CRACKER BARREL PLUNGES BACK INTO HMR WITH CARMINE'S PURCHASE

LEBANON, Tenn. -- Cracker Barrel Old Country Store here has plunged back into the HMR business, with the acquisition of two specialty stores that offer up a big helping of fresh prepared foods.Cracker Barrel, which previously had tried a home-grown HMR format separate from its 341 table-service restaurant/retail stores, completed acquisition of Carmine's Prime Meats, Palm Beach Gardens, Fla., earlier

LEBANON, Tenn. -- Cracker Barrel Old Country Store here has plunged back into the HMR business, with the acquisition of two specialty stores that offer up a big helping of fresh prepared foods.

Cracker Barrel, which previously had tried a home-grown HMR format separate from its 341 table-service restaurant/retail stores, completed acquisition of Carmine's Prime Meats, Palm Beach Gardens, Fla., earlier this month. Terms of the acquisition were not disclosed.

Carmine's operates two gourmet food markets, one in Palm Beach Gardens and the other in Fort Lauderdale, Fla. The 13,000-sqare-foot store in Palm Beach Gardens includes an upscale, casual-but-white-tablecloth Italian restaurant that seats 230.

Within a year, Cracker Barrel plans to roll out at least two additional units modeled after the Palm Beach Gardens Carmine's, and will keep the stores' identities entirely separate from the Cracker Barrel name, Cracker Barrel officials said.

"This is clearly a new direction for us in the meal convenience segment, and it's one we believe quite strongly in," said Judy Donovan, vice president of new business development for Cracker Barrel. "We've looked around for some time at this whole thing called meal convenience or home meal replacement.

"This emerging segment, we believe, encompasses a whole lot of different food-consumption opportunities, and we think Carmine's gives us the chance to present meal convenience in a way that should be very attractive to consumers," Donovan said, further explaining the setup at Carmine's.

"Carmine's offers everything from fresh, raw goods from a butcher shop and produce department -- if you want to prepare a meal completely -- to a whole, vast array of products that are ready to heat and eat," she said.

The fully cooked foods at Carmine's are prepared on-site and presented chilled in a service case.

The original owners of Carmine's, Carmine and Sheila Giardini, will stay on under a long-term employment agreement with Cracker Barrel. The existing culinary staff, which includes on-site chefs, will also remain, Donovan said.

Cracker Barrel's other restaurant-retail combination, Cracker Barrel Old Country Store, dots the Interstates of 28 states and caters to travelers. At an average of 100,000 square feet, the Cracker Barrel locations include a sit-down restaurant, a fireplace and a retail store that features, for the most part, gift-oriented crafts and dry grocery items.

In 1994 and 1995, targeting the take-home-meals crowd, the company launched a new format called Cracker Barrel Corner Market, in Nashville and in Murfreesboro, Tenn.

The Corner Markets, built small and located in areas with a density of offices and small retail businesses, first offered only Cracker Barrel country cooking, prepacked and chilled in single-unit packaging. Later, because customer traffic wasn't up to expectations, the company added a hot-food, cafeteria-style counter, then drive-through windows, at two of the locations.

In 1996, the company closed the doors of all its Corner Markets. "That was an experimental project. We were putting our toes in the HMR area in just one direction," Donovan said. Donovan repeated the explanation for the closings that other Cracker Barrel officials have offered in the past: that the Corner Market proved to be confusing to consumers.

She conceded that applying the Cracker Barrel name to the experimental Corner Market concept turned out to be a negative, because consumers expected elements of the familiar Cracker Barrel Old Country Store concept to be there and they weren't.

"It was an environment they didn't understand. They thought there ought to be a fireplace roaring in the corner and table service," Donovan said.

"As we looked at this industry over the last year and a half, we've come to realize that Cracker Barrel in and of itself is a very special experience for guests. Our food is served piping hot at the table. They can sit and eat beside a fireplace and then shop in the retail store [for gifts or nonfood items]," she said. To take that experience and try to translate the food part into a different setting was the core of Corner Markets' troubles, Donovan said.

That experience underscored the decision to keep the Cracker Barrel brand separate from Carmine's, she said.

Carmine's, meanwhile, bears no resemblance to either Cracker Barrel Old Country Stores or the experimental Corner Market concept, she pointed out.

While Cracker Barrel specializes in country cooking, Carmine's sports a gourmet menu. Donovan said Carmine's retail component could be compared to that of Dean & DeLuca, the upscale, fresh- foods specialty store out of New York, with the addition of a dine-in Italian restaurant under the same roof.

The management of Carmine's, as well as its name, will remain completely separate from that of Cracker Barrel Old Country Stores.

Donovan joined Cracker Barrel, from General Mills' Olive Garden restaurants, at about the same time Cracker Barrel shuttered its Corner Markets.

"The company wanted to explore growth opportunities, and those that involved HMR concepts were at the top of the exploration list," Donovan said. Carmine's is Cracker Barrel's first acquisition.

The parallel between Carmine's and Cracker Barrel's original-concept Old Country Stores is that they present a unique experience that consumers have shown they like, Donovan said. "People who know and love Carmine's come here because it's a special experience, too."

The two companies should complement each other, she emphasized. "Cracker Barrel understands how to operate a restaurant and a retail store under one roof, and Carmine's knows how to operate a restaurant and a food market under one roof.

"It's a good marriage of skills. It's combining Carmine's knowledge of their business and Cracker Barrel's experience in putting multiple units out there and knowing how to structure organizationally while running two businesses under one roof."

Donovan said the company would proceed slowly with further expansion of the Carmine's concept.

" We're looking to open our next couple of locations in the next year," she said. "We're referencing this as developmental at this point. We're in the transition process and we're delighted with how it's going."

The company will target south Florida for the additional sites. "It makes sense because our base is there; it's our training ground," she said. "We're not prepared to talk about any expansion plans after that. We're just focusing on getting a couple of these open under the new organization."

At least one consultant told SN he wasn't surprised at the news of the acquisition of Carmine's. "When they closed the Corner Markets, they were very explicit that they hadn't given up on home meal replacement," said Neil Stern, partner at McMillan/ Doolittle, a Chicago-based retail consulting firm.

"With the acquisition of a more retail-oriented concept, I would guess their intention is to try to marry the skills they'll acquire from the retailer with the skills they already have," Stern added.