UKROP'S TURNS NEW PAGE WITH MCDONALD'S COLLEGE VENTURE

ROSEANNE HARPER

RICHMOND, Va. -- Beginning this week, Ukrop's Super Markets brand pizza and soups will be served up hot at a McDonald's operation here in a groundbreaking link-up for the supermarket chain.

In addition to putting Ukrop's pizza alongside Big Macs on the hot menu, the deal gets the supermarket chain's fresh-made sandwiches, salads and entrees into a refrigerated self-service case adjacent to the fast-food service counter.

All the Ukrop's items for the joint venture will be produced at the chain's central facility here and delivered on a daily basis, Ukrop's officials said.

The McDonald's operation opened on the Virginia Commonwealth University campus here late last month, sporting a banner over the counter promising the imminent arrival of Ukrop's products. Indeed, the banner has been counting down the days until Sept. 17, when the chain's products will appear.

Sept. 24, Ukrop's will introduce an identical roster of products at another McDonald's site, which opened earlier this month on VCU's Medical College of Virginia campus here.

This is the first time Ukrop's has gone outside its own stores to market its products, officials said.

"McDonald's has been a very willing partner, agreeing to make any modifications necessary to effectively handle Ukrop's products," said Kevin Hade, vice president of manufacturing for the 25-unit supermarket chain here.

"Basically we are a vendor in this situation, selling products to McDonald's. We're running this as a venture out of our manufacturing group, and it will be McDonald's employees selling Ukrop's pizza from behind the counter," Hade said.

He stressed, however, that the employees will be trained by Ukrop's in the handling and presentation of the products. McDonald's has agreed to send its employees through Ukrop's orientation program, which covers the chain's history, food-production and food-safety policies, and "makes associates aware of some of the macrocultural issues associated with Ukrop's, what consumers will be looking for from them," Hade said.

A requirement for all Ukrop's associates, the orientation will be given to McDonald's employees at Ukrop's corporate offices.

"We're actively involved at the campuses, too," Hade added. He explained that Ukrop's assigned responsibility for the two sites to Ted Ukrop, accounts manager for fresh foods. Either he or his assistant, Jennifer Pufki, will be on site almost constantly in the beginning, Hade said. Indeed, Pufki will spend full days at the first site for the first week.

"Jennifer will be there to work closely with McDonald's managers on the ordering of our products and the presentation of them because dealing with chilled prepared food, and shelf life, is totally different from what McDonald's is used to," Ted Ukrop told SN.

While she's at the sites, Pufki will be sampling and demoing Ukrop's products, and talking to customers, "especially on the VCU campus where the students are younger and a lot are not from Richmond; they're not all familiar with our food. At the other campus, a lot of students are from Richmond so they're more familiar with us," Ukrop said.

Hade pointed out, too, that Ted Ukrop's team will seek feedback from customers to make sure the product mix is appropriate.

"We may find that what we've selected and what the customers want are two different things. In our stores, we offer about 60 chilled entrees. But for these sites, we took about 30 of our most popular items, ones that appeal to a cross-section,"

Hade said. Hade said the chain sees its presence on the university campuses as an opportunity to meet a need, to perhaps develop those already familiar with the chain into long-term customers, and also to introduce its products to a student population that may not know about Ukrop's.

"It's also an opportunity to just bring our products a little closer to the consumer. People are so busy, if they work nearby, they may, on their way home, swing by this entity to pick up dinner," Hade said.

The link-up is also a chance for Ukrop's to "inroad ourselves into some younger consumers," he added. "That was an attractive element in our decision."

Exporting its products to sites outside its stores also will make fuller use of its central commissary, which at this point is only at 60% of capacity.

Hade said that Ukrop's has made no arrangements at this point for other out-of-store marketing sites. "We'll see how this goes," he said.

Industry experts see the relationship between McDonald's, Ukrop's and VCU as productive for all.

"Ukrop's has positioned itself to do this type of thing with its commissary," said Neil Stern, partner in McMillan/Doolittle, a Chicago-based retail consulting firm. "In a minor sense, it's a brand extension for them. In another sense, it's making better use of the commissary. One of the biggest problems with home-meal replacement is sourcing products.

"I haven't heard of anybody else doing this," he added.

Brian Salus, who was a food-service executive at Ukrop's before starting his own consulting business, Salus & Associates, in Midlothian, Va., four years ago, sees this particular partnering as historic.

