If done right, fresh home meal programs can help delis double or triple their contribution to store sales, said Dan Giacoletto, national merchandising and promotions manager at Bongrain Cheese USA, New Holland, Pa. Giacoletto has more than 20 years experience in the deli and food-service industries.
"Currently, the average supermarket deli accounts for 4% to 6% of store sales. With the introduction of an effective home meal replacement strategy, that could go to 10% to 20% without cannibalizing sales in other parts of the store," Giacoletto said in an interview with SN.
Giacoletto has been preaching the virtues of a good supermarket HMR strategy at venues such as the New England Dairy-Deli-Bakery Association's annual conference in Boston last month.
At that meeting and many other industry gatherings recently, supermarket deli executives and prepared foods pundits have been alternately dreading or praising the efforts of Boston Market, Golden, Colo., and other food-service oriented HMR providers.
Giacoletto told SN that supermarket delis can compete effectively -- and some are -- but only if management is ready to take such opponents on directly and commit more than just talk.
"Supermarkets must go head-to-head with Boston Market, because they're losing sales to them on a daily basis. Supermarket delis are good at selling components of a meal, but most aren't trying to sell the whole meal, or aren't doing it successfully," he said.
Giacoletto offered a long list of reasons for many retailers' lack of success with HMR. It began with macro issues, such as a lack of commitment from the top, lack of training dollars dedicated to getting a project up and running, and failing to create a formal business plan or marketing strategy.
From there, retailers' challenges trickle down to execution. Many operators, for example, are attempting to add a food-service operation in an already crowded preparation and display area, or they are using inadequate point-of-sale materials and signs.
"Just putting up a sign that says 'rotisserie chickens' is not good enough. Remember that you should be convincing the customer to buy, not just pointing out where the product is."
Instead, Giacoletto suggested trying this message: "Take home our delicious rotisserie chickens and get one or two of our wonderful side dishes to make it a meal."
He has also noted many supermarkets assembling and positioning rotisserie programs to compete with Boston Market, only to base them on chickens that are too small.
Giacoletto said that while delis use a small bird to under-price the HMR competition, it leads to products that don't look nearly as appealing as Boston Market's larger chicken.
"Make it easy for customers to compare your product to Boston Market's. Boston Market uses a bird that weighs at least 3 pounds. If you're going to show customers how much better a value your chicken and side dishes are for the money, you need to have the same sizes of product. And you have to have comparable quality," he said.
"Boston Markets meals are expensive. If you offer the same size meal for less, you can use that to draw customers away from them."
Giacoletto ventured to say that the operating structure of supermarket delis can allow them to undercut Boston Market.
"Most supermarkets have less costs than Boston Market. For one thing, Boston Market has higher real estate costs. Their sites have been acquired recently, while many supermarkets have been situated where they are for a long time, so they are paying at the old rate."
Labor, too, is less expensive for supermarkets than for Boston Markets, because deli associates can be put to work doing other tasks between the meal rush periods, he said.
At any price or profit margin, however, the hot food has got to be merchandised with skill and with the food eaters' perspective in mind.