When trying to figure out if grocery delivery and meal kit services are worth the investment, Farm Boy co-CEO Jeff York uses basic math.
Just 2% of food is purchased online and that is expected to increase to 12% by 2023, he said. “But I like 100% math, so 100 minus 12 means 88% of business will still be done in stores.”
Rather than neglect the core consumer (the 98% shopping in store today), Farm Boy focuses on providing the traditional shopper with great service, great food, with fewer preservatives. “All that stuff that’s kind of boring but it’s really important to making money, that’s what we really concentrate on,” said York. “We’ll get into delivery and whatever happens once there’s a proven business model.”
Farm Boy still does most of its business around its hometown of Ottawa, and there just isn’t enough demand for delivery in that market, he said. However, that story could change as Farm Boy continues to grow within the Greater Toronto Area. The grocer recently opened a 20,000-sq.-ft. store in the city’s west end and plans to open another 12 to 15 locations in the GTA/Golden Horseshoe region within the next three years.
“I think there’s a real business case for getting the food to people in Toronto,” he said. “If you only did it in Toronto you could probably make money so we’re looking at different options right now.”
York was part of a panel discussion during Restaurants Canada’s annual trade show and conference in Toronto that explored a myriad of topics including how to cater to time-starved consumers, full-service dining options and technology.
When discussing mobile apps, Mark Cousineau, 7-Eleven’s national category manager food service, said they provide rich consumer data, but ROI can be difficult to measure. “Trying to understand what the key sales takeaway is from that area of the business is not always easy to access,” he said. “Where are we going with the sales from these mobile apps and how are we benefitting from it… I’m not sure if we’re all there quite yet.”
Tony Cammalleri, Longo’s director of culinary innovation also said trying to find the right piece of technology or application to reach and engage tech-savvy consumers is challenging given the sheer volume of choice out there. But, he added, one of the most important ways to create interest and demonstrate to consumers what you do best is through a content-rich website. “Business has changed in the last 10 years and if you don’t have a great website people don’t take you seriously.”
Asked what paid media (sponsored ads on social, pre roll on YouTube) Farm Boy uses to reach consumers online, York said he prefers not to throw money away. “A lot of money is being wasted in this sector, Walmart is blowing its brains out right now,” he said. “There’s so much money to waste [when it needs to be about] what’s relevant to the consumer.”
“Millennials don’t have any money. Baby boomers control life,” he added. “If you think you’re going to get a business based on millennials, good luck to you. Good luck to everyone chasing them.”