SUPERMARKETS SEEK BIGGER BITE OF TAKEOUT MARKET

Christine Blank

NEW YORK -- Supermarkets are pumping up their their lunch and dinner business to capture a bigger bite of the lucrative takeout market.

Industry observers pointed to a handful of operators that are giving restaurants a run for their money, including Wegmans Markets, Ukrop's Super Markets, Whole Foods Market stores and Wild Oats Market stores.

While it remains a challenge for many, if not most, retailers to compete with restaurants, supermarkets have a few advantages, industry observers said. For instance, in many cases, they offer better pricing on meals than casual dining chains.

Wegmans' relatively new Dulles, Va., store, which features a sit-down Market Cafe, coffee bar, pizza offerings and an Old Fashioned Sub Shop, does a "great" lunch business, said Jim Wisner, president of Wisner Marketing Group, a Libertyville, Ill.-based supermarket consulting and research firm.

"The food is very good, not your average, bland sandwich lunch food," Wisner said. "There is good pricing and fairly quick service."

Whole Foods Market also does a remarkable job promoting takeout sales from its cafes and prepared foods sections, particularly at its bustling Columbus Circle store in Manhattan.

"You could see enough things to bring home for dinner for the next 10 years, including salads, sandwiches and cooking items," Wisner said. "It's fresh and quick, relative to a sit-down restaurant."

While some restaurant chains known for quick quality meals, such as Panera Bread, are seeing good sales, they still cannot offer the variety and pricing that many supermarkets can, Wisner said.

Still, supermarkets have to step up their game because the restaurant industry is grabbing a greater portion of the takeout market. About 75% of consumers use takeout or delivery from full-service restaurants at least once a month, according to a new study from Technomic, a Chicago-based food-service research and consulting firm.

In addition, twice as many regular users expect to increase their use of takeout and delivery restaurants in the coming year, the study found.

Restaurants have captured more takeout customers by making their pick-up and delivery options more convenient.

For example, selected Outback Steakhouse restaurants offer curbside "take-away" service in which restaurant employees deliver pre-ordered food to customers' cars.

Competition from Outback locations and other restaurants with curb-side services prompted Richmond, Va.-based Ukrop's to look at how it can make its in-store cafe and prepared foods offering more convenient, said Nancy Wingfield, food-service director for Ukrop's.

"We've done well with pick-up, but what restaurants are doing with their curbside service is a very innovative idea, and something that we can look at to improve," Wingfield said.

While Ukrop's in-store cafes already have separate entrances for shoppers, the chain is looking at other ways to make takeout more convenient.

"We don't have a particular strategy in place, but we're looking at our parking spaces outside the store and what other means we can do to attract more consumers," Wingfield said.

One option Ukrop's executives talked about in the past but have not implemented is a drive-through window for its cafes. Some stores, including at least one H.E. Butt Grocery supermarket in San Antonio, Texas, are already using the windows, Wisner said.

"The problem with supermarkets is going in and getting the food," he said. "It's too much of a chore."