H-E-B leverages grocery arm for restaurant success
Rendering of H-E-B's Oaks Crossing restaurant at the Market at Stone Oak.
Whether it is because of competitive pressure, the need to differentiate itself or simply to test the waters, H-E-B is moving in on the restaurant business, opening more in-store eateries.
It has been a couple of months since the grocery retailer opened 3 Double-O Nine, its third casual-upscale dining concept for the chain. Two of which are located in H-E-B stores in the San Antonio area and one in Houston.
And these aren't just one-off ideas.
HOME OF THE DAY
H-E-B hired Randy Evans, a well-known chef in Houston, as their exclusive director/chef of restaurants. The grocer even moved him to its corporate offices in San Antonio so he could be more hands on in directing the company's plans to put restaurants in certain grocery locations.
The other factor in H-E-B's commitment to restaurant development is the chain's goal of operating six such outlets before the end of 2016. That means it will be opening three over the next 18 months, with the locations still under wraps.
It may seem like a head scratcher to some, especially since you don't typically hear, "Let's go to H-E-B for dinner!" all that often. However, there are a few components working in H-E-B's favor compared to other restaurateurs looking at opening a location.
For starters, H-E-B has unlimited access to supplies and already has vendor relations well under way. It has an entire grocery store — 50 in San Antonio, to be exact — at it's disposal, which undoubtedly takes a significant bite out of their operating costs.
Evans told the Houston Press this past February that prices for H-E-B's restaurants are lower than normal because, "That's the H-E-B buying power. They buy in such quantity they can get amazing deals on ingredients."
H-E-B also has customer loyalty down pat, with a solid reputation and plenty of marketing. Don't know about one of their new locations? Someone is sure to hear about it or see it within a short matter of time. There aren't any facts or figures for this, but I'm willing to bet that roughly 90 percent of San Antonio residents shop or visit H-E-B at least once a week. That's amazing publicity for a recently opened restaurant, and one that is a clear boost for business.
However, as with all new restaurants, there are some hiccups. For H-E-B, that appears to be service and quality. Yelp reviewers called 3 Double-O Nine a "rudderless ship," and warned "don't be in a rush to go." Another said the prices were too high for what they were given, and that service left something to be desired.
Those are all issues that have historically been worked out after a restaurant finds its groove, but when it comes to introducing its new "groceraunt" concept, H-E-B doesn't have as much time as other newcomers may have to prove themselves.
Here's a closer look at the menu and some of its prices, compared to other San Antonio restaurant options:
- Margherita pizza
- H-E-B: $10 for a 12-inch pizza
- Stonewerks: $13.95
- Classic Caesar salad
- H-E-B: $6.50 (proteins or extras come for an additional charge)
- Silo 1604: $6
- Soup of the day
- H-E-B: $3.50 for a cup
- Stonewerks: $5.95 for a cup
- Club sandwich (or some version thereof)
- H-E-B: $8
- Silo 1604: $8
- Classic burger
- H-E-B: $7.50
- Stonewerks: $10.95
- Cheesecake
- H-E-B: $6
- Paesano's 1604: $7.95
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