GETTING TO THE TABLE 1997-09-15 (2)

ROSEANNE HARPER

Product quality -- attaining it and maintaining it -- is at the top of the menu of issues facing supermarkets as they get deeper into the meals business, chain executives told SN.

Just prior to the Food Marketing Institute MealSolutions conference -- taking place this week in Los Angeles -- SN questioned home-meal replacement decision-makers about their companies' strategies and major concerns.

They replied that finding a way to offer top-quality products -- all the time -- concerns them most, because it is a hurdle that must be cleared if supermarkets are to begin to reverse the flow of consumer food dollars currently pouring into the restaurant industry.

In addition, the supermarket officials discussed the importance of food safety and of closing the credibility gap that exists in consumers' minds when it comes to supermarkets as a source of prepared meals.

They also said a major priority is finding out exactly what their particular customers want.

"The leading issue is quality," one chain executive said. Another stressed that effective marketing and thorough food-safety procedures are necessities, as well; but without a product that makes customers say, "Hey, that's good," success is just a dream.

In a "virtual roundtable" discussion conducted in separate telephone interviews, SN sought answers to questions about the present and future of the fresh meals category with:

Tom Brewer, vice president of deli, food service for Price Chopper Supermarkets/Golub Corp., Schenectady, N.Y.

Linda Gassenheimer, executive director of food and public relations for Gardner's Markets, Miami.

Tammy Jerry, vice president of perishables departments for Carr Gottstein Foods, Anchorage, Alaska.

Dan Kallesen, director of bakery/deli at Harps Food Stores, Springdale, Ark.

Daniel Lescoe, senior vice president at Big Y Foods, Springfield, Mass.

Norman Mayne, vice president and chief executive officer of Dorothy Lane Market, Dayton, Ohio.

Howard Nep, director of deli operations at Andronico's Market, Albany, Calif.

Tom Roesener, vice president of store operations, for Clemens Markets, Kulpsville, Pa.

SN: What is the most important issue in the meals category today?

GASSENHEIMER: For the supermarkets, a very, very important part of this meals business is trust, building consumer trust. The consumer wants and expects consistency, predictability and trust.

JERRY: What we're finding is we need to have quality fresh meals that our customers can purchase quickly. The quality of the meal is extremely important for our customers. We're finding more customers are on the go, and so we need to make it as convenient for them as possible to get in the store, grab something, and out the door they go.

KALLESEN: I think the most important thing is getting consumer confidence. It can't be just in the hot or cold meals sections; it has to be in the whole department from A to Z. If you don't take a look at your total department in terms of consumer confidence, none of these home-meal replacement things are worth you spending any time on. If they don't have consumer confidence in the total department, I don't know how they expect to get the consumer to buy a higher dollar ring. That's the first thing that has to be done.

LESCOE: The No. 1 issue today is the quality of the product. But other very important issues are quality assurance and how to manage labor. All of these require a tremendous amount of detail work. To offer top quality, there's endless cutting of product against product and being careful not to skimp on ingredients. One way we can manage labor is by managing the product mix -- for instance, having related products. While the associates are not selling pizzas, we try to think of what else could they be doing that's related. Calzones, for example.

MAYNE: Try to figure out what works, and I'm not kidding, because people are testing all sorts of things out there. So far, there's no blueprint yet.

NEP: The most important issue, first of all, is freshness and consistency of meals, that's No. 1. Then maybe variety comes in next.

ROESENER: The leading issue is quality. We hear it over and over again from consumers that the restaurant industry continues to upgrade their center-of-the-plate items and side dishes. We as an industry have to continue to focus on quality to meet or exceed what they're offering the consumer.

We're doing it at Clemens. I'm on [an FMI MealSolutions] panel with Rocco [Fiorentino] from Manhattan Bagel. The bagel world of today has exploded. Instead of trying to do a parbaked bagel or an in-house operation, we went out and found the best of the best. We feel we have quite a competitive advantage with the quality. And the convenience drives foot traffic through our store.

In the pizza category, we developed our own LA Pizza. We did a lot of research and development on it and we're very proud of it. Whether we do it or go outside, it's the top quality that counts. We're involved in three types of grouping: branded, manufacturers and proprietary. The reason we're doing that is for quality. We can no longer afford to put out product that's below the restaurant or fast food.

If we want the foot traffic to come to us and to change the paradigm that we're just dry groceries, we've got to meet or exceed those quality standards.

BREWER: The answer comes in several different pieces. I'm not sure one is more important than the others. There's quality, food safety, marketing, and the process of getting the product to market. They are all critical issues.

Having a great product without the marketing is no good; having a great product and great marketing without proper food-safety procedures is not good either. Commitment, too, is critical. You'd better have a lot of that through all levels of management. I could go on and on with a list of critical issues. They're all pieces of a very large picture and they all have to be there. It's a huge mistake to not cover all bases.

SN: What should the supermarket industry be doing to position itself as a meals provider? Is credibility a factor?

BREWER: Credibility is a major, major factor. The supermarket industry has an unfortunate history of not delivering a fresh, top-quality product. [The supermarket industry] has always taken the easy road. I am talking in general terms; I'm sure there are people out there who have done it right before now. But throughout the industry, we've taken what was available to us, and just put it out there.

