SAN JOSE, Calif. -- Retailers are seeking better bottom-line performance from the deli -- but not all of them are squeezing their departments' operations to find it.
Deli/food-service executives are certainly on the prowl for profit improvements, judging from comments collected by SN on the exhibit floor at the International Dairy-Deli-Bakery Association's convention, held here June 18 to 20.
Some retailers are on a mission to cut waste. They said their strategies include:
Instituting new procedures to reduce shrink.
Retraining counterpeople to control portions more tightly.
Trimming inventories and monitoring sales on a more frequent basis.
"One thing in particular that's working well is to designate a 'shrink tote' in the cooler," said Diane Bean, deli merchandiser at D&W Food Centers, Grand Rapids, Mich. "Associates have been instructed to put any questionable product in the tote, instead of just throwing it away. Then it's the manager's responsibility to determine what goes out."
Other deli/food-service executives said their target is better profits through sales volume growth, not operations refinements. They told SN they will:
Draw attention to strong food programs, like rotisserie chicken.
Invest in equipment upgrades that will pay off in sales gains.
Many of the tactics identified are not new to the industry, though they may have been newly tried by the companies in question. However, taken together their efforts form a picture of deli's bottom line getting extra attention.
"We're focusing on full meals and picnic packs to build sales. It's not the margin so much as the volume we're focusing on," said Jimmie Jones, bakery-deli product manager at Supervalu's division in Billings, Mont.
"We're trying to recapture the business we've lost to the chicken places and other restaurants. In our marketing area, the meal concept is new for retailers," Jones explained.
Here are some highlights of what the deli/food-service decision makers had to say from the show floor about profitability improvements in their departments.
Tom Brewer VP, deli-bakery merchandising
Price Chopper Supermarkets
Schenectady, N.Y.
When it comes to the bottom line, I have one very strong belief and that's that you should increase sales. Usually, when supermarket people talk about making more money, they start thinking about reducing costs. But I think about making investments -- investments in selling more products. We always try to drive sales.
Recently, we've put emphasis on rotisserie chicken and we've been very successful. In a new store, we put more rotisseries in, and we put the chickens on special at two for $5. One week, at the new store alone, we sold 5,500 chickens. And we're doing really well with them at our other stores.
Bringing attention to them [with specials and with additional equipment] pays off. It attracts customers and they come back and buy more of other products too. It definitely increases sales of other deli products.
Diane Bean
deli merchandiser
D&W Food Centers
Grand Rapids, Mich.
We're working hard to reduce shrink through better training of associates and using better procedures.
One thing in particular that's working well is to designate a "shrink tote" in the cooler. It's an actual, large tote like a bread rack or carrier. Associates have been instructed to put any questionable product in the tote, instead of just throwing it away. Then it's the manager's responsibility to determine what goes out.
We want to prevent products that are still good from being discarded. That can happen. A customer might say something doesn't taste right, and actually the product is all right.
And, if the product really isn't good, then the manager needs to find out why. It really hits home when he or she looks in the tote at the end of a day and sees the product itself rather than just seeing it on paper. Or sometimes the associate would forget to record that something was thrown away.
We've just been doing that one month and shrink has gone down 1.5% already.
We've also developed a cooler check list that involves the store manager. He goes into the cooler on a regular basis now with the deli manager to check sell dates and also how long bulk products have been in there. For example, if there's red skin potato salad nearing its sell date, he can help figure out what's got to be done to get it sold.
Diana Ovenell
director, deli-bakery
Thrifty Food Stores
Burlington, Wash.
We're just making sure our people are more accurate. For example, when deliveries are made, they're instructed to hand count each piece. And we're also cutting down on warehousing, actually on all inventory. For instance, we're not buying turkey or ham to last two weeks. We're buying enough just until next delivery.
In order to do that, we have to have more frequent sales reports from each location. Now we require them weekly. Previously they had been no more frequent than monthly. These types of things have become particularly important since we've grown. We've gone from 14 stores to 20 in the last year. So we had to make sure we keep control.
Darrell Bruff
deli-bakery supervisor
E.W. James & Sons
Union City, Tenn.
We're working hard on getting paid the right amount for what we serve. We're showing our employees exactly what a plate of food is supposed to look like.
A dinner, for example, should have 4 ounces of vegetables and 6 ounces of meat, but it's amazing how much food they can pile on those plates. They get generous. They can stack a bowl till it looks like Mount Everest. We're just keeping a closer eye on that.
I also sat down this month with our food-service supplier to analyze costs and retails more closely. We found that we've been charging 20 to 30 cents less than I needed to on most sandwiches.
The one that really surprised me, though, was the fact that it costs us less to offer french fries with a sandwich than it does to offer ruffled potato chips. The chips cost us 20 cents, and we were giving them away with the sandwich. A serving of fries costs us 16 cents. So we're getting aggressive with french fries. We're asking our people to suggestive sell them with every sandwich.
Another place we're trying to save on waste is in packaging. I'm making sure that the cake decorators don't have plastic containers out there with a color in each one or that the deli associates aren't using them when they should be using a reusable bowl or other utensil [for prep purposes].
Jimmie Jones
bakery-deli product manager
Supervalu division
Billings, Mont.
We're focusing on full meals and picnic packs to build sales. It's not the margin so much as the volume we're focusing on.
We're trying to recapture the business we've lost to the chicken places and other restaurants. In our marketing area, the meal concept is new for retailers.
We're offering 12 different family or picnic packages. They range from $16.95 to $38.95. An example of the upscale one would be two slabs of ribs, 2 quarts of potato salad or coleslaw, 2 pounds of baked beans and a pound of pistachio delight, which is a fluffy dessert. We're advertising that one, because of the large ring.
Nancy Rand
deli coordinator
Quillin's
La Crosse, Wis.
To push our bottom line up, we're looking to increase sales as much as we can. For graduation season, we promoted chicken wing trays for the first time and we also offered dollars-off coupons on party platters.
And for the Memorial Day weekend, we did some particularly good buying and ran good ads. For example, we bought 35-pound buckets of potato salad and advertised the whole bucket. They cost us $17 and we put them in the ad for $24.99, with a line that said, "potato salad for 140 people for less than $25."
It was a good item because there was zero shrink. We didn't drop any potato salad on the floor filling smaller containers. And it was a great attention-getter. We sold so many more than we had thought we would. We also bought a half semi of cooked ham and sold it at a good price, but had a good margin. We had both on ad the two weeks prior to Memorial Day. That was one factor in putting deli sales up 24% over the same period a year earlier. Bakery sales, too, were up 15% over the same period a year ago. I think that's because once people came to the deli they bought bakery items also. The departments are right together.
Anna Marie Harrison
deli department manager
Raley's Supermarkets
West Sacramento, Calif.
We're trying to increase sales at our store by promoting side dishes, for instance, with ribs and chicken. And we've been announcing over the PA system a different dinner each day. We might say, "Tonight's dinner is a barbecued half chicken, with potato salad and baked beans, for $3.99."
Sales have increased noticeably since we started doing that about a month ago. Hot food is a good business for us anyway and this makes a bigger ring for each sale. We're increasing the variety of entrees we offer. We just added sirloin tip roast and we're planning to add more.
