HARRIS TEETER WORKING ON FOOD COURT NET

ROSEANNE HARPER

ATLANTA -- Harris Teeter has continued to nurture its food-service programs, even when profit is still way out of the picture for some of them.

Staying power is essential to success for supermarket food service, said officials of the Charlotte, N.C.-based chain at the opening session of the Food Marketing Institute and National-American Wholesale Grocers' Association food-service conference, held here last week.

The two executives from the 140-unit chain -- Joe George, senior vice president and Gianfranco DiCarlo, director of deli/bakery/food service -- described some of the fine-tuning they have employed and the lessons learned during the evolution of Harris Teeter's food courts.

In addition, they revealed which of the chain's programs are profitable now and which aren't.

They said the programs making money are: Caesar salad stations, a sushi bar, rotisserie chicken, pizza, self-service salad bars and easy meal entrees in the service case. Chef Prepared entrees and side dishes, packaged for take-out, have just recently emerged from the red ink category, they said. Fresh pasta stations and grills, added this summer in a handful of stores, are still considered experimental.

The programs that are not profitable are: coffee bars, Chinese food, prepared seafood, and juice/melon bars.

While the juice and melon bars have been well received by customers, they're not yet making money, George said. The Chinese programs and coffee bars have not been popular everywhere, but that may indicate a need for a sharper marketing plan, the two officials suggested.

Significantly, the entire group of non-profitable programs has been kept on board. George said that upper management knows those programs are potential money makers, and it takes time to work out kinks and learn how to market each program in different areas.

"We know there is potential to make the food-service department a destination for take-out, and that's where we're headed with these programs," said George.

But it hasn't been easy.

For example, the Chef Prepared program, which features chilled, prepared entrees and side dishes, is only now beginning to show a profit after three years. Nonetheless, that program has been has been put into 45 stores and is on board for all new stores and remodels.

"What we have to do is learn to market, to create a demand," George said. He added the chain has discovered firsthand the importance of listening to its customers.

DiCarlo explained, "When we started the Chef Prepared program, we tried to sell complete meals [including two sides packaged with an entree] but they didn't move at all." The chain soon learned from customers that they wanted to be able to choose their own side dishes. Subsequently, six months into the program the side dishes were broken out into single-serving sizes. That enabled a customer to grab an entree and then choose what to go with it. Sales picked up immediately, DiCarlo said.

Customers don't want to be boxed into buying a particular combination, but offering meal ideas is nonetheless an important service, the officials said.

"The competition, such as Boston Market, tell consumers they'll rescue them with a wholesome meal, already prepared. Well, we're going to have to do that even better than Boston Market and Kenny Rogers," George said.

That means perfecting specific programs, such as pizza. "We're trying to learn how to market our pizza. The take-out pizza business is growing [nationally], but they're not coming in to buy ours to the extent we would like," George said.

"We know customers want to get in and out in a hurry. While we may not put in drive-through window, we'll make it easier with better [store] design, so the customer doesn't have to go through the whole store to get a meal to take home," he added.

The chain executives pointed to other lessons they've learned, such as the importance of marketing to a particular community; doing enough research ahead of launching a program; sharpening the emphasis on take-out by offering more self-service; keeping costs under control by consolidating labor; and properly training their associates in food service.

The need for store specific research was a hard won lesson.

DiCarlo said the chain didn't do enough research before putting in cappuccino bars, and paid for that mistake.

"Coffee bars certainly have the potential to make money, but we got too eager, and didn't do our research," DiCarlo said. The chain put in 13 almost simultaneously, and only two of them are doing well. It hasn't yet been decided what to do with the others, he added.

"Salad bars don't belong in all our stores, and we have sushi only in one store, in Atlanta, because you have to have the right location to support it," DiCarlo added.

But planning isn't everything. One of the Harris Teeter's most successful programs, a salad station, was born by accident, according to George. He recounted the story of an office worker asking one of the chain's chefs if he would make her a chef's salad. He did, and she took it back to the office, where her colleagues tasted it. The next day, they came back with her to the store for their own lunch salads.

"And now, that's one of our most successful programs," DiCarlo said.

The program has since been rolled out to most stores, where it also provides some theater, DiCarlo said. In some lower-volume stores, a Caesar salad station on wheels is rolled out only at lunchtime and early evening.

As part of the learning process, Harris Teeter has been broadening menus, but at the same time tailoring menus to particular marketing areas.

"We've expanded our rotisserie chicken program, for instance, to include ribs and turkey breast," George said.

The company is experimenting with regional cooking, such as rural American and lowland cuisine, he added. Originally, all prepared foods were produced in-store, but now the operation relies on a mix of store-made items and some products sourced from outside.

"We need both [in-store prep and product sourced from outside]," DiCarlo said. Without being more specific, DiCarlo said the company has made "partnering arrangements" with some manufacturers to produce particular items to Harris Teeter's specifications.

Flexibility and creativity are active ingredients in Harris Teeter's food-service formula, the executives said. For example, a counter that was not being used in the mornings at one store was turned into an experimental omelet station. "And we're happy to say it's doing very well. We have that in three stores now," DiCarlo said. He pointed out that the suggestion for an omelet station came from a store associate.

All associates in Harris Teeter's food-service departments are getting some formal food-service training, DiCarlo said. "We've made an arrangement with Johnson and Wales [a culinary school] for three-day classes for our people," he said.

"It's not that it will make a chef of everybody, but it gives them a feel for the business. They'll know what burnt oil is or what to look out for," he said.

Asked about on-premises eating, George said that seating has not been designed to accommodate dinner-time customers.

"We don't see the supermarket as a destination location for on-premise meal consumption. Instead, we see it as a convenience factor, particularly for the lunch trade. And we must keep this in mind when we're designing new stores or remodels. We do see it as a destination for take-out food, and we're in the process of building a strategy to sell take-out meals and food," George said.

The executives said that Harris Teeter's future plans include considering the further development of complete meals for carry-out merchandising. It was also continue to change its menus and add more self-service.