Kroger Testing Out Fee-Free Meal Delivery Service In Columbus

Dec 5, 2019

Kroger announced this week it’s getting into the meal delivery game.

Columbus is one of four test markets for Kroger Delivery Kitchen, which will bring prepared restaurant-style meals to customers’ doors with no delivery or service fee.

The announcement comes not long after GrubHub, one of the biggest players in the meal delivery space, announced disappointing third quarter earnings of just $1 million, compared to $22 million at the same time last year.

In a letter to investors, the company wrote it didn’t believe "that a company can generate significant profits on just the logistics component of the business."

But Garrick Brown, chief retail analyst at Cushman Wakefield, says that that may not be a concern for a grocery store, which can build a brand through this type of delivery.

“You can almost do this as a loss leader, as long as those consumers are also utilizing this with their loyalty club, to be roped more into the Kroger universe, to be buying their groceries through Kroger as well,” Brown says.

Plus the capacity and breadth of grocery stores means they can do more with delivery than just prepared meals.

“They have the capacity to combine where you’re not just getting prepared meals, you can also get your groceries as well, in sort of a one-shot exercise,” he says. “And usually the price points are a lot cheaper.”

Brown says grocery stores are trying to ride the wave of tech disruption that’s rippling through nearly every industry.

“A lot of this goes back to grocers trying to figure their way in the world of e-groceries,” he says. “And I think that’s where the challenge is for grocers.”