Meatball Hero

How furniture giant Ikea is driving unexpected growth by ramping up its food division.

- Jonathan Ringen

A year after the first Ikea store opened in Sweden in 1958, founder Ingvar Kamprad installed an amenity that would be recognizable to current-day shoppers worldwide, from Tempe, Arizona, to Wuxi, China: a sit-down restaurant with a small menu featuring wholesome Scandinavian staples. And for the next 50-plus years, Ikea management continued to think about its food operation pretty much the same way Kamprad did. “We’ve always called the meatballs ‘the best sofa-seller,’ ” says Gerd Diewald, who runs Ikea’s food operations in the U.S. “Because 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.”

But sometimes a company can find its next growth engine in surprising places, if it just looks at its business creatively enough. Over the past several years, Ikea’s food division—which also includes the Swedish Food Market (where you can buy everything from jars of herring to make-at-home versions of the restaurant menu)—has proved to be much more than just a tool to move more Vittsjö TV stands. By focusing on this formerly unloved division, and locking into prevailing trends around ethically sourced ingredients and healthier options, Ikea has turned food into one of its fastest-growing segments. The company is now considering the next phase of this unexpected revenue generator, and it might even expand into stand-alone cafés in city centers.