KOUNTER KULTURE

JACK ROBERTIELLO

NEW YORK -- It may be a common sight in many parts of the country, but in the midst of Manhattan's aggressively eclectic Greenwich Village, the appearance of a Kmart is unusual, to say the least, and it turns many of the jaded, multiply-pierced heads that stream by.

And a Kmart Cafe? Here, that's a downright revolutionary concept. Or should that be counter-revolutionary?

While the Kmart that opened in lower Manhattan late last year has been generally welcomed by low-cost mass-merchandise-starved consumers who flock to the unit, not many New Yorkers have been clamoring for new places serving cut-rate cafeteria-style food such as that featured in the Kmart Cafe.

Kmart's offerings -- a later-day drug store counter menu of grilled ham-and-cheese sandwiches, french fries and baked apple dumplings -- may be a welcome convenience to suburban and rural shoppers, but in this densely populated and intensely competitive New York neighborhood, everyone from national fast-food leaders and coffee chains to small mom-and-pop operators struggle to woo local students, artists, performers, shoppers and business people.

In an area with so many choices -- authentic pizzeria pizza sold by the slice; trendy vegetarian wrap sandwich shops; street vendors selling falafel, souvlaki and hot dogs; and other operations designed for quick service -- the Kmart Cafe faces daunting competition.

Other national retailers have managed to fit right into the neighborhood. From the windows of the Kmart Cafe overlooking Fourth Avenue, a crowd of sippers jammed into a modest-sized Starbucks are visible. The Barnes & Noble superstore a block further down the street has a cafe as well, and in midafternoon, it's generally difficult to get a table.

Meanwhile, on Kmart's third floor on the afternoon SN visited, one customer picked at her turkey BLT while another dawdled over french fries. A few employees drank sodas, and some apparently late risers struggled to get a full cup of regular coffee from the nearly empty thermos dispensers; instead, they were ultimately forced to make do with hazelnut-flavored coffee.

It seems it will be a while before "Meet you for coffee at Kmart" becomes a catch-phrase around the Village.

It's not like Kmart hasn't made efforts to differentiate its food-service division in the past. The company's 2,147 units contain 1,850 restaurants, which include 550 franchised Little Caesar pizza shops. The restaurants generated $350 million in sales in 1995, the company said last year.

And a joint venture with DAKA International, a Danvers, Mass.-based food-service and restaurant company, collapsed late last year after the two had agreed in principle to turn over existing and future operating responsibilities for Kmart's restaurants to DAKA.

At the time, Floyd Hall, Kmart's chairman, president and CEO, admitted the food-service operations were underperforming, and said the alignment with DAKA would improve not only the division's bottom line, but also the quality of food and customer comfort.

Kmart officials did not return requests for interviews or for information regarding their food-service operations.

But if Kmart still intends to improve things, they have a lot of room to maneuver, said one industry consultant who wished to remain anonymous.

"Kmart food service is a perfect example of using nonfood management to make decisions about offering food for the shopper. It's unbelievable," the observer said.

Another expert industry source compared the Kmart format to an old-fashioned drug store cafeteria.

"There's no glamour to it. When you go in a Kmart, you get into a Kmart mood -- you have a perception of what Kmart is. That's exactly what that cafe was, Kmart style, and they're apparently not trying to bring it up a couple levels," said Stephan Kouzomis, president of Entrepreneurial Consultants, a food-service and deli consultancy.

"They probably believe they have to have one in every one of their stores, but the question is execution, and what are the expectations when people go into Kmart. It appears they haven't done anything to uplift the past expectations of the quality level of food and what is offered," he said.

The DAKA deal may be dead, but the presence of an unremarkable food-service operation in Kmart's New York stores may indicate a change is still coming.

"Obviously, they're sort of in flux in the food-service business," said Neil Stern, of Chicago-based retail consultant McMillan/Doolittle. "Their intention was to spin it off and partner with DAKA, to sort of get out of the business. When that fell through, they were left with this division, and they have to figure out something to do with it. But it doesn't sound like what they have is a long-term strategy for it.

