey, I've never been to Sprouts but I've heard about this sandwich. I'm gonna go in and check it out,’” he said. “It's really opening us up to a segment of customer that we didn't have before.”