Prepared for Growth

With rotisseries in high gear, meatballs simmering and mashed potatoes piled high, retailers are making adjustments in their prepared-food departments to suit the times, and it's paying off. In the midst of a deep recession, the market for ready-to-eat, ready-to-heat and ready-to-cook food is still heating up for many retailers. To get their share, retailers have put a new focus on their evening business

With rotisseries in high gear, meatballs simmering and mashed potatoes piled high, retailers are making adjustments in their prepared-food departments to suit the times, and it's paying off.

In the midst of a deep recession, the market for ready-to-eat, ready-to-heat and ready-to-cook food is still heating up for many retailers.

To get their share, retailers have put a new focus on their evening business to attract people who, in better times, might have eaten dinner at a restaurant. They're also packing up more items for self-service, especially family-sized mashed potatoes and macaroni-and-cheese, switching service hot food to self-service bars, offering fried chicken at near cost, advertising such things as “buy this, get something else” deals, and plumping up the variety of comfort foods they offer.

“We've changed our menu. We've hired a chef to do some R&D and come up with interesting but practical recipes,” said Bruce Brigido, vice president, Brigido's Markets, a four-unit family-owned independent based in North Providence, R.I.

Brigido said the company's aim is to offer appealing items that can be retailed at a relatively low price and still provide a decent margin.

“There's no tenderloin at $16.99 a pound, nothing exorbitant,” he said. “We're making more chicken dishes, and we've added what some people call American chop suey. It's a mixture of meat and tomatoes and macaroni. At $4.99 a pound, that's doing very well for us.”

Meanwhile, Brigido's is rearranging its cases to provide more space for mashed potatoes, mac-and-cheese, lasagna, soups and chili.

The company's largest store has a run of 24 feet of chilled, store-made foods.

“Prepared foods are still an up-and-coming category, and comfort foods are a good option, especially now,” he explained. The strategy is paying off. Prepared-food sales are up 6% to 8% there for the first quarter of this year.

Another family-owned chain, Rouses Markets, Thibodaux, La., is clocking year-to-date double-digit increases in sales of prepared foods. And out in Texas, Lubbock-based United Supermarkets has just added a third Taste of Market Street unit. The 1,300-square-foot “Taste” units feature drive-up windows, and are situated on the outer edge of the parking lot at fresh-format United Market Street stores. They're mini-versions of the “mother” store, with a small selection of fresh items and store-prepared foods, including a “dinner of the day.” The addition of the newest Taste of Market Street store as recently as January speaks of success, and United officials confirmed that indeed prepared-food sales throughout the chain are up.

As consumers get more careful with their spending, the chain has been offering a series of value deals.

“So far, we've been somewhat insulated from the worst of the recession in West Texas, but we're very cognizant of the fact that people are looking for value,” said Diane Earl, director of deli and foodservice at the 49-unit chain.

“We've been doing a lot of ‘buy this, get this’ promotions. For instance, if a customer buys a slab of ribs for $10.99, we offer a pound of smoked sausage free.”

She pointed out that the price of the main item is not reduced. But when it comes to fried chicken, pricing is aggressive.

United is occasionally offering eight pieces for $4.99, down $2 from the everyday price.

In Lebanon, Ky., where the recession hit early and hard, single-unit Higdon's IGA, is doing a balancing act with prices.

“In this town, in this economy, if it's not inexpensive or a real deal, they're not buying,” Higdon's owner Jimmy Higdon told SN.

He has been offering eight pieces of fried chicken on Wednesdays for $4.99. He also drops lunch prices to $3.99 on some days, and offers a $2.99 meal with a mini chicken-fried steak, mashed potatoes, cabbage, and a roll or corn bread for seniors on Tuesdays.

“Counting labor in, we just about break even on that one, but it's worth it,” Higdon said.

Higdon's IGA, known for its home-cooked food, has a following. So, while profits may not be anything to write home about, sales of prepared foods are not down.

“When you have a reputation for good cooking, it sticks. Our lunch business was down a little at the first of the year, but by mid-March we were hitting on all eight cylinders,” Higdon said. “Now, we're trying to think of ways to sell more in the evening. We had always done such a huge lunch business, we just hadn't paid much attention to the rest of the day. We are now.”

Meanwhile, Rouses Markets officials are thinking in much the same vein. They're making several changes to keep prepared-food sales growing. Most significantly, they're paying more attention to late-afternoon and evening business.

“We have a strong lunch business. Now, we're starting to focus on the evening,” said Scott Miller, assistant to Donald Rouse, one of the 35-unit chain's owners.

“We're changing the menu over for evening, offering what a customer would want to take home for the family.”

Miller believes Rouses is getting some of the business that had formerly gone to restaurants.

