BATTLING THE ELEMENTS

ATLANTA -- Here in the metropolitan area that is hosting the 1996 Olympic Games, athletes are getting set to capture medals -- and supermarkets are looking to win customers with meal solutions.But it's the supermarkets that are already facing tough competition from far-flung rivals.Atlanta provides a handy microcosm of how competition for the take-home meals business is broadening far beyond the grocer's

ATLANTA -- Here in the metropolitan area that is hosting the 1996 Olympic Games, athletes are getting set to capture medals -- and supermarkets are looking to win customers with meal solutions.

But it's the supermarkets that are already facing tough competition from far-flung rivals.

Atlanta provides a handy microcosm of how competition for the take-home meals business is broadening far beyond the grocer's deli department. Retailers here are going head-to-head with strong opponents from other industries for the opportunity to provide fresh, convenient meals.

Mid-scale restaurants here are aggressively gearing up for takeout, for example.

And there's also an especially large variety of alternate sites for quick-service restaurants in this burgeoning metro region. A locally beloved chicken chain -- Mrs. Winner's Chicken & Biscuits -- has an up-front unit inside a Home Depot superstore, situated across the road from a Publix Super Markets unit.

Just a few miles away, there's a McDonald's in a Wal-Mart; and close by there's another one in a Texaco station. Directly across the street from that latter combo, Burger King is linking up with an Exxon station.

This spring The OK Cafe, a popular family restaurant here that had dabbled in takeout, created a separate full takeout area and named it the OK Take-Out Cafe. It features dedicated parking and a separate entrance. Within walking distance of an A&P, the cafe offers a large array of chilled food priced by the pound, salad-bar-style. It even sells grocery essentials such as milk, bread and fruit. Meanwhile, The Buckhead Restaurant Group's Pano's Food Shop, a retail specialty store devoted to fresh prepared foods to go, is in the midst of a major expansion that will at least double its 1,300 square feet and its inventory of to-go selections. Tori Stoner, general manager of Pano's, said she's seen tremendous growth in takeout prepared foods this past year, at Pano's and at other restaurants and supermarkets in the area. That's what has spurred expansion at Pano's, she added.

A trendy restaurant here, Indigo's, has an adjoining takeout restaurant called Indigo's Out-To-Go that has become very popular recently, local sources said.

It's a dizzying array of food-service oriented competitors, and presents local grocers with a formidable challenge for the consumer food dollar.

"If supermarkets don't see these alternate sources for takeout meals as competition, they're sleeping," said consultant Ira Blumenthal, president of Co-Opportunities, a business development and consulting firm here that works primarily with the food-service industry.

Stoner said she considers nearby supermarkets with top-notch deli/food-service departments competition for Pano's. But do the supermarkets notice places like Pano's as competition?

Some here might be noticing. At least, some chains in this market are spotlighting prepared foods more than ever -- chilled as well as served hot, and any combo of deli items that could constitute home meal replacement.

Some operators take a low-price stance with meal deals as well as with traditional prepared foods, while others are going up the scale with gourmet items and on-site theater such as made-to-order salad stations.

One local industry source said that, even though they may want grits and mashed potatoes as well as roasted peppers, consumers here are as sophisticated and in a hurry as those in any U.S. metro area. He also said the competition between supermarkets here is fierce.

"This market is so fast-paced and competitive, there's never a dull moment. But if there's one thing that can give you an edge, it's the deli," the source said.

In terms of intramural competition, the old guard here -- consisting of Kroger and Winn-Dixie -- is being given a run for its money by the likes of Publix Super Markets, Lakeland, Fla.; and Harris Teeter, Charlotte, N.C. The latter two are relative newcomers to the market and are flaunting their freshly prepared foods and shaking up the game, industry observers told SN.

"In just a little more than two years, Publix has grabbed the second biggest piece of the market, pushing Winn-Dixie to third place," said one local industry observer. "And Harris Teeter, with only two stores here right now, has made its presence felt. They've both helped raise the bar in the deli in all the chains," he added.

Harris-Teeter Trains To Reach Peak Form

Harris Teeter makes no bones about accelerating its own pace in deli to solve consumers' meal dilemmas.

"We ran focus groups to find out what our customers wanted us to do during the Olympics and they told us clearly that they want us to provide meals," said Craig McKenzie, Harris Teeter operations manager, Region VII. SN interviewed McKenzie at Harris Teeter's Brookhaven store in Buckhead.

Already, Harris Teeter's two stores here do considerable volume, with their chef-prepared entrees and salads racking up sales 6% to 10% above stores in Raleigh and Charlotte, N.C., which have the next highest sales in those items.

But the chain expects the Olympics to push sales of its entrees and salads up at least two and a half times the current volume, said McKenzie.

