STILL GOING STRONG

Roseanne Harper

Sushi's popularity continues to grow, offering retailers new potential.

When a few fearless operators decided to test sushi in their stores more than 10 years ago, many customers didn't know what it was. The exotic rolls did not set cash registers on fire. Now, however, sushi has become a regular purchase for shoppers seeking a healthy snack, quick lunch or easy appetizer for a dinner party. Even kids eat sushi.

Marsh Supermarkets, Indianapolis, has put sushi operations next to the service deli in the last three stores it's opened. Earlier this year, the retailer added hot rice bowls to the heated food line up near the sushi. Marsh sources the products from Advanced Fresh Concepts, the Rancho Dominguez, Calif., company that's the leading supplier of sushi to supermarkets.

"It adds variety. AFC periodically reviews their lines to see if there's anything that would fit with what our customers would want," said Marsh spokeswoman Jodi Marsh.

After testing sushi in just a couple of stores in 1997, Marsh gradually rolled AFC operations into 26 of its 69 supermarkets.

"[Where we put sushi in] is based on the demographics and the volume. We keep in touch with customers so it's also based on what they buy or what they say they want," Marsh added.

In Seattle, officials at Metropolitan Market said sushi continues to be an extremely strong part of the retailer's prepared foods offering. Metropolitan's sushi stations are set up near the rotisserie chickens and prime ribs.

"Our sushi sales have increased every year so far. It's actually a destination in our stores," said Andrew Woodcock, director of food service and product specialist at the five-unit independent.

The family-owned company, which had in the past done business under the Thriftway banner, contracted with AFC 10 years ago to supply stores with fresh sushi daily.

"At that time, it [sushi] positioned us as a leader in this market, and its popularity is still growing. But remember, Seattle is a restaurant town," Woodcock said, adding that may account for consumers' quick acceptance of sushi from the very beginning.

In some markets, sushi sales have hit a plateau, but retailers told SN they're not worried.

"Sales have leveled off in the last six months to a year, but I wouldn't be without it," said one Northeastern retailer. "I have no intention of recapturing that space. It's well worth it. My customers expect fresh sushi."

Indeed, retailers who are seeing sales flatten could probably find ways to pump them up. After all, sushi outside the supermarket is still on a roll. Promotion of some kind could help sales.

"I think the single point of education that needs to be conveyed to the consumer -- and that will boost sales -- is that sushi, at least American supermarket-style sushi, is not raw fish or seafood. It's seasoned rice with a variety of ingredients," said consultant Brian Salus, president, Salus & Associates, Midlothian, Va.

To help build sales at supermarkets, AFC has worked with retailers to develop new items, like the "summer roll," wrapped in rice paper instead of seaweed and containing lettuce and sometimes teriyaki chicken or other cooked ingredients.

"Some people don't like seaweed," said Clarence Chan, AFC's national accounts manager. "Anyway, we do bring in some new products periodically to keep customers interested. We have added rice bowls that some retailers merchandise in their deli nearby, and we'll try some noodle dishes. Right now, we don't believe Americans are ready for cold noodles, though."

California rolls, making up about 40% of AFC's total sales, continue to be the No. 1 seller at all AFC locations, Chan said. The rolls are filled with avocado and imitation crabmeat.

At retail, momentum has been generated almost entirely by point-of-sale literature and word of mouth. Most supermarkets make an agreement with a sushi provider, such as AFC, whose expertise they can rely on, and then let the sushi companies do the work. Usually, the arrangement is such that the retailer provides the space and the sushi operator gives the retailer a certain percentage of weekly sales.

"Sushi is a perfect product to outsource. Easy revenue," said Neil Stern, partner, McMillan-Doolittle, a Chicago-based retail consulting firm. "Leveling off is OK. If sales begin to decline, then they might have an issue. I haven't seen anyone in retail promoting sushi, and they could.

"Sushi restaurants are still going up. For that matter, every new [grocery] store I've gone into in the last six months has put a sushi operation right next to their prepared foods, where it should be."

Going out on a limb at one of its newest stores, Kowalski's Markets, St. Paul, Minn., added a dramatic sit-down sushi bar with solid-surface counter and chair-back stools.

While customers liked the look of the counter, most bought their sushi from the self-service section and took it with them, said Mike Oase, vice president, operations, at nine-unit Kowalski's.

