The Kroger Co., which has long expressed a desire to capture not only a greater percentage of grocery sales, but a greater percentage of the meals their shoppers consume, is taking another step in that direction through an expanded partnership shining a bright light on so-called “dark kitchens.”
The Cincinnati-based grocer and ClusterTruck, the Indianapolis startup using proprietary software to engineer prep and delivery of fresh-cooked meals quickly and efficiently, said they would establish 1,000-square-foot prep kitchens in two existing Kroger stores, a move that would put new menu options in front of in-store shoppers while offering an alternative to on-demand restaurant options for pickup or delivery. The companies first began working together late last year on a co-branded meal-delivery program prepared in certain ClusterTruck commissaries and promoted online and in apps only. (A launch market in Denver, co-branded with King Soopers, appears to have been discontinued).
These experiments reflect a vision of using supermarkets already close to consumers to grab a greater share of the meals they consume—and has been accelerated by changes in consumer habits that came along with the pandemic, officials say.
“Kroger remains focused on providing our customers with fresh food and experiences enabled by industry-leading insights and transformative technology,” Dan De La Rosa, Kroger’s group VP of fresh merchandising, said in a release. “The new on-premise kitchen, in partnership with ClusterTruck, is an innovation that streamlines ordering, preparation and delivery, supporting Kroger as we meet the sustained customer demand for quick, fresh restaurant-quality meals, especially as we navigate an unprecedented health crisis that has affected every aspect of our lives, including mealtime.”
A Kroger spokesperson added: “On-demand ordering has shown demonstrable traction with customers and will only continue growing in popularity with the changing restaurant landscape. The COVID-19 pandemic has only served to accelerate the demand for fresh meals available on-demand, as families and individuals are balancing multiple responsibilities such as working from home and remote education. Through the partnership, it’s one way we can meet these changing customer needs through innovation.”
A ClusterTruck kitchen is now open in a Kroger store in Fishers, Ind., near Indianapolis (9799 E. 116th St.). A second is scheduled to open later this year in a Kroger Marketplace store in Dublin, Ohio (7625 Sawmill Road), near Columbus. Photos of the Fishers unit show a delivery window onto the store floor beneath a massive sign saying “We Fixed Delivery” alongside ClutserTruck’s winged-food-truck logo.
The companies said ClusterTruck’s systematic approach to meal delivery allows the company to ensure all orders are delivered to the customer within just 7 minutes of preparation—and on average, less than 30 minutes of ordering. The combination of ClusterTruck’s innovative technology platform, optimization of meal delivery and launch at Kroger stores has the potential to create what the companies called “a new and more sustainable model.”
“ClusterTruck combines leading software, high-quality ingredients, and delicious variety to elevate the prepared food delivery experience,” said Chris Baggott, ClusterTruck co-founder and CEO. “As the prepared food delivery category continues to explode, we’re thrilled to play such a pivotal role in Kroger’s fresh and forward-thinking meal delivery strategy.”
In an interview with WGB earlier this year, Baggot noted the partnership with grocery stores and kitchens had strong potential for expansion “because they have existing and often underutilized kitchens. Kroger has 2,800 locations already. … Preexisting kitchens would really accelerate that goal [of expansion].”
One point of difference between ClusterTruck and other courier delivery models in the space, Baggot added, are proprietary software algorithms designed to get contract drivers more jobs per hour than existing couriers in the space, lowering relative delivery costs, giving drivers better opportunities to earn, and supporting faster delivery.
The expansion of Kroger’s relationship with ClusterTruck reflects the retailer’s ongoing investments in providing a variety of prepared fresh food options and creating a seamless experience for customers. Kroger experienced a 127% digital sales lift in second quarter 2020, as customers continued to use digital ordering options, including pickup, delivery, and ship to home.
Kroger executives have often spoken of opportunity beyond supermarkets as an area for growth, noting that a fragmented restaurant space—which until the pandemic came along, consumed as much U.S. consumer spending as retail food stores—provided a big opportunity to win share. In recent years Kroger has experimented with opening its own restaurants and acquiring the online meal-kit company Home Chef to support that vision.