"You won't be able to get into a restaurant during the Olympics. Everything's going to be packed. And this store right here will do particularly well because there's a MARTA [Atlanta's rapid transit system] station right out there," McKenzie said, pointing toward the store's parking lot.

The chain will add more ethnic items to its deli mix for the Olympic weeks and will bundle entrees and side dishes into meals for grab-and-go cases.

It will also bring in more refrigerated cases for self-service meals and sandwiches, McKenzie added. The cases will not displace anything, but will be added in the aisles. Ten to 15 additional associates are scheduled in the deli food-service department at the Brookhaven store during the Olympics, he said.

Harris Teeter's meal push will not end with the Olympics, McKenzie said. "We recognize that it won't be a typical test period. So we'll see how it does in the weeks after everything has settled down," he said. Bundling together meals to go is seen by the chain as a natural progression of its chef's program. The program features a huge array of store-prepared items, from salmon in a crust to rare roast beef, roasted vegetables and a whole roster of other entrees and vegetables, all merchandised attractively on large oval-shaped platters in the service case. Some of the products are also sold self-service in individual-portion containers.

The prepared entrees, sides and desserts currently account for 17% of total store sales, a store-level source told SN.

Harris Teeter is highly regarded locally for its mouth-watering merchandising of fresh, prepared foods, local observers said.

"I personally think that Harris Teeter is doing as good a job as anybody in Atlanta when it comes to home meal replacement," one of SN's sources said.

A local consumer said Harris Teeter is the store she thinks of when she thinks of picking up ready-to-eat food to take home after work.

"It's a fresh food format. The deli with all the chef-prepared foods is very, very appealing," she said.

Kroger Goes for Branded

Meanwhile, Kroger is so ensconced in the Atlanta market that the banner has just about become synonymous with "supermarket" in many consumers' minds, said an industry source.

"Considering what their market share is and the quality of some of their newer stores, they're not where I'd think they would be by now in terms of meal replacement. They seem to be struggling to get a handle on what they should be doing in this market," the source said.

Indeed, more than any other store in the area, Kroger seems to run the gamut here from not paying much attention to prepared foods in some units to its Alpharetta store, which definitely had meal solution elements in place.

Some stores, such as one on Piedmont Road in the middle of Buckhead, seem to have let deli slide down on the priority scale. The hot food program was mainly fried and rotisserie chicken, with a seating area tucked away, much as it is in the chain's older, more traditional formats. That is downsized from a couple of years ago when the deli was more upscale and even offered sushi for a short time, according to a local source.

By contrast, a Kroger unit in Alpharetta, about 15 minutes north, features a deli/food-service department that looks up-to-the-minute and exciting.

The anchor is a branded element, a Chick-Fil-A counter. Chick-Fil-A, a quick-service chicken restaurant chain based here, has leased space in several Kroger units in the market. In the Alpharetta store, Chick-Fil-A is paired with Great Panda, a Kroger-concept Chinese food program.

At the Great Panda counter, the "restaurant" quality is enhanced by a huge, backlit color photo of plates of Chinese food.

Consultant Ira Blumenthal said that's the type of graphic tool a retailer can use to quickly tell consumers, "Hey, we have meals here."

He also pointed out that this Kroger store could probably boost sales of chilled entrees and salads with more signs about meals, as could many other stores in the market.

At the Alpharetta Kroger, for example, a 16-foot refrigerated case with a large selection of chilled entrees and sides was set at an angle adjacent to the Great Panda station.

Whole meat loaves, $3.99 each, were attractively displayed in that case. So were chicken pot pies, meatballs, lasagna, quiches, and some side dishes such as mashed potatoes and baked beans. The selection was clearly "comfort" food to put on the dinner table.

But no signs over the case alerted customers about what was there. Simple star bursts using "dinner" or "meals" could have drawn customers to the case, Blumenthal said.

"If supermarkets are going to be successful selling meals they're going to have to get away from blackboards and paper plates that say 'pizza' stuck on the wall. They've got to go to color photography, like the restaurants do," he said. Another local source agreed. "When consumers go into a supermarket, they don't expect to find meals to take out, so you have to tell them they're available, actually draw them to the case."

At the Alpharetta Kroger store, a huge island case just across from the Chick-Fil-A station displayed store-made pizzas, and beverages were available from self-service cases nearby. In other Kroger stores that SN visited, the deli/food-service departments were anchored by branded quick-service restaurants such as Popeyes Chicken & Biscuits, a locally based restaurant chain, and Schlotzsky's Deli, an Austin, Texas-based national chain of freestanding delis.

Publix, Bruno's On Their Marks

Other chains are more obviously concentrating on signature meals in their stores here.

Publix chose June to introduce a whole new line of chilled salads, sides and some center-of-the-plate items. Called "Quick Takes," the takeout products were prominently displayed in all the Publix units SN visited, and, at one store, customers were being offered tastes of them at a demo stand. In stores, the typical merchandising was about 25 products packaged in single and double portions.