“We've seen steady growth in our prepared foods, and in our value-added meats and seafood over the past year. Sales are up between 10% and 20%.”

Some of that growth, though, has to be credited to Rouses' proactive tweaks to its prepared-food departments — adding variety in just about every category, and highlighting comfort foods.

“We've added to the variety of stuffings we offer, and we've added white beans and rice. We've always had red beans and rice. Now we offer both. We've also expanded the number of soups and casseroles.”

Rouses has also put new twists on staples — for example, filling baked potatoes with shrimp.

Making everything more convenient is on the project list as well.

“We're changing over all our hot service counters to self-service tables,” Miller said.

“We found that in a few stores where we had the prepared foods self-service, customers liked it that way.”

Salad bars, too, have been added just in the last few months.

Most of the prepared foods sold in the evening are taken home, Miller said, pointing out that Rouses does not offer extensive seating.

At some other chains, however, tables and chairs are getting more use than ever before.

“Our seating areas really fill up these days,” one retailer told SN. “People tell us they like to eat here, because it is eating out, but less expensive than a restaurant, and they don't have to tip.”

Back on the East Coast, at McCaffrey's Markets, Langhorne, Pa., where the seating areas are large, the company promotes ethnic nights on Fridays and Saturdays. It could be Italian, Greek or Chinese.

“We'll be doing more of that,” said Mark Eckhouse, vice president of the three-unit independent.

“Families are coming in. They know they can get a healthy meal here.”

Eckhouse said the company also is offering more packaged whole meals, with a protein, starch and vegetable, priced at $6 or $7.

McCaffrey's is situated in an affluent area, and even there, comfort foods are the big thing right now.

“We're calling attention to staples like our twice-baked potatoes, which have always done well for us,” Eckhouse said.

“We're packing up mac-and-cheese and mashed potatoes. It's the first time I've ever packed up mashed potatoes for self-service. We saw that those branded mashed potatoes in the meat department were selling very well, so we figured why not get customers to buy these, made right here by us.”

Sales of combo meals are up by double digits, and with more family-size and single-serve grab-and-go packages, prepared food sales overall are doing OK, Eckhouse told SN.

“I think self-service is doing as well as it is because customers see a meal there and it's convenient. We're probably not promoting our prepared foods as much as we should.”

Eckhouse added that the recession actually presents a tremendous opportunity for any retailer who has a well-honed prepared-food program.

“Maybe we supermarkets can recapture some of the business we had lost to restaurants.”

Consultant Terry Roberts, founder and president of Merchandising By Design/The Design Associates, Carrollton, Texas, believes it is a prime time for retailers to shine the spotlight on their fresh-food offerings, especially their prepared foods.

She's working right now with Porricelli's Markets, a two-unit independent in Connecticut, to help it develop a stronger and more profitable prepared-food program.

Drawing attention to store-made, high-quality signature items is always a winning strategy, Roberts said, and that's exactly what she's advising Porricelli's to do.

“The focus does continue to be on comfort foods, old standbys like meatballs, lasagna and chicken cutlets, which are three of their fastest-selling prepared products,” Roberts told SN.

“But we're continuing to look at adding products, like family-sized packages of comfort food sides, and at cross-merchandising hot breads at peak sales times.”

Comfort foods reign in these tough times — both as top sellers and as profit-makers. From mashed potatoes and lasagna, to jambalaya and seafood chowder at Rouses and chicken spaghetti and fried okra at United Supermarkets, they're getting big rings.

Even as new menu items are added at Brigido's, the company's signature meatballs remain its best-selling item. And sales of simple entrees such as rotisserie chickens have taken flight.

“We've seen a good uptick in our rotisserie sales,” Rouse's Miller said.

Tanney Staffenson, advisor at Lamb's Thriftway, Portland, Ore., told SN earlier that Lamb's barbecue grills [a version of a rotisserie turning out chickens, planked salmon and the like] are ringing up impressive sales. They're up 20% year-to-date.

Another retailer reported that neither consumers nor supermarkets were ready for prepared foods when the “home meal replacement” movement got under way in the 1990s, but after years of honing and tweaking, now is the time, he said.

Consultant Brian Salus, president, Salus & Associates, Midlothian, Va., agrees wholeheartedly.

“In the many years I've spent in the food industry, I've never seen the restaurant industry take a downturn. Now, I have,” Salus said. “Consumers are reexamining how they're spending their money.”

Salus said he's seeing tried-and-true rotisserie chickens, beef stroganoff and lasagna being put in the spotlight along with comfort food sides.

“For many retailers, this is nothing new, but it's time to reintroduce [these items] as a meal solution,” he said. “The opportunity is now.”