Young people are abandoning restaurants for an unexpected place

What does Whole Foods think millennials want? Lower prices and robots that make tea
What does Whole Foods think millennials want? Lower prices and robots that make tea

Millennials are giving rise to a new concept: the "grocerant."

The grocerant: a grocery store that offers fresh, restaurant-quality prepared foods.

More and more grocery stores are morphing into "grocerants" and devoting a larger part of their stores to prepared foods in a bid to attract more millennials.

Whole Foods' new chain of stores, called 365 by Whole Foods Markets, is a perfect example of this trend. Most of the store is devoted to fresh food buffets and a variety of in-store restaurants.

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The "grocerant" strategy is working, according to the industry research firm NPD Group.

"Restaurant-quality and fresh food, chef-driven menus, and in-store experiences have given rise to the grocerant and inspiration to millennials to visit and spend," NPD wrote in a recent report.

In-store dining and take-out of prepared foods from grocers has grown nearly 30% since 2008, and accounted for 2.4 billion foodservice visits and $10 billion of consumer spending in 2015, according to the report.

Grocerants get higher marks from consumers in terms of variety and healthy options, compared to fast-food restaurants, NPD reports. Grocery stores' prepared foods are also rated higher for freshness and quality, which are particularly important to millennials, the study found.

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"Many grocers now offer restaurant-quality food at a lower cost than full-service or some fast-casual restaurants," NPD notes. Grocers are also offering a wide variety of fresh foods in specialty categories such as Asian, seafood, Italian, Mexican, and barbecue.

A growing number of grocery stores are also offering dine-in seating for customers.

"Millennials' interest in the benefits and experience supermarket foodservice offers will continue to be strong over the next several years," said David Portalatin, vice president of industry analysis at NPD Group. "This forecast bodes well for food manufacturers and retailers who have their fingers on the pulse of what drives this generational group. Give the millennials what they want — fresh, healthier fare and a decent price —and they will come."

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