(FNS) -- The name of the Food Marketing Institute's annual MealSolutions show means just that: How can retail supermarkets solve the meals dilemma for time-starved consumers, while getting a decent return on their expenses?
This year, SN sat down with some people who've had plenty of experience feeding Americans. The difference here is that they did it (in some cases, still do) from the food-service side of the business. We asked them what two or three restaurant-derived ideas retailers could easily incorporate into their own fresh meals efforts. Some of the ideas may not surprise you; others will:
The renowned chef and owner of Campagna and Campagna Home, both located in New York, said that a lot of the ideas from the restaurant industry "have to do with flavor profiles. There are buzz words in the restaurant industry, such as balsamic, sun-dried tomatoes and pesto, that are making their way into the supermarkets."
Strausman, who has done work with Wegman's, said that he finds that restaurant ideas in supermarkets are very successful. "Restaurant marketing [in supermarkets] gives people the feeling that they're getting more prepared products of restaurant quality -- and they are," he said.
But the supermarkets also must bring chefs into the store as consultants to plan menus and train the staff, which is what he did for Wegman's. "While it's important for the chairman of the supermarket to know what balsamic vinegar is, the person on the floor needs to know, too," he said.
Supermarkets also must learn how to add more value, or how to make their customers' lives easier. For example, Strausman's own supermarket, Campagna Home, which is on Manhattan's East 21st Street right across the street from his Campagna restaurant, has a butcher department that offers extras with the meat, such as rosemary or garlic studded into the meat. His 2,000-square-foot store even delivers to customers, which, he conceded, is difficult for large supermarkets to do successfully now.
"But they need to learn how to do that," he said. "Our job is to make it easier. The consumer wants fresh, prepared products both raw and cooked to take home that night and eat."
The one thing that a supermarket could easily do is hire a professional chef to oversee and run the prepared-food area, Strausman continued. "Supermarkets have a lot to offer a chef with a family who doesn't want to open his own restaurant," he said. With a chef in place, the supermarket then can build a persona around that person. "One thing I do is give the food a story," he said. "I have Mark's Pot Roast, and people come in and ask for that. Give the food a name."
Three supermarkets Strausmann cited as using restaurant tactics successfully are Wegman's, Rochester, N.Y., Central Market, based in Austin, Texas, and King's, West Caldwell, N.J. King's has a chef who does the prepared foods and much of the menu planning, Strausman said, while Wegman's has a meal solutions area in which they bring out the entrees at 4 p.m.
"The best thing is that, when [the freshly prepared food] is gone, it's gone," Strausman said. "Wegman's gives people a feeling of freshness when they do that."
To the founder of Ed & Joan DeLuca, Middlebury, Conn., bundling is essential for supermarkets who want to make money with their fresh meals programs. However, before getting into bundling, supermarkets food-service people must first understand that home meal solutions is an irreversible trend and, secondly, that they must know who their competition is.
"When we talk about chefs and cooks, we talk about them as needing a passion for food," DeLuca said. "The retailer himself also has to have the passion to be in the food-service business."
Because bundling and pricing are all consumer-oriented, a supermarket must first know who the customer is. For example, DeLuca pointed out that, when he was at KFC, where he was president of a division, the company had a marketing department of at least 50 people concerned only with finding out how to communicate with the consumer. "That's what the supermarkets are up against," DeLuca said. "When I was at KFC, we were trying to get the business away from the supermarkets. We had only a 27-percent share at that time, so we studied the supermarket industry to see how we could get the business away from there."
DeLuca, who left KFC and founded his own award-winning company, DeLuca Restaurants and Italian Stores, with his wife, Joan, in 1978, said another problem is that supermarkets have a wide range of different demographics, which food-service companies do not. Food service is more focused in consumer marketing.
"They use a rifle approach, while the supermarkets use a shotgun approach," he said. "I understand that they need the shotgun approach with the rest of the store, but they need to step back and realize their food-service department is a different business."
