DISTRIBUTORS OFFER HMR ADVICE TO RETAILERS

SALLY BELL

DALLAS (FNS) -- The supermarket industry's inexperience in the fresh take-out meal business presents "a glaring opportunity" for food-service distributors to help retailers develop quality, profitable home-meal replacement programs, said a panel of distributors at the HMR Summit here.

A supermarket's focus is necessarily so broad that it is difficult for operators to become experts in the entirely separate and highly competitive environment of food service, the panelists said.

The proof is in the statistics, said James O. Hendrickson, vice president of sales and marketing for Thoms Proestler, Rock Island, Ill. He cited a study published by SN showing that 64% of shoppers never visit the supermarket just to buy prepared foods.

Food-service distributors commonly have vital specialized expertise on staff that a supermarket on its own would have difficulty matching, he pointed out. These consultants often include restaurant management personnel, chefs, dietitians, beverage specialists, sanitation control experts and specialists in merchandising and promotions.

Distributors are accustomed to responding quickly to changing customer needs, and they understand the restaurant competition down the street, Hendrickson said. They also provide restaurant-style consulting expertise, such as food and labor cost control, software solutions, and guidance on food and nutrition.

"They can coach you on what you need to be doing, and help address labor and other problems that affect profitability," he said.

Floyd Warner, director of produce and training for Fort Worth, Texas, wholesaler Ben E. Keith Co., pointed out additional advantages of bringing in food-service distributors, including delivery of products for a designed use, selection control of similar items, decreased temptation to use short-dated items that hurt ultimate product quality, aid in maintaining HMR profitability, and even menu suggestions that help boost customer sales.

The men said that while most supermarketers have yet to do a good job with HMR, it has great potential given societal trends of limited time, interest and experience cooking full meals at home.

Hendrickson cited a 1997 study showing that supermarkets today have just 19% of the

HMR business, which not surprisingly is dominated by full-and limited-service restaurants that together hold 75% of HMR dinner business.

But the same study also showed that food stores of all kinds lead in HMR growth, reflecting a 16% increase from 1991 to 1996, compared with the 6% growth in restaurant off-premise sales. Another study showed that HMR is expected to comprise nearly half of food-industry growth between 1996 and 2001.

Contrary to the assumption that restaurants have all the advantages when it comes to customer convenience, Hendrickson said supermarkets actually lead today when it comes to maintaining a take-out food operation, and having a separate entrance and checkout for take-home foods.

Supermarkets interested in developing HMR programs capable of snatching business from the neighborhood restaurant have other advantages as well, he noted.

Foremost, up to 10,000 customers a week pass through the doors, already-shoppers whom store traffic patterns can judiciously guide right to HMR. They often have big marketing budgets with which to launch and promote HMR, economies of scale across many units in food preparation, and flexibility in preparing meals in-store or in a central commissary.

Many hurdles remain, however. The sheer size of today's sprawling supermarkets, with parking in vast lots, can pose a daunting obstacle to shoppers wanting a quick solution to

tonight's dinner. Inside, these convenience shoppers fight shopping carts, have difficulty finding people to wait on them, and then wait through a long checkout line to pay for the purchased meals. "That's not what I call convenient," remarked Hendrickson.

Other obstacles to success include controlling labor costs and product waste, food safety and cold chain management, and negative customer perceptions about supermarket quality compared with that of restaurants.

Ben E. Keith's Warner advised supermarkets interested in developing HMR programs to "do your demographics -- know your clientele, plan your menu to meet your customers' demands and always have fresh products produced just-in-time. Do that, limit your production labor to meet the peak hours and keep portion cost under control, and you will be successful."