CHICAGO -- Kroger Co. is determined not to go it alone in the fight for a bigger piece of the take-home meal business.
Partnering with other companies to create in-store food-service programs will be Kroger's modus operandi going forward, said an official from the Columbus marketing area, where the Cincinnati-based chain is apparently already forging several alliances.
Harry Buskirk, deli-bakery merchandiser for the more than 100 Kroger stores in the Columbus area, said the chain is actively seeking a variety of partners in its home meal replacement efforts.
Buskirk talked about Kroger's strategy in a workshop on the blurring of the lines of marketing between restaurants and supermarkets at the National Restaurant Association Show here.
The partners range from multinational branded suppliers to very local restaurateurs, depending on the needs of the market and even the neighborhood.
In the Columbus marketing area alone, the prominence of in-store food service also varies significantly.
In rural areas, for example, about 4% of total store sales are generated from deli, bakery, cheese shop and other food service, Buskirk said. But "in some newer ventures, where we have a food court concept, we are pushing toward 9% of total store sales."
As much as 36 feet of the refrigerated case are dedicated to prepared foods in newer stores, he noted.
"We are doing well in take-home, but we have yet to break the barrier where this is the place to take the family to dinner," Buskirk said. "Can people do all their things in our store and still eat dinner with us?"
Partnering seems to be a turn in the right direction. "When we do business with Church's or Popeyes, that business doesn't count toward total store sales, but it does seem to have a halo effect," Buskirk said, referring to two outside concepts Kroger has brought in to some stores. "Those seem to be becoming destination departments."
In certain stores where the demographics are right, Kroger offers exclusively chef-prepared food, ranging from prime rib to pork chops. The chain is partnering with local restaurants to offer branded food service, he added.
In May, the Columbus marketing area introduced a new chicken program in partnership with local meat brokers, Buskirk said. Rotisserie and fried chicken are available, along with side dishes. The chicken program will be advertised weekly through Labor Day to encourage grab-and-go sales, he said.
In its partnership with branded food-service companies, Kroger typically signs a lease and takes a percentage of the company's sales as its profit. "We try to establish the percentage at a low level to start, but it builds as the business grows, so both sides have an interest in growing the business," Buskirk said.
The advantage of a branded partnership is that both sides are strongly committed to getting the right items and the right quality in front of people, he said.
A partnership with Sara Lee began two years ago, with emphasis on premium lunch meat. Those products were given display space first in line in the service case, plus promotional support with print ads and in-store signs.
The next step was creating a sandwich shop featuring Sara Lee lunch meat. The most recent development has been the addition of two items to be cooked in the chicken rotisserie: a hand-selected and premarinated Sara Lee turkey, and a boneless pork roast, Buskirk said.
The rotisserie chicken is featured in Kroger's Wishbone shop. Kroger uses an upscale bird that finishes at a 4-pound weight. Side dishes are all chef-prepared, he added.
Another of Kroger's branded partners, Atlanta-based food-service operator Popeyes Chicken, was also represented at the seminar podium. Mark Rinna, Popeyes president, said his firm operates 18 restaurants in supermarkets, all in Kroger stores. Eleven are corporately run, and franchisees run the others.
"The partnership between Kroger and Popeyes offers an added service to customers, in the form of a branded, high-quality takeout or meal in-store. The in-store unit generates incremental traffic," Rinna said.
"We are looking at opening two more restaurants in partnership with Kroger sometime in the future. Kroger has been very proactive in looking at new concepts and expanding partnerships. They feel their future is in branded foods."
Rinna said both companies are learning that branded partnerships need nurturing to continue to be effective. Since the pilot restaurant opened in January, 1995, Popeyes has seen interest plateau among Kroger customers. Regular shoppers found the in-store Popeyes restaurant to be quite novel at first, but some have stopped coming; and others, who had not tried it, seem to have forgotten it is there, Rinna said.
"We must market to two distinct customers: potential customers who live in the area and could use us as a freestanding restaurant, and Kroger customers themselves. We need sufficient signage to direct them to the store. We need a more retail-oriented approach to attract and keep Kroger customers," he said.
He suggested cross-promoting the outlet with other categories such as soft drinks or salad mixes.
"We have to make the restaurant an integral part of the supermarket and tap certain synergies in marketing. Kroger could print the Popeyes logo on its grocery bags. Popeyes purchases could be rung up at the Kroger checkout. Popeyes could partner with Kroger in deli trays and in offering prepackaged hot or cold meals to go."
