SN: Is your company leaning more toward chilled meals and meal components or hot foods? Self-service or service? Why?
BREWER: [At Price Chopper] we are in the hot-food business and we continue to add to it. But with that still in mind, we believe the future is in chilled food. It's often more convenient, relative to the individual. It's safer, and perhaps better quality. People don't mind heating things up as long as they don't taste like leftovers. They just don't want to prepare it. And all the studies show people are looking more and more for food to take home.
Chilled will be our direction in the future. We're committed to that and to increasing self-service of those items. We think that's a real issue. It's convenient to pick up and it's easier to depict a plate value if you can look at that package and see how big it is and what it costs. When you see it in bulk, it's difficult to imagine how much you need. The customer is probably thinking about how much that hunk of lasagna weighs, and then how many people it will feed once it's cut up.
GASSENHEIMER: We at Gardner's have been in this prepared-meal business for 10 years, it's something we've been building for some time. Most of our meals are chilled and can be warmed again or eaten at room temperature. But we have been forced by our customers to go into hot food.
We don't have a hot table per se, but we do have roasted chicken, specialty ribs and meat loaf, all served hot. The customer demand dictated that. Originally, we only had roasted chicken, but our customers wanted the other things.
We're very careful on the hot-food side, however, because when you're serving hot meals in Florida, there are food-safety issues to be concerned about. People leave the store, enter a hot car and may make a stop on the way home -- with chicken sitting there, warm. That's potentially dangerous.
JERRY: We're going more toward hot food. We find it's continuing to be a growing category for us. We just put in fresh hot pasta bars with pasta that we make in house, with sauces and garlic herb chicken and Italian sausage toppings, and we're finding that to be extremely successful. For dollar ring and gross profit, the hot is a lot more successful for us then the chilled.
In the grocery industry, self-service is something we need due to the labor situations, and there are unique situations that allow you to do self-service, but for the most part, our hot meals are service. We're finding a lot of customers prefer service.
KALLESEN: We have a hot-food case program, but we're selling more of things like meat loaf and rotisserie meats -- pork, beef and turkey breast -- cold rather than hot. We've downsized our hot tables from 8 feet to 4 feet to try to get more turns on them.
Our role in chilled meals will be tying in deli, meat and produce. We just opened a store where we have 48 feet of refrigerated case right across from the deli that is split between meat, produce and deli, and you wouldn't believe the amount of stuff that's selling out of the case. In the latest store, we've also added 8 feet of service deli case, and its distribution is probably double what any other store has done, about 6.5% where the other stores are running 3.5%. So I would say we're leaning toward service. You have to have the people to staff it, but we're better off with service, slicing the meat and taking the meat loaf out of the oven communicates the idea of freshness. It creates more of the restaurant image when you're serving out of the deli case.
ROESENER: What we've found out in the last three years is that you need a combination. You can't have a narrow product line. It's definitely a combination of hot and cold, service and self-service. That's why we're creating a shop within a store like the bagel shop and pasta shop. In those elements, you can include that mixture. Getting the right mixture is the key. These small areas where you limit yourself to strictly cold or strictly service or hot or cold, it doesn't satisfy the consumer's wants.
LESCOE: We have a fresh-made sandwich program that's a feature. So a majority of our items are cold and we started off with an early concentration on service. We're going toward more take-and-go now because we've had some people who don't want to wait to be served. We're watching closely what people will buy.
MAYNE: We were leaning more toward chilled food rather than hot, but then you visit a place like Ukrop's, and you see they are doing a great job at hot food -- cooked-to-order hot food. So we're thinking about hot food again, but we haven't really formulated a plan as yet.
We're a very service-oriented company. Others do a magnificent job in self-service. You can't use a big paint brush to determine what's best for everybody. A lot depends on your demographics and what your customers are used to. Service works for some and not others.
NEP: We're going toward more chilled food. We are expanding our hot-food areas, too, though. Actually, what we're doing in our take-and-go areas is incorporating hot food into the chilled-food area. When customers walk into the take-and-go area now, they can quickly grab hot food as well as cold food.
I think chilled food is going to keep growing. I've been doing packaged entrees for about 10 years now, and I've found people are accepting chilled food because of its freshness and quality, compared to the quality of a steam table, where the food has possibly been there for an hour or two and is starting to break down.
We're leaning more toward self-service. A lot of people just want to take the food and go, and some people don't like dealing with counter help.
SN: Is execution of meal programs at store level a problem? What can be done about it?
BREWER: On the store level, it's always a problem because of the labor issues -- cost of labor and the technical skills required. The facility's design, too, is a factor. Not all retailers are set up to produce food safely, to prepare it, cook it, chill it down. It's a real challenge. We've chosen to do most of our production at a central facility. About 75% to 80% of our products that will be sold cold are made at our central facility, and 80%-plus is self-service now.
Then that takes the store level execution down to selling the product, serving the customer, ordering the right product and the right quantity, and putting it out to sell.
We know how to sell and merchandise. I'm comfortable that we can handle that [at store level].