In the area of bundling, supermarkets need to understand their major competition, DeLuca said. For example, restaurants are making money by bundling components into "value meals." They're selling a hamburger that they're making perhaps 40% on, but they're also selling a soda that they're making 80% to 90% on and desserts on which that they're making 60%, he said.
"While supermarkets don't have the capability to analyze [sales] so intensely," DeLuca said, "they do need to understand that bundling soda and other high-margin items into the meal package is the way to make money."
While a lot of supermarkets have better pizza than the local pizzeria, the local pizzeria is selling a lot of that soda. "Bundling of foods is how restaurants are making money, and yet the customer gets a value," he added.
KFC also analyzed its promotions. "The word for that is putting in systems to monitor promotions," he said. "All restaurants have systems to analyze labor and production, when to produce. Supermarkets do that in other parts of the store, but not in their food-service departments."
As one of the men credited with revolutionizing the fresh meals format as a co-founder of Boston Market, former chairman and CEO of Boston Chicken, stressed convenience and service as key restaurant attributes that can easily be adopted by their retail fresh meals counterparts.
According to Naddaff, today director of his own company, Business Expansion Capital Corp., Newton, Mass., restaurants have always made it easy for customers to get in and out easily. Since supermarkets are not necessarily located or designed in such a way to get people in and out quickly, anything they can do in the food-service department to further that convenience would help.
To that end, he credits Henry Masella at Star Market as doing a "great job" presenting home-meal replacement products. The prepared foods area there is organized well, he said, and is almost like a food court in a shopping mall.
"It's easy to see what's there so that it's easier to make a decision," he said. Byerly's, based in Minnesota, is another supermarket that does a good job of organizing displays so that it's easy to select the food, he added.
Any marketing techniques undertaken -- advertising on the radio between 4:30 p.m. and 6 p.m., when people are trying to decide what to have for dinner -- must be supported by strong service, Naddaff said. "If a customer hears an ad and comes in, and then gets locked into a line, she won't be back," he said.
Naddaff, who also serves currently as chairman of Ranch*1, a 30-unit chain of chicken sandwich stores based in New York City, as well as a consultant to Red River Barbeque and to Jreck Subs Group, suggested that store coupons literally be placed in the customer's hand. "At Ranch #1, we have people out front giving out coupons," he said. "It's called guerrilla warfare." Supermarkets could also intercept customers in the parking lot with coupons or even a flyer that tells them what's available in the deli, he added.
The chief executive officer of Carvel Corporation, Farmington, Conn., suggested that menus must be limited and focused. "Quick service restaurants learned years ago to offer value, quality and speed of service," he said. "The business foundation must be focused. This is particularly true for hot meals."
Fellingham, who was president of KFC International and then president of Kentucky Fried Chicken USA until 1990, when he joined Carvel, said that, in general, the fresh meals operation must establish what it stands for in the chain's customer's mind.
"It must be more than some place you can get a warmed-over meal, conveniently," he said. In other words, he asked, are supermarkets marketing hot meals ready to eat for families, or single-sized meals to individuals?
"No one succeeds trying to do everything, which is where most chains are today," he said.
Operationally, stores must cook and staff the department according to peak hours with strict operating procedures, such as hold times, portion sizes, etc., he said. Ideas for promotions include upselling the current week's hot meals with size and price in chain circulars in Sunday newspapers. Some chains do this, he said, but it must be done as professionally as restaurants do it -- with graphics and photography. "After all, it is their customer the supermarket is chasing," he said.
ADOLPH W. (PAT) WALTER IV
The president, chief executive officer and director, Joffrey's Coffee, believes that combo meals are an idea that supermarkets can take from restaurants and quickly put in place. The complete meal, he said, should be priced to include a discount from the a la carte menu board, so that it is a perceived value. An example is pricing some fresh, sliced greenbeans, sweet potatoes, and a drink for $5.95.
"This would truly be a home-meal replacement," he said. "McDonald's and others do this through their order-by-the-number in store point of sale materials."