"I'd estimate 85% of our sushi sales at that store, open since June, have been self-service. We thought [the sit-down bar] would work, because we know they do well at other places. There's one at Mall of America.

"Now we're going to use that counter for our 'Lunch and Learn' programs and for demoing product, especially our imported cheeses," he said.

In spite of disappointing counter business, Kowalski's can't complain about overall sushi sales.

"Sushi sales [in all Kowalski's stores] have been on a gradual upward swing since we introduced it in 2000. It's been pretty close to store growth," Oase said.

Meanwhile, some retailers have added sit-down service counters and new products in an effort to give sales a lift.

At Whole Foods Market's newest store in Austin, Texas, a sit-down sushi bar appears to be doing good business. It's crowded much of the time, a local source told SN.

In New Jersey, some ShopRite stores have added a full-time sushi chef behind counters that were previously totally self-service.

On a recent visit to a Pearl River, N.Y., ShopRite, SN observed the AFC sushi chef, who has been there only since midsummer, roaming the store, offering customers menus and samples from a tray of California rolls.

Product demoing and sampling is key to increasing sushi sales, said Eddie Owens, director of communications for 47-unit United Supermarkets, Lubbock, Texas. United, which introduced sushi operations three years ago, has sushi in all five of its fresh-format Market Street stores and in two of its United banner stores.

"It [sushi] fits perfectly with our prepared foods offerings in our Market Street stores, and it also is an attractive offering in stores that have a significant mix of college students and health-conscious customers," Owens said. "Both the United stores are in college towns."

There's little doubt that just about everybody by now has at least heard of sushi, and many have dared to taste it. Sushi cookbooks are crowding the shelves at Barnes & Noble. Target Stores' Web site offers a sushi-making kit and at least 10 other sushi-related products.

"Sushi [in supermarkets] may be losing momentum, but like all products, programs and concepts, it has its life cycle," Salus said. "For supermarkets that have had sushi five-plus years, it is no longer 'new and trendy' but a mainstream part of the store's offering."

Knowing Your Limits

Sushi is a classic example of a product retailers should outsource, industry sources told SN.

It's labor-intensive to say the least, but for food-safety and efficiency reasons, it is best left to trained sushi chefs, who know sushi-grade fish on sight and can whip up a tekka roll in seconds, retailers and consultants said.

"We never thought of doing sushi ourselves. When we know someone else can do something as well or better than we can, we let them do it," said Mark Eckhouse, vice president of McCaffrey's Markets, a Yardley, Pa.-based chain of three stores.

Like many retailers, McCaffrey's sources sushi from Advanced Fresh Concepts, Rancho Dominguez, Calif. Officials at McCaffrey's said they have confidence in AFC's chefs on every level.

"We train all our chefs here at our facility and then give them additional on-site training," said Clarence Chan, AFC's national accounts manager.

"Also, we have 60 supervisors out in the field who make unannounced visits to the operations, sort of like a secret shopper. If there's anything out of line, they'll stay and work side by side with the chef till everything's going fine."

The growth of AFC's customers and surging revenue are both testament to sushi's enduring appeal. With its core business in food stores, AFC holds 80% of that market share, Chan said. From about 900 in-store operations five years ago, AFC now operates in 2,200 individual supermarkets across the United States and Canada. In fact, its supermarket accounts jumped by 300 just in the last calendar year.

These days, AFC's customers include about 200 new segments such as commissaries and universities. Partly as a result of branching out to new venues, the company's sales have more than doubled in the last two years, hitting more than $250 million at the end of the last quarter.

AFC has the lion's share of retail accounts, including Kroger, Safeway, Publix, Wegmans, Giant of Landover and, most recently, all units of Dallas-based EatZi's. Other small sushi companies serve some supermarket accounts, too. For example, Agnes Chua, a former AFC associate, owns Ringo and Tsuki restaurants in Chicago. Chua's chefs provide fresh sushi on-site for a handful of independent grocers in the area.

Okami Foods, Sun Valley, Calif., manufactures sushi using only fully cooked product at four processing plants located strategically around the country. "All our items are made to order and shipped within 24 hours," said Okami spokeswoman Tracey Schram. Okami's customers include Jewel, Bi-Lo, Costco and Trader Joe's.