"It comes down to this: With all the things they have to focus on, and all the skills they need to compete and survive in the other segments of their business, I doubt this one is going to get the attention it needs," said Stern.

Speculation has focused on another outside company, perhaps a contract food-service provider, coming in to run Kmart's food-service division. In the meantime, the New York Kmart Cafe reveals one of their most recent openings.

And the Kmart Cafe here does have some advantages that might provide an edge over other food-service operations.

First, there is the location. The Kmart takes up most of a building near the Public Theater, one of New York's best known theatrical venues. Across the street, the long-running "Blue Man Group" plays to sold-out audiences. A subway station continuously empties riders into the street directly across from the store's entrance.

And while it may not be among the neighborhood trendsetters, Kmart does attract substantial traffic, including lots of students, or so it seemed the day SN visited.

Tucked into a corner section of the store's second story, the cafe is bright, airy and spacious, with lots of ceiling space and a series of enormous floor-to-ceiling cathedral-type windows topped with radiating mullions that create an sunset effect. The room fills with afternoon light, and gives customers a vantage point to catch the scene below from a relatively open and remote point of view, unusual in such a teeming urban setting.

The design and color scheme complements the open feel of the room, with shades of white and kelly green predominating. Unobtrusive neon signs set a soft-sell tone. There are even fabric flowers emerging from stem vases on each of the 40 or so tables in the cafe.

The area is set up in a simple box format at the southeast corner of the floor. On the north side against an interior wall is the cafeteria line, about 40 feet of counter with an open grill and fry area behind. The counter running along the customer side of the line is covered with stand-alone holding, cooking and merchandising units.

After customers approach the beginning of the line, they find a machine dispensing frozen "slushie" beverages; a two-door self-service case with individually packaged pie slices, salads and dressings; a three-light warming unit with fried chicken parts and apple dumplings; a three shelf hot pizza warmer with generic "Fresh and Fast" signage; a hot line with eight insert trays of macaroni and beef, a variety of vegetables, and chicken in a cream sauce, with Sara Lee dessert cakes merchandised on the counter above it.

Further on, the cafeteria line is topped with a Sabrett hot-dog cooker; a 3- to 4-foot tall Coca-Cola product dispenser with six beverage selections; a self-serve cappuccino machine; and a Haagen-Dazs ice cream bar merchandising freezer unit.

As for made-to-order food, there's no evidence of customizing for this market, or new advances in the concept. The menu is essentially a moderately revised version of the late 1995 Kmart Islander Cafe and Eatery menu.

A la carte breakfasts are inexpensive: 80 cents per egg, $1.45 for four strips of bacon, 69 cents for hash browns or sausage patties, and $1.69 for a K-bagel.

The grill menu lists a variety of burgers, patty melts, hot dogs and a Philadelphia steak & cheese sandwich, priced from a low of $1.29 for a plain hot dog, to $4.65 for a Big K cheeseburger combined with fries and a 20 ounce beverage. Cold sandwiches -- turkey; tuna and Italian submarines; and bacon, lettuce and tomato, and turkey club sandwiches -- retail for between $2.89 and $3.99.

Some hot meals were available, too. Macaroni and beef with vegetables and a vegetable platter were served from the hot line.

After ordering, customers pay and receive a stand-up card with a number to place on their table, much like at a restricted stack library, and their food is delivered when ready.

Two women staffed the cafe the day SN visited, one affable and pleasant middle-aged woman working the register, and a younger woman wearing her hat sideways, urban hip-hop style.

Whatever Kmart decides to do with its admittedly underperforming operations, only the most ambitious outside company will be attracted by the obvious logistic and format problems, say observers.

"They'll need a very big partner, and one of the questions is the economics," said Stern. While stores in high-traffic areas like this one may be attractive to ambitious potential partners, developing a concept that will work well in both The Village and the villages where Kmart does business could be a major impediment in the way of Kmart's transition to 21st century food service.