MAGRUDER'S LITTLE DIVIDEND

ROSEANNE HARPER

CHEVY CHASE, Md. -- Magruder Inc. is off to a fresh start in an old location.

The transformation of a small grocery store here into a combined liquor store and deli that features food prepared on-site holds big promise for the 12-unit, Rockville, Md.-based retailer, said Mark Polsky, Magruder senior vice president.

His optimism is based on what has happened in the few weeks since the deli opened in the 6,000-square-foot store. "It's unbelievable. Traffic's been growing every day. I see whole families in there. One person is buying the wine, while the other, with a child in a stroller, chooses the entree for dinner," Polsky said. And that's just the beginning. Wine and cheese tastings, even a singles night, are planned to keep excitement revved up. And demos will become regular events, Polksy said.

Fresh as it is, the concept will not be added in existing Magruder stores. But it could serve as the anchor at new sites if the company finds the right locations with the right demographics, he said.

With an array of entrees -- ranging from comfort foods like meat loaf and lasagna to more exotic ones like couscous with chicken -- and a grab-and-go counter with a large variety of packed sandwiches and salads, deli selections are designed to appeal to busy people day after day. Having an appealing variety to choose from is the key to this business, Polsky stressed.

The deli is all takeout; no seating is provided, which is not surprising given the store's size. A 16-foot refrigerated self-service case runs perpendicular to a 24-foot European-style service case that displays about six different entrees a day, plus a large number of side dishes and salads.

"We'll probably rotate half of them once a week," said Polsky. He added that the deli at this location is offering about 30% more items than delis in other Magruder units.

"The young working couple, the single person who doesn't want to cook for just themselves. The people who want freshly prepared foods, but aren't interested in fast food. They're our customers," Polsky said, explaining the niche Magruder is aiming to carve out with this store's approach.

Magruder wanted to attract both lunch and dinner customers and apparently has succeeded. Peaks in traffic at lunchtime and in early evening are about equal, Polksy said.

The location is almost perfect for several reasons. "There are condos all around here, and some offices, and there's not much competition for carryout quality food. Sutton Place and Fresh Fields and the nearest supermarket are too far away, all at least five miles," he said.

The nearest contender for the busy customer's dollar is a Boston Chicken three doors away. "But when they opened there in January, our chicken sales went up," Polksy said.

Before the deli was fully launched this month, Polsky explained, Magruder had been selling rotisserie chicken and a variety of cheeses, in addition to liquor, for several months in the remodeled building. "We were already selling 30 chickens a day. Now, since the deli is open, we're selling 75," Polksy said.

He said Boston Chicken's debut probably helped Magruder's sales because "it makes it clear that our chickens are a great value. They're $4.99 each, and Boston Chicken is charging about $8 for a comparable size."

Magruder's decision to combine freshly prepared foods with liquor at this established location was bred of a combination of factors, Polsky said.

"We knew we had to make some kind of change. You just can't make it these days with a grocery store in such a small space. We couldn't offer the variety customers want," he said. "We also know there are pockets of people out there looking for fresh product, and we figured we could combine what we know how to do well -- deli, produce, and cheese -- and expand on it.

"We decided to keep the liquor -- which had been sold from a separate space next to the old grocery store. That way, for this first foray into a new field, we would have liquor as another draw," he said.

By contrast, this first jump into making prepared foods is almost like going into the restaurant business, Polsky said.

At the retailer's other stores, which average 20,000 square feet, only three products -- chicken salad, tuna salad and shrimp salad -- are made in-store. Other deli items are sourced from manufacturers. Here, everything is cooked on premises, even the roast beef and turkey.

Polsky told SN how Magruder got ready for the big switch.

"We hired a consultant who owns two restaurants in the area. He helped us find a chef and loaned us some of his managers to help get our food-preparation staff trained. We also hired a designer to help us deliver the message that we have freshly prepared, quality food at a reasonable price," he said.

"Then we got in an airplane and flew around the country looking at other people's operations." Asked what operations had the most influence, Polsky said, "Those in the Seattle area, particularly Larry's Markets." He said he was particularly impressed by the decor and by the large variety of salads Larry's offers.

For decor at the remodeled store here, Magruder decided on a clean, airy, light look, "but not too upscale," Polsky said. "We didn't want to scare people away. Our deli prices are a little higher than those in a regular supermarket, but they're not as high as some of the independent specialty delis."

Keeping the clean, light look and downplaying "upscaleness" presented a particular challenge.

Lighting plays a big role. "We're using white, enameled grills over the lights, and there is a lot white and light colors," Polsky

said. "But, for example, to keep from looking too upscale, we stuck with metal shelving for liquor, and even the wood wine racks are not highly polished," he added.

Flooring is made up of squares of light gray carpeting, which Polksy said is easier to maintain than tile.

The deli occupies only 15% to 20% of the 6,000 square feet. It's close quarters, but even that can be a plus, Polksy said. "All preparation and cooking is in the open. Our ovens are our kitchen," he said. "We have space in the basement which we could have used for cutting and chopping and other preparation, but we decided it wouldn't be efficient. And this gives us some activity for customers to see. We've also purposefully kept counters and even liquor racks low so that customers can see the whole store. I think it makes it seem bigger than it is," Polsky said.

Besides the theater provided by open prep and open cooking, the retailer is delivering the "fresh" message in other ways. Prior to the deli's opening, handouts in the liquor store announced that food freshly prepared in-store would soon be offered. One of the fliers read: "Good prepared food ready-to-go doesn't have to cost a lot. Cooked on the premises: pot pies, quiches, baked meat and vegetable lasagnas, rotisserie chicken, beef brisket, gourmet roast beef, turkey, pasta salads, black bean and corn salad."

The flier also was distributed to nearby condos and apartment buildings.

Salad prices range from $2.99 to $4.99 a container. And here are some sample entree prices: 6-inch pot pies, $3.99 each; vegetable lasagna, $3.99 a pound; chicken dijon, $6.99 a pound, and individual meatloafs, $1.99 each.

Meal packages are next on the agenda to attract customers' attention. "That'll be a good way, too, to introduce new products. We could pair an already popular entree with a new salad, and see how people like it," Polksy said.

"We started out with a brunch package that's very popular. We offer a pound of lox, an 8-ounce bar of cream cheese, six bagels, an onion, a tomato and a cucumber for $10.99. We've been selling 100 of those on Saturdays," he said. Currently, the store cannot stay open on Sundays because liquor stores in this suburb of Washington must, by law, close down on Sundays. However, a "Farmers Market," which is all produce and occupies the nearly 2,000 adjacent square feet that used to house the liquor store, does remain open on Sunday. It, too, helps deliver the "fresh" message, Polsky said.