MIDDLEBURY, Conn. -- Supermarkets can exert a powerful influence in the creation of a new fresh meals industry, according to a food manufacturer working with some chains on their home-meal replacement strategies.
But to do so, the food supplier says, supermarkets may have to shed the grocer's attitude and behave more like restaurateurs when they manage product promotion, safety, quality assurance and pricing.
"This is the first time I know of where supermarkets are driving the manufacturer rather than vice versa," said Ed DeLuca, founder of DeLuca Inc., in an interview with SN at his plant in Middlebury, Conn., speaking of the emerging role of retailers.
It's DeLuca's hope that retail strategists will keep more than just marketing and beating the competition in mind as they move forward.
"Everybody is talking about capturing business from Boston Market. But I don't hear enough people talking about quality assurance and product safety," DeLuca said. "Some retailers may not realize, whether they're making their own rotisserie chicken or slacking out food-service packs, that they're product manufacturers, too."
Retailers enter dangerous territory, he said, when employees who are poorly trained in food safety or Hazard Analysis Critical Control Points standards are preparing or handling more and more fully cooked products.
Problems like "blown" packaging or inconsistent refrigeration create potential danger areas, he said. And when slacking out frozen foods or chilling hot cooked foods, retailers must be wary of procedures that create wasted products, and invite contamination and a subsequently hard-to-erase reputation for slipshod food handling.
"In the food business we're not allowed our first mistake," DeLuca likes to say.
Consumers are unforgiving when it comes to unsatisfactory prepared food, especially with so many available alternatives. With strong challengers emerging in the home-meal replacement derby, retailers who are laissez-faire about the sector may see the opportunity to profit from it pass them by, he said.
Only a few small manufacturers have been emerging in the nascent field; and with national food giants apparently hanging back, supermarkets have been left to scurry for solutions.
But whatever new products and approaches retailers settle on, it will take informative marketing and high quality standards to make consumers more confident in the supermarket products, DeLuca said.
"Supermarkets will have to educate their customers about the product first. Because if retailers think they can just stick this stuff on the shelves and it will sell and they'll beat Boston Market, they're in for a surprise," he said.
"This fresh industry is still embryonic," he said. "We know very little about consumers in this category. We know they're looking for products like this, but they don't understand 'fresh' yet. They presume it's been frozen somewhere along the way."
A former food broker, marketing executive and independent restaurateur, DeLuca began selling fresh Italian entrees to supermarkets in the Northeast in 1983. His company currently distributes nine modified-atmosphere, never-frozen Italian entrees and four sauces under the Ed & Joan DeLuca label, and 12 entrees and four sauces in food-service packs for deli departments.
DeLuca manufactures his products with an advertised 60- to 90-day shelf life, the result of a combination of methods incorporating modified-atmosphere packaging, recipe formulation and processing, he said.
After opening a restaurant in Connecticut in the late 1970s, DeLuca's business evolved into a three-fold operation -- part restaurant, part deli and part fresh entree manufacturer. "Seven years ago, nobody knew anything about the fresh foods end of the business. We grew up together in this," he said.
DeLuca restates a challenge he thinks many supermarket executives reject out of hand, but at their own risk. "If you're serious about confronting the challenge from the fast food business, you can't expect to take a 50% markup on the emerging products. Otherwise, stores will never be able to build a home-meal replacement business."
DeLuca pointed to such fast food marketing techniques as slashing prices to build traffic and gross sales, while familiarizing customers with new products or re-energizing standbys. The cost? Profit margins.
"There's a saying," DeLuca said, " 'You take dollars to the bank, not percentages.' "
To build a reputation as reliable meal replacement providers, DeLuca said, retailers will need to consider new vehicles like meal centers, that would bring produce, bakery, prepared foods and other fresh components together so shoppers can shop at stores-within-stores for a single meal.
The biggest shift may be to a new way of thinking, both for retailers and their customers.
"Not very many people think of supermarkets as destinations for takeout or ready-to-eat meals, but the potential there is tremendous. I think retailers will have to get out of the grocery mentality and start thinking more like [New York gourmet retailers] Balducci or Dean & DeLuca."