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IKEA Mulls Opening Its Restaurants Standalone And Independent Of Main Stores
By Yoon Sann Wong, 19 Apr 2017
Image via Shutterstock
One year after the first IKEA opened in Sweden in 1958, founder Ingvar Kamprad added in the brand’s now iconic restaurant to serve up simple and wholesome Scandinavian staples. Fast forward to 2017 and IKEA’s food business has become a majorly lucrative amenity for the brand.
“We’ve always called the meatballs ‘the best sofa-seller’,” says Gerd Diewald who runs IKEA’s food operation entity in the US.
Initially, IKEA simply thought of its food arm as a means of keeping customers in-store and feeding its hungry clientele. “…It’s hard to do business with hungry customers. When you feed them, they stay longer, they can talk about their [potential] purchases, and they make a decision without leaving the store. That was the thinking right at the beginning,” comments Diewald.
This perspective however, is shifting. IKEA’s food division, including the Swedish food market that supplies your take-home packs of Swedish meatballs plus jars of herring, has become one of the brand’s fastest growing segments. Now it’s time for the company to strategize its next move for the unexpected revenue generator.
The vision: standalone restaurants in city centers.
“This might sound odd, but it’s almost something we didn’t notice,” explains IKEA Food’s Managing Director Michael La Cour. Next to the company’s main home-goods business that raked in US$36.5 billion in revenue last year, the food arm might seem insignificant–but that’s where you’re wrong. “[W]hen I started putting the numbers into context of other food companies, suddenly I could see, well, it really is not that small,” adds La Cour. IKEA Food’s generated annual sales amounting approximately US$1.5 billion in 2013.
The service has made a mark for itself in more than just Swedish meatballs and lingonberry sauce. It’s aggressively reduced waste across its outlets, championed certified-sustainable seafood, and translated IKEA’s simplistic form plus sustainability into this culinary sector. IKEA’s restaurants tailor half of its menu in each country to the individual market, but one key competitive advantage remains the pricing.
“It’s an experience just going there, and that’s what people are looking for in a restaurant meal these days…more than that, what you get for your money is far superior to many other family-dining restaurants,” says Bonnie Riggs, a restaurant-industry analyst at NPD Group.
The design of IKEA’s restaurants further caters to various pockets of its customers. Children head to the ‘play area’, while adults who simply want to enjoy a hot cuppa joe settle in the lounge chairs or sofas. “All of our demographic groups intuitively migrate to the right area [for them],” says Diewald.
All these efforts have culminated into US$1.8 billion in sales in 2016, with 65 million diners a year spanning 48 countries. With a third of IKEA’s customers heading to its stores just for the food presents major opportunities for the retail giant.
Over the last two years, IKEA has launched pop-up restaurants in London, Paris, and Oslo. “The mere fact that we don’t need so many square feet to do a café or a restaurant makes it interesting by itself,” La Cour comments.
“I firmly believe there is potential. I hope in a few years our customers will be saying, ‘IKEA is a great place to eat—and, by the way, they also sell some furniture.’”
While the idea is worth contemplating, IKEA Food has officially clarified that such plans remain purely tentative.
“IKEA Food is continuously thinking of how to meet the growing interest in food among consumers and find ways to meet them where they are. While we have experimented with new ways of enjoying IKEA food–including through pick-up points and pop up restaurant events in London, Paris and Toronto–no decisions on standalone restaurants have been made at this time.”
Would you love to see IKEA Food’s branch out as independent restaurants? Perhaps it would mean traveling a shorter distance to get your meatballs or lingonberry sauce fix.
[via Fast Company, image via Shutterstock]
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