CLEMENS GETS BAKERY SALES ROLLING WITH BAGEL SECTION

ROSEANNE HARPER

LOS ANGELES -- Clemens Markets has quadrupled its bagel sales, boosted its total in-store bakery volume and upscaled its image, all with the single stroke of implementing a branded bagel program at one of its stores, a chain official told attendees at the Food Marketing Institute's MealSolutions '97 show and conference here.

To launch the ultrasuccessful operation, Clemens, based in Kulpsville, Pa., worked with a franchisee of Eatontown, N.J.-based Manhattan Bagel Co.

The partnership spawned the full-service, full-bake Manhattan Bagel operation inside a new, 55,000-square-foot Clemens Market that opened in Quakertown, Pa., earlier this year. Executives with the retailer and the bagel operator described the Quakertown operation and its positive performance during a panel discussion that explored the benefits of brands in the home-meal replacement arena.

The Quakertown program is one of three Manhattan Bagel outlets that Clemens now has in its stores. The other two, also operated under lease agreements by Manhattan Bagel franchisees, are in Clemens units in Harleysville, Pa., and Center Square, Pa.

When we opened the store in Quakertown we were looking at how to raise the quality level to drive customers to Clemens," said Tom Roesener, vice president of operations for the 16-unit retailer. "We put in a new, fresh concept at that store, and we wanted to establish a point of difference versus our competitors."

He went on to say that the company initiated the contact with Manhattan Bagel because it expected the name would be recognized and associated with quality. Roesener also figured it would help capture additional early morning traffic.

"We've had a gap in the supermarket when it comes to driving traffic in the morning. And here in our area, we have a lot of convenience stores called Wawa and they seem to capture the morning business," said Roesener.

The plan worked, he said.

"We've been able to fill that customer gap in the morning at Quakertown by driving them in to pick up their coffee and bagels. And it's surprising what they'll pick up with them, their bread and milk and other items."

At Clemens' Quakertown store, the Manhattan Bagel operation is at the front, adjacent to the in-store bakery. It is designed so that bagel production is in full view of the customers.

"When we decided this, some of our buyer-merchandisers were a little apprehensive about how the bagel operation would affect in-store bakery sales, but it has enhanced them," Roesener said.

"We attribute that to two things. No. 1 is we're sending a louder message about quality by having a higher-quality bagel. With that and our new fresh format here, we're driving more consumers to our stores."

The operation in the Quakertown store is selling about 1,112 dozen bagels a week. That compares with an average 256 dozen a week at other Clemens stores, which are bringing in already-baked bagels from outside. It also compares favorably with an average 374 dozen bagels sold a week at stores that are finishing off parbaked bagels in-store.

It's the brand and the quality together that are driving sales for the program at Clemens stores, Roesener said.

The combination is also boosting bakery's strength overall, relative to other parts of the store. In fact, at the Quakertown Clemens unit, in-store bakery sales are capturing 3.15% of total store sales distribution, beating the Clemens' average of bakery taking 2.84% of total store sales, he said.

What's more, sales of Manhattan Bagels alone at Quakertown make up 1.8% of total store sales. Thus, added together, in-store bakery sales and Manhattan Bagel volume account for 4.95% of store sales, Roesener said.

The Manhattan Bagel operation placed inside the Clemens Market unit in Harleysville, Pa., is ringing up a similar volume, said Rocco Fiorentino, vice president of business development for Manhattan Bagel Co.

These levels of sales success are coming with a more than 10-cent rise in retail price for Manhattan Bagels products compared with the parbaked or outsourced bagels offered in other Clemens stores, both of which are unbranded. Manhattan Bagels are retailed at Quakertown for 55 cents each, while the parbaked at other stores are 43 cents each, for example.

"We're a true department in the store," Fiorentino added. For instance, customers can pay for their milk and other items at the Manhattan Bagel counter or they can pay for bagels at the regular checkout lanes, he said. Products are coded so the rings go to the correct department.

Fiorentino commented that Manhattan Bagel's association with supermarkets has been a learning process. "When we went into our first supermarket in Atlanta, we didn't offer self-service there and we learned that some supermarket customers like to pick their own bagels from bins. We've also brought our cream cheeses into the self-service case up-front."

Also, at the first in-store Manhattan Bagel operation the setup did not allow customers to lump their bagel purchases with other items at the same checkout station. "They had to take out their wallet twice," Fiorentino said.

The Manhattan Bagel executive said the company has developed a variety of formats, depending on the needs of its supermarket partners. But the ideal, he said, is a full-bake operation at the front of the store.

"When they can see the boiling and baking in the oven it tells customers these are New York-style, fresh-baked bagels," Fiorentino said of the open production feature. At the same time, a 10-foot self-service case also gives them optimum convenience, he added.

Working closely together has been a key to sales success, Roesener said.

"There's a lot of mechanics to the business. If you don't have a true partnership it doesn't get done. Our store manager at Quakertown has been able to work with the franchisee, for example, to extend the hours [of Manhattan Bagel] because store traffic is a little different up there. He also gets in a little earlier in the morning," Roesener said.

Fiorentino credited execution and commitment on the part of Clemens Markets for a particularly successful linkup.

Some of Roesener's remarks were made on a videotape that was shown during the panel session. The video, shot at the Quakertown store, also showed customers talking to an interviewer about Manhattan Bagels and about how much they like them.

"All of this [the Manhattan Bagel operation] is for one thing -- to serve our customers better," Roesener said on the video.

"We plan to partner more with Manhattan Bagel in the future," Roesener said. The third Manhattan Bagel operation opened inside the Clemens Market at Center Square, Pa., last week.

"In the 70s and 80s, we had the luxury of opening traditional supermarkets, but in the 90s and the year 2000, we need to offer prepared foods and we'll be partnering with key people to bring home-meal replacement to our customers," Roesener added.

In addition to Clemens, other supermarket chains that have either full-service, branded kiosks or self-service Manhattan Bagel operations inside them include H.E. Butt Grocery Co., San Antonio; D&W Food Centers, Grand Rapids, Mich.; Kroger Co., Cincinnati; Smith's Food & Drug Centers, Salt Lake City; Vons, Arcadia, Calif; and Furr's Supermarkets, Albuquerque, N.M.