LEEANN CHIN CREATES READY-TO-HEAT ENTREE DIVISION

ROSEANNE HARPER

MINNEAPOLIS -- Leeann Chin, Inc., a locally renowned Chinese restaurant chain here, that has operations inside Lunds Byerly's stores, has created a new division to develop ready-to-heat entrees and has named a former Byerly's executive -- Keith Kersten -- to head up the effort.

"We're looking to provide packaged, ready-to-heat meals in the supermarket deli and also to expand our line of shelf-stable sauces," said Steve Finn, chief executive officer of Leeann Chin Inc.

And one of the key steps toward those goals was the appointment of Kersten as president of the new Leeann Chin Food Holdings division, Finn said. Kersten, with Byerly's, Edina, Minn., for more than 20 years, was most recently senior vice president of operations for that grocery chain which was bought two years ago by Lunds Food Holdings, Edina.

With his background, Kersten will contribute grocery business know-how that's much-needed at Leeann Chin, Finn said.

"What we have is a great product and brand but absolutely no grocery experience. We're relying on Keith to help us figure out a lot of things like packaging and merchandising and marketing and just exactly what will be credible to supermarket customers."

Kersten sees himself bridging the gap between the food-service company and supermarkets and also helping supermarkets understand what their customers want in prepared meals. A graduate of the Culinary Institute of America, he's had experience on both sides of the fence. He came to Byerly's from the hotel/ restaurant business.

"At Leeann Chin, I can contribute the knowledge of how food retailers think. After I joined Byerly's, it took me a good year to understand the grocery mentality. It's really a commodity business, while the food-service industry looks to provide a dining experience or event, not just fuel for the body," Kersten said.

"We're going to have to take food-service items and make them into appealing commodities, whether fresh or frozen."

The new division will hopefully launch at least six varieties of Chinese entree ready for the supermarket self-service case within the next year, Finn said. Later, more variety will be added in single-service and family packs. Retails will range from $4 to $10.

The products will be delivered fresh, never-frozen, to Lunds Byerly's units where they will make their debut. But as distribution is expanded outside the Twin Cities market, the products will be shipped frozen. They're intended, however, to be merchandised in the deli, not the frozen-food case, Finn said.

While the initial menu items haven't yet been chosen, they'll undoubtedly include lemon chicken and Peking chicken. Those two entrees are twin best sellers across the board -- at Leeann Chin's 40 quick-service restaurants, its two upscale restaurants and its hot service counters in Lunds Byerly's, Finn said. The hot counters are in all 11 of Byerly's and four Lunds stores.

The restaurant chain's association with Byerly's began in 1992 when the first full-menu hot operation was successfully tested in a Byerly's store.

"Keith was one of the key Byerly's people behind the decision to bring us in. He's very familiar with us as a business partner," Finn said.

Soon after its initial test at Byerly's, the Leeann Chin hot operation was rolled out to all the retailer's units. Leeann Chin provides the fresh product, the supermarket's employees serve up the food, and Leeann Chin pays Lunds Byerly's a percentage of sales.

Neither Finn nor Kersten would talk about sales figures but both men were unhesitating in their comments about the success of the team-up.

"When we [at Byerly's] participated in share groups [in which retailers informally exchange information] we found that Leeann Chin's sales in our stores were 10 times higher than those of similar programs that other supermarkets had," Kersten said.

Finn added that Leeann Chin has been happy from the start with its relationship with Byerly's. The Leeann Chin name in the Minneapolis-St. Paul area was already held in high esteem by consumers when Byerly's linked up with it. Consumers had come to know the quality of the products through Leeann Chin restaurants, but packaged products will present their own challenges, Finn said.

"Our sales at Lunds Byerly's have been great, but it's been totally a food-service operation. Basically, we have seven or eight feet of hot case attached to the deli counter. It's like an extension of our restaurant business. Selling packaged entrees and meals is an entirely different thing."

In that regard, both Finn and Kersten talked about the importance of brand equity and the right packaging in creating credibility. Market research recently conducted by Leeann Chin has shown that prepared ethnic foods in the supermarket are apt to be met with skepticism, Finn said.

"Consumers just aren't sure a supermarket knows how to make such food. So that's where the Leeann Chin brand will be valuable," he said, adding that the packaging will display the Leeann Chin brand dramatically. Even the packages themselves will be designed to stand out.

"We're still evaluating the packaging. It definitely will not be generic. This will be higher quality, have a lot of color, and a different shape. We've built a reputation by using the best quality ingredients and we want our packaging to reflect that."

Kersten commented on the packaging from the retailer's perspective.

"One of the most important things in packaging is to make it easy to get it on the shelf and to have a lot of bright colors to make it stand out in the case. It's also important how many you can get in the case," he said.

Kersten's expertise on the grocery side will be valuable to Leeann Chin Food Holdings when it comes to modifying product for the self-service case, Finn said.

"We'll modify the entrees to make them a little different, maybe with a garnish. We're not certain about the dynamics of offering the same product in supermarkets as we're offering in 40 restaurants. We'll upscale the look probably," Finn said.

In honor of its longstanding working relationship with Lunds Byerly's, Leeann Chin will give the retailer a limited-time exclusive with the products before it expands its distribution. The next market areas to get the products will probably be Detroit and Kansas City, where the chain has recently opened freestanding restaurants.

Leeann Chin's 28,000-square-foot manufacturing facility here, where it currently produces sauces and some components, will be sufficient for manufacturing and packaging the new products.

"We were previously operating at a fraction of capacity, so this facility will serve us well into the future," Finn said.