There's been a lot of ducking and weaving and bobbing, but the end result is the consumer does not think of the supermarket as a place to go for food service. Before we do anything, we have to realize there is a problem. How are we going to get great-tasting, great-looking food to the consumer? I don't mean necessarily gourmet food, but something that makes them say, "Hey that's good."

The first thing in that issue is to realize that you created a problem, or maybe somebody created it for you. But if you assume there's not a credibility gap, then you're making a mistake.

To gain credibility, you have to determine what you're going to do based on what your customer wants. You need to profile the customer, not just look at the demographics. Find what they eat. Is it gourmet food or meat loaf? Look at what they eat and when, and figure out how you can provide it. If there are several different restaurants serving great meat loaf in your area, it tells you something. And every market, rural, urban and suburban differs.

The restaurant industry has figured it out. They know who they're targeting. Once you target [those same customers] and have everything in place, then you make enough noise in the marketplace to establish credibility.

GASSENHEIMER: I think the supermarket industry at the moment is looking for the means to establish itself. But the question is, how can they accomplish these things? I think we're, at the moment, in the middle of a revolution/evolution. I think the industry is evolving.

The supermarket can not do some of these things overnight. A lot of the changes the supermarkets are making are very expensive, and they have to test them to make sure they are right. The supermarket also must show the consumer that they are committed to these programs.

It's very costly to make the commitment to reconfigure the store. It's very expensive to take out a case that you know is earning X amount of dollars per square inch and put a trial case in there, because every single inch of that store is spoken for and planned on. That's a real problem.

The problem we have in the supermarket business, at least down here, is finding the proper staff for this concept. We're not used to paying restaurant-type salaries, and the people who have been in the restaurant business aren't used to retail-type businesses, so we're having to do a lot of training -- and that's an expensive commitment.

When you go to a McDonald's, you know what you're going to get and you know how much it's going to cost. It's reliable, and whether you or I like this kind of food doesn't matter. I will go there because I know what I'm getting, timewise, pricewise and tastewise. So when the consumer comes to the supermarket, when they come for a fast meal, those are the kinds of things they have in mind. Taste, time and cost are what they have in mind. People want the food to be delicious, but they don't want fancy food.

JERRY: We need to offer our customers quality in a safe environment. We're continuing to hear that there are business opportunities out there. So we need to give our customers the absolute confidence they need when they shop for food. They need to know they're getting a safe product they can trust, and that comes from building a loyal consumer relationship with a grocery chain. If the customer already trusts you for the best produce or meat, they're more likely to trust you for meals.

KALLESEN: We have a lot of disadvantages that we have to overcome in competing with the restaurants. We're not restaurants. We don't have waiters. If consumers buy our meals, they're going to have to clean up and do some other things. We're trying to put out the same quality food as restaurants, but our shrink factor is higher than restaurants and our margin is less because we're not, in most cases, getting the same kind of retail that they get. That means we're going to have to get control of all our costs.

To do that, we have to put a lot more pressure on and have a lot more partnerships with manufacturers to help us control shelf life, shrink and quality. In order for us to have the variety we need, we're not going to be able to do everything ourselves. It's going to take more partnerships to get the consistency and quality.

MAYNE: It seems like everybody that's working on roasted chickens has discovered that is one thing that works. And if you have a high-quality product, and the chickens are fresh, it's something that seems to be working.

Credibility is a factor. We at Dorothy Lane believe we are trying to use the best ingredients we can. Credibility could be an ingredient issue. It's one of the issues for us, and we're working hard to improve on it every day.

NEP: We need to provide restaurant-quality product, something the consumer can't find in a fast-food place. That's where I think we have the edge; we're so diversified, we can do so many different things. Here at Andronico's, in our kitchens we have restaurant-trained chefs, so we can really put out some quality foods that you can't get at a fast-food place.

ROESENER: Credibility is the key item. As an industry, in the 1970s and 1980s, we looked toward the center of the store and it cost us a lot of dollars. In the 1990s, I think we've made tremendous strides with our credibility and formatting of meal-solutions items. The supermarket industry should be proud of where it's at and it's going to satisfy consumers needs in the 1990s. We've made a dramatic turnaround. We've come outside of our paradigm.

In the 1970s and 1980s, everything had to be in-house. We finally realized that we're not experts in every area. The bagel example; we thought we had a good bagel, but we were way off target.

I'm proud to be in this industry in 1990s. We've seen a rapid change in format and that's going to have to continue. The existing box has to be totally reformulated. D&W's "stealth bomber" store and our new Quakertown, Pa., store [show that] retailers are taking the leading edge and realizing it's beyond the product and now we're looking at the formatting to a higher degree.

Quality and format are the keys to credibility. It's us doing our homework. [To do a lot] in such a short time, we need to partner. It's impossible to be an expert in all areas, I don't care who you are. We see the big chains taking a mixture of proprietary branding and in-house.

LESCOE: Everybody sees the world differently. If you're an everyday-low-price operator, I'm not even sure that you should be in the HMR business. Credibility is a big factor and there are ways to get that get credibility. For example, our areas of preparation are open, so customers can see what's going on. They can see our associates wearing hats and gloves while they're preparing things right in front of them. And then, we have great displays [of our prepared food]. To us, these things are the key to positioning ourselves as a viable meals provider.