Consultant Blumenthal commented that in its newest store in Atlanta, Publix has raised its own deli standard with both the Quick Takes display near the front of the store and a food station that creates a lot of theater at the front of the store. He said the chain is paying attention to important details like providing sturdy packaging.

"It's apparent that they're using upgraded packaging. It's a more rigid container. The food will travel well," Blumenthal commented.

A store-level source said the Quick Takes items are made at a Publix central kitchen. Publix officials at headquarters declined to be interviewed by SN.

At the new Publix store, mobile modules formed an island with work stations in the center and service counters around the edge. Associates could be seen building sub sandwiches, chopping vegetables, tossing pizzas and stirring vegetables. Crates of red onions and new potatoes displayed at an angle within the work station served to underscore the "fresh made" message.

The presentation is reminiscent of Rochester, N.Y.-based Wegmans Market Cafes, where fresh products are displayed attractively in bulk just in front of food prep stations.

Bruno's also has brought its deli expertise to a new level at a newly built store in Sandy Springs, an Atlanta suburb, local sources said.

At Sandy Springs, particular attention is given to the merchandising details -- from salads to entrees -- in the deli service case.

Bottles of wine are displayed in the case alongside platters of grilled chicken and lasagna and roasted vegetables, apparently to make a suggestive sell.

In the merchandising of prepared foods, this Bruno's store rivaled Harris Teeter's prepared foods presentation. The service level also was up to Harris Teeter's standards. At both chains' stores visited by SN smiling associates continually invited customers to taste various items in the service case, and they talked about the fresh ingredients used in the products.

Bruno's appeared to offer more meal options -- not necessarily more variety, but more ways to eat a meal -- than other stores visited.

The service counter displayed chilled meal elements basically in "menu order," with some upscale desserts following main course items. Then came a pizza station; next, a hot table displayed fried and roasted chicken, and ribs and pork loin with six wells of hot vegetables.

A meal of the day was advertised for $3.99. The hot foods area sported a separate cash register and an upright refrigerated case that held a variety of beverages.

A cafe at the end of the hot food line seated approximately 60 at wooden tables and chairs, but the takeout trade is not neglected here.

The first element to greet customers as they turn right into the fresh food aisle is a food preparation and serving center featuring made-to-order Caesar salad and hot pasta entrees.

Caesar salad was priced by the plate and also by the pound. A plate was $3.50; sold by the pound, it was $3.99. Three different types of hot pasta, all $4.99 a pound, were offered on a chalkboard menu. During a short period at mid-afternoon one day, a handful of customers ordered pasta and salad to go.

The "Price" Players in the Field

A&P, Montvale, N.J., which has 37 stores in the Atlanta market, is featuring "Low Price Meal Deals" in its self-service cases adjacent to the service counter.

A banner proclaiming, "Deli Express," hangs over the case. In addition to single serving items, one "meal deal" for $7.99 includes a rotisserie chicken, a pound of potato salad, six rolls, napkins and plastic forks and knives.

Another meal for the same price includes eight pieces of fried chicken with the same accoutrements. Yet another included a regional favorite, pulled, barbecued pork. The "meal deals" are packaged in large, rectangular, clear containers.

A&P executives declined to be interviewed by SN.

Like A&P, two other chains in this market -- Winn-Dixie and Cub Foods -- have most of their units situated in blue-collar areas. Both position themselves as a low-price leader, but also offer fairly extensive prepared foods programs. Winn-Dixie's delis feature hot foods, for example.

Cub Foods here, in particular, sees its combination of low prices and fresh, center-of-the-plate salads made in-store as a draw.

"Our mainstay in the meals category has been our protein salads," said Donna Bohannon, deli-bakery director for the Atlanta division.

At a Cub store north of downtown Atlanta, the main dish salads, displayed attractively in crockery bowls in the service case, were comparatively low priced.

Antipasto salad was $2.88 a pound; chef salad was $2.29 a pound; and Italian pasta, $2.28 a pound. The item with the highest retail was chicken salad with green grapes, at $5.98 a pound.

Two store-made desserts -- Southern-style banana pudding and a gelatin-based item -- round out the menu, at less than $3 a pound.

Asked if Cub makes money at those prices, Bohannon said, "Yes, a little, but we're going for volume rather than a big margin. That's how we make a good profit."

At a hot table near the salad case, Cub offered a meal deal much like the one SN saw at A&P. For $7.98, the customer gets a rotisserie chicken, or eight pieces of fried chicken, a large side of potato salad or baked beans and six dinner rolls or four large biscuits. Individual dinners also are offered for $2.99.

Gearing up for the Olympics, Cub is increasing its inventory of grab-and-go items, mainly sandwiches and salads packed together, Bohannon said. She added that the Cub division estimates the Olympics will increase its deli business by at least 30% to 50%.