Another idea that supermarkets can use when trying to get consumers to think of them for a quick meal solution is to add a drive-through and copy the advertising style that quick service restaurants use, he said.
"If grocers are wanting a slice of the home-meal replacement market, then they have to stop thinking like grocers and more like quick service restaurateurs," he said. "Supermarkets are so used to leveraging their suppliers for marketing funds and then presenting the products in a pathetic excuse for a Sunday or best-food day circular, that they do not have the conceptual skills to develop 'I want to go there' advertising."
Grocers are "habitual price marketers," he argued, who hope that vendors will develop marketing and brand awareness levels high enough to cause food to virtually jump off the shelves into customers' carts. But supermarkets should make their food so appealing that it makes the consumer want to purchase it.
"The shopper's mindset needs to change from 'I'll buy that because it's on the list' to 'I'll buy that because I want it,' " he said.
"Specials of the day create a loyal following," said Dan Giacoletto, national promotions manager and director of food-service marketing, BongrainCheese USA, New Holland, Pa. When he worked at Jansen's IGA in St. Louis in the early 1970s, the store had a signature meatloaf.
Jansen's didn't have the meatloaf every day, but printed a monthly specialty calendar that it mailed to its preferred customers.
Jansen's also balanced its menu to coincide with the days of the week when its customers had money available, Giacoletto continued. "For instance, on Friday and Saturday when most people got paid, we would have more high-end items, such as shrimp dinners and buckets.
Then, on Monday and Tuesday, we'd have value items to bring them in," he said.
For example, Tuesday was spaghetti bucket night, where Jansen's offered a choice of four types of noodles with a red sauce for $5.99, and customers could add a loaf of bread and salad or drink for $4 more. "For under $10, you could feed a family of four," he said.
Although Jansen's had specials, the company never used promotions such as dollar-off coupons because it believed that type of promotion cheapened the product, Giacoletto said. A "special" in a restaurant implies that it is a special recipe or made on a limited basis. "If you try selling a meal at a discount price, people start questioning its quality," he cautioned.
"In fact, don't sell on cheap," he said. "Just price your products right. Go out to Boston Market or to a Chinese restaurant in the area and see what people are willing to pay. Customers don't expect bargain basement prices."
If a supermarket says that its takeout is 25% than a family-style, sit-down restaurant, then that's 25% more that the supermarket must price its home meals, he said.
But Jansen's did do inexpensive advertising by sending circulars and menus to plants and offices on Fridays, timed to bring in customers when they received their paychecks. Also, every grocery bag that left the store had a prepared-food menu attached to it and dropped inside.
"We had a successful home-meal replacement business at Jansen's before anyone else was doing it, which was the early '70s," Giacoletto said. "We even had separate registers in the deli and we worked bread from the bakery right into the meals. It was merchandised right next to the deli case."
Giacoletto also advised supermarkets to sell by the portion, not the pound. "People want to know what their meal is going to cost them," he said. In states where retailers are required by law to sell by the pound, the supermarket could give customers an idea of how many ounces makes an appropriate portion. People don't know how much a portion in a restaurant weighs, and they don't know how much to buy when the food is sold by the pound, unless the supermarket tells them, he said.
He also suggested that supermarkets tell customers that there's a 100% money-back satisfaction guarantee. "Restaurants don't say that, but it's implied," he said. "If the steak I order in a restaurant isn't satisfactory to me, it's understood that I get another one. If you're not willing to guarantee your prepared foods, you shouldn't be in the business."
Supermarkets that he finds are using restaurant-like ideas successfully include Ukrop's in Richmond, Va., and Ball's Hen House in Kansas City, Mo. "The food looks as good as any on a restaurant menu," Giacoletto said. "The case compels you to buy. The display makes you hungry." The supermarkets also offer mainstream, restaurant-type items, such as taco salad and Cobb salad. Ball's Hen House, located in a big barbecue area, also offers "great barbecue," he said.