"To some, this might seem to be a relatively small event, but in reality this is something the food industry will look back upon as a milestone," said Salus, who is the president of his firm.

With consumers reducing their consumption of both fried foods and beef items -- two of McDonald's core products -- McDonald's needs to source more consumer-popular menu choices and the relationship with Ukrop's does that, Salus said.

"Ukrop's offers McDonald's a source for freshly prepared foods -- and a wide variety at that -- fresh products that add much to the mix at the 'food courts' at MCV and VCU," he added.

Salus also said it's a plus for Ukrop's that the relationship exposes it to McDonald's restaurant-system and management-system expertise. Hade at Ukrop's agrees.

"It's a great opportunity to work closely with the largest restaurant company in the world. We feel like we've already learned some things from McDonald's. For example, the types of things they demand from their vendors. They have some very good systems," Hade said. The three-way deal has been percolating since the first of the year when McDonald's spearheaded negotiations with Virginia Commonwealth University officials, Hade said. And all parties involved are optimistic about the relationship, he said.

At McDonald's, Julie Glockner, regional marketing manager for the chain's Norfolk region, said, "We are extremely excited about this concept and what it can do. I think students and faculty have even more stress put on their time than most people and this meets their needs."

The McDonald's units on the two campuses are corporate-run rather than franchised. Glockner added that McDonald's could have gone into the contract relationship with VCU alone, but both McDonald's and VCU wanted to expand the selection of food offered.

To do that, an association with Ukrop's was a hands-down choice, she said. McDonald's approached Ukrop's with the idea last December.

"We knew their reputation. We wanted the quality they offer. And Ukrop's is not only a great supermarket, but also a great corporate citizen, as are McDonald's and VCU," Glockner said. She added that she sees it as a huge opportunity for all concerned.

So does VCU president, Eugene Trani. "When you merge the diversity of products and high-quality service of both McDonald's and Ukrop's, which is Richmond's favorite grocery store, you get an unbeatable combination," Trani said.

Even before Ukrop's actual arrival on campus, positive feedback has been coming in from students and faculty, said Charles Bryson, director of business services for the university.

"They [Ukrop's] are unbelievably well-respected here. The local community ranks them right up there with Mom and apple pie," Bryson said.

He said the hundreds of menu items that will be available between McDonald's and Ukrop's are creating excitement on campus.

"We've had people asking when Ukrop's is coming and what they're going to be offering," Bryson said.

A banner at the two sites says, "Ukrop's Fresh Express Coming . . ." The number of days left until the debut is changed on the banner each day. Other graphics announce, "Ukrop's Pizza, Ukrop's Hot Soups Coming Soon."

The selling and prep area at each campus is approximately 2,000 square feet, and that doesn't include the backroom or seating.

"There's seating for hundreds so students can eat and work on their notes or assignments," said Bryson.

McDonald's will offer a full menu of items just as it does in its freestanding stores. Ukrop's, in the beginning, will offer just four basic pizzas, which will be sold only hot, either by the slice or the whole pie.

"They'll be sausage, pepperoni, cheese and a vegetable pizza. Later, maybe we'll add more," Ted Ukrop said. The pizzas will be brought from the commissary already topped. Two or three varieties of hot Ukrop's soups will be offered daily as well.

A large variety of baked, breakfast items such as muffins and bagels will also be supplied by Ukrop's, both at the McDonald's counters and at Company Joe's, a separate McDonald's concept on the campus. It features baked goods and coffee. Ukrop's coffees will also be offered at each concept, Ukrop said.

In the refrigerated, self-service case, Ukrop's will offer its Dinners for Two as well as the variety of single-serve entrees and salads and sandwiches. Indeed, this month's Meal of the Day list has already been posted at the campus sites. Each month, the supermarket chain direct mails and also posts, in-store, the Dinner for Two that will be available each day. It's a packed-up dinner including entrees, salads, soup, dessert and bread or rolls.

Prices of Ukrop's products will probably be kept the same as those in its stores, but ultimately the decision is McDonald's, said Ukrop.

While McDonald's has units on 20 some college campuses around the United States, this is the first time it has linked up with a supermarket on a campus. Here, McDonald's lease arrangement with VCU is similar to its others, Glockner said.

Between the VCU academic campus and the medical school campus, the head count in students is approximately 22,000 and faculty totals 13,000, college officials said.