GASSENHEIMER: I think there is a great deal of trouble executing. I see a local supermarket chain here sticking prepared meals way in the back of the store, for instance.
At my speech at MealSolutions last year, I emphasized the fact you have to bring these sections into the spotlight. It must be in the front of the store with a dedicated register so people can get in and out of the department fast.
The last thing I want to do at the end of the day if I'm not doing my regular supermarket shopping is face an entire supermarket. I can't even think of walking through a whole supermarket to get to the items I want and then stand in line.
JERRY: Yes, it is a problem. The proper training for your associates is the key to a success story -- and we do that extremely well at some locations. If you don't have associates who have been properly trained, then you can not execute your programs. As we step up these programs and make them more valuable to the customer, it takes a more skilled person. It's harder to replace a skilled worker, like a chef. If he doesn't show up, you can not get coverage from a different department and start training them on the spot. It takes a lot of training to get somebody ready for serving customers and creating recipes.
LESCOE: You have to pay attention to details, details, details. We encourage our management team to taste test as often as possible, to constantly monitor product quality. Periodic taste tests will ensure that we offer consistent products all the time.
Execution is difficult. HMR is a different business than the grocery retail business as we know it. We have ongoing training sessions for our associates, and we also try to keep things simple. They don't have to come in at 12 p.m. and prepare veal Oscar. To make a good corned beef or pastrami sandwich is relatively simple since we have portion control and the bread is freshly baked in the store everyday. And we don't have a huge variety of pizzas. We have just four, and we do those four exceptionally well.
MAYNE: Sometimes execution is a real problem. But other times, you're very pleasantly surprised that you do something better than you ever expected you would. It's just the fundamental human condition. In a nutshell, hard work is what it takes.
NEP: Yes, you run into the labor problem here, especially when a cook or chef calls in sick, it will throw us back a little in production. Centralizing the kitchens into a commissary would help.
ROESENER: If it's a problem, it's because you look at it that way. Through our R&D, we realized labor was going to be a crucial component, and again there's no way your entire labor force can be directed to these areas. That's why we went back to the combination of in-house, manufacturing and branded. Manhattan Bagel is responsible for supplying and training the people. We don't have the headache of the labor force.
On the in-house brands like LA Pizza, again we want our people to be highly trained in these food-service areas to meet expectations [of customers]. We've worked with our brokers. They've been a tremendous help in training our people. It helps also that we have a central kitchen where we can take our people for training off-site.
SN: What is on your wish list in terms of meal solutions?
BREWER: I think we stand at the threshold of great opportunity right now, and my wish is that we can overcome all the obstacles and meet the needs of the consumer, which are rapidly changing, with a top quality product. There's a tremendous shift going on. I see it with my own kids. My wish is that we can take the supermarket industry in a new direction successfully with prepared food. I believe it will become the core of the supermarket business.
GASSENHEIMER: We'll have it shortly, a new store we're opening with the emphasis more like an Eatzi's, but still a supermarket. We're trying to create a restaurant/retailer mix. That's where we're going.
JERRY: For us, it's more and better knowledge, better education and better tools for individual supermarkets to develop their people. FMI puts out video training tapes -- and they're good, but it's also good to be able to read about what other people are doing in the industry, how they tried something and found out what was successful and what wasn't. You very seldom hear about those things that don't work; not too many people share those ideas. So everybody ends up going down the same road, and then when you sit down and start talking to someone, you find out what didn't work very well for others.
At the store level, I'd like to continue to incorporate the store-within-a-store concept, especially with all perishables, bringing everything together for fresh meals. People aren't looking for a box of macaroni and cheese for dinner. They're looking for a quality meal.
KALLESEN: I think we need to venture out into our own locations. I'd like to see a Martha's Kitchen and Martha's Bakery out there as a stand-alone business. We could utilize our knowledge and volume buying and put it into the food-service arena where the playing field would be more level. There would be a definite advantage in food cost from our buying abilities. We can compete with the Atlanta Bread Cos. and St. Louis Bread Cos. of the world. They get into the right locations and create the right atmosphere. We can create the atmosphere, but you never have the perception that those guys have as long as you're inside the grocery store. It's very hard to break that barrier of the consumer saying, "Hey, let's go down and eat supper at the local Harps store."
LESCOE: On the top of my wish list is this: I'd like to see some benchmarks from the restaurant industry; some of the variables they look at that we don't normally. I'd like to see us build some alliances there. We have meetings with manufacturers to see how we can bridge gaps, and we have our supermarket share groups, but there's nobody from the restaurant industry.
MAYNE: I'd like to see meal solutions work so we can go on to other things. I ask these questions of myself all the time.
NEP: My wish is for a centralized commissary with distribution, that's at the top of my wish list for Andronico's. And we will be doing that in the near future. That way, we can get better control over the consistency of the product. We'll have trained chefs overseeing the area and controlling the food quality.
From the manufacturers, I'd like to see more all-natural quality foods with no preservatives.
ROESENER: Right now we're working on Chinese. That's one category we're missing. So my wish is that we get everything in place for that to be a success. Again, we have to look at the hot, the cold, and the service and self-service and get the mix right.
