Supermarkets are out to capitalize on their perceived strengths. And research shows signs in the stores’ favor. Says Bonnie Riggs, restaurant-industry analyst at Port Washington, N.Y.-based market researcher NPD Group, consumers consistently rate supermarkets higher than restaurants not only in affordability, but also in product variety and availability of healthful options. Furthermore, according to NPD’s Consumer Reports on Eating Share Trends (CREST) study released in March, two important demographic groups—young adults and families with children younger than 18—significantly cut back on their dining-out occasions in 2008. Those with children made 3% fewer restaurant visits than they did in 2007, and visits by diners ages 18-24 sunk 9%, to 233 per person on average from 254 the previous year.

The good news for restaurants, however, is that Americans want to dine out. “One-third of adults are saying they’re not going out to eat as much as they would like,” says Hudson Riehle, senior vice president of research and information services for the National Restaurant Association, citing NRA data. And restaurants continue to best supermarkets in the areas of convenience and food quality, Riggs says.

By looking for opportunities in the messages to which consumers are responding and emphasizing their competitive strengths, restaurants can capture more market share from supermarkets. As the examples on the following pages demonstrate, many operators already have.

Affordability is key to supermarkets' new appeals to families.

“Part of the advantage [retail outlets] have over restaurants is consumers rate them very high for providing healthier options,” says Riggs. With everything from brown-rice sushi to bean and grain salads at the deli counter, supermarkets have something to offer customers with assorted dietary interests or concerns.

Yet the simple presence on a menu of healthy items beyond the standard side salad—dishes that are lower in calories, lower-cholesterol or lower-sodium as well as some meatless options—may help health-conscious consumers feel better about dining out. As R&I’s 2009 New American Diner Study reports, 26% of participants say they would be more likely to eat dinner at a restaurant on weekends if there were more healthful dishes on the menu.

KFC sought to boost its appeal with such diners with its April launch of Kentucky Grilled Chicken. “We heard from our consumers that they really wanted nonfried options at KFC,” says Laurie Schalow, a spokesperson for the Louisville, Ky.-based chain. “Moms, everyone in the family, even teenagers, just aren’t eating fried foods as often.” Before the grilled chicken’s introduction, she notes, for many consumers, “we no longer fit into their consideration set.”

What did fit? Supermarkets, with their hot, rotisserie-roasted chickens. In fact, 40.9% of participants in R&I’s New American Diner Study indicated that they’d bought a cooked whole chicken from a supermarket in 2008—that’s even more than bought packaged salads. “If I were a chicken specialty restaurant, my No. 1 competitor is the retail sector,” says Riggs.

Louisville-based KFC is counting on grilled chicken to draw health-conscious diners.

To get even more people to try the chicken, the chain initiated a major marketing campaign. The first promotion, this spring, promised one free piece for the asking; more than 4 million pieces of chicken were given away. A couple of weeks later, KFC partnered with Oprah Winfrey to offer a free grilled-chicken dinner to fans who downloaded a coupon from the TV host’s Web site. Demand was so overwhelming that KFC had to issue rain checks to customers who were turned away when the stores ran out of food.

“[For us] the message is 'Don’t just think about KFC as a special treat,’” says Schalow.

For health or budget reasons (or both), consumers want more portion choices. “[It’s] 'Give me a small portion and price it accordingly,’” Riggs says. In a supermarket, shoppers can buy only the ingredients—or, in the case of prepared foods, the poundage—they need to make the portions they want.

Carrollton, Texas-based T.G.I. Friday’s took the lead two years ago in targeting the growing group of consumers interested in eating less and spending less with its launch of the Right Portion, Right Price menu, consisting of smaller-size entrées priced from $6-$10. Other operators have followed suit: In April, Dallas-based Chili’s Grill & Bar introduced a 10 Under $7 menu of smaller-portion entrées, nachos and slider plates.

Supermarkets: the original (and still reigning) champions of meal customization.

Another reason consumers may perceive supermarkets as being more affordable is because of the type of discounts they offer. Specials on a broad range individual items allow people to create their own meal deals, picking and choosing items to suit their tastes, their budgets and the size of their dining party.

Restaurants, in contrast, often favor buy-in-bulk deals, requiring diners to order multiple (three pizzas for $5 each, for example) or like items (buy one entrée, get one half off) in order to score a discount. The problem is that such tactics don’t offer a value proposition for smaller dining parties looking for less food, and in the case of entrée-pair promotions, they don’t fit the trend of consumers increasingly opting to make a meal of smaller, shareable plates. (Small plates are No. 8 on the NRA’s 2009 Top 20 Trends list, as ranked by chefs.)

A few restaurants are changing the game and coming closest to what supermarkets now promote as “everyday values”: low, across-the-board pricing on a wide variety of highly popular options. Subway launched its $5 Footlong deal last year. And it was Friday’s again that fired a shot heard 'round the casual-dining world, when it announced that for the month of May, all sandwiches and salads would be priced at $5 (no purchase of a drink or additional food item necessary).

What ground-floor pricing will mean for a casual-dining chain like Friday’s in the long term remains to be seen: How will guests react and view the brand when prices head back up?

Until supermarkets introduce drive-thru windows or curbside delivery, they can’t match restaurants when it comes to convenience. A trip to the grocery store still often entails snaking through the parking lot in search of an empty spot, scouring store aisles, waiting at the deli counter and then waiting in a checkout lane. Plus, notes Riggs, even heat-and-eat and semi-prepared supermarket selections typically require a little at-home preparation. “And when I don’t want to cook, I don’t want to assemble, either,” she says.

Compare that with the ease that convenience-savvy restaurants provide through drive-thrus, curbside service and grab-and-go counters. Says NRA’s Riehle: “Fifty-five percent of adults say they enjoy going to grocery stores, versus 90% who say they enjoy going to restaurants.”

Thus, playing up—in ads and e-mails, on store signage and via social media—a restaurant’s unique combination of craveable menu items, convenient ordering options, and (when available) competitive deals can help ensure that when diners face a last-minute meal decision, they opt for the dining experience that they decisively prefer: going to a restaurant.