ALBERTSON'S AND BRIAZZ TO TEST SANDWICHES

LYNNE MILLER

SEATTLE -- Briazz, operators of gourmet sandwich shops, is planning to roll out products at 30 Albertson's stores in Southern California next month.

Briazz reached an agreement to begin its test at Albertson's starting July 8, according to a filing this month with the Securities and Exchange Commission. Company officials declined to specify which products will be rolled out. One official with Briazz said the deal had not been finalized.

"Due to the fact this is a test, we're not commenting," said Victor Alhadeff, chief executive officer of Briazz, and founder of the financially struggling chain.

The Albertson's test would be the latest effort by Briazz to bring its brand under another retailer's banner. The sandwich company in May launched a test with Target, supplying eight Target stores in Seattle and Chicago with frozen panini sandwiches, which are then heated and served at stores that have cafes.

In 1998, QFC, a division of the Kroger Co., began carrying prepackaged sandwiches and salads supplied by Briazz. The products are sold in refrigerated deck cases in the delis at more than 50 QFCs in the Seattle area, according to the company's annual report. Tully's Coffee, also based here, began offering the company's salads and sandwiches in its downtown stores in 2000.

Founded in 1995, Briazz operates more than 40 freestanding cafes in Seattle, San Francisco, Los Angeles and Chicago. Four central kitchens in each of those markets supply the cafes with freshly made foods.

While Briazz conveys an upscale image with attractive signage and logos, menu items are priced to appeal to a range of consumers -- entrees range from $2.99 to $5.99, according to the annual report. Menu offerings include traditional foods, such as Cobb salads and tuna sandwiches, and gourmet fare, such as tarragon chicken sandwiches. Targeting office workers seeking a fast breakfast or lunch to take back to work, the company typically opens stores in communities with lots of offices. Some stores even are located on the ground floor of office buildings. Though the cafes offer limited seating, takeout is the focus. Briazz also offers box lunches and catering services.

In its most recent annual report, the six-year-old company had lost $48.1 million as of Dec. 30, 2001. The company plans to close the loss gap by opening a significant number of new cafes in existing markets and making existing units profitable. Last year, the annual report said the company's expansion plans were placed on hold; certain cafe openings were postponed due to lower-than-expected office occupancy rates and poor market conditions in Seattle, San Francisco and Los Angeles.

This year, Briazz shifted its focus to hot sandwiches. The company recently introduced a line of piadinas -- a bubbly, toasted, herb-flatbread sandwich stuffed with premium salad fillings and rolled. Hot subs have proven to be popular at certain cafes in Chicago, San Francisco and Seattle. In fact, Briazz plans to retrofit some of its other stores to allow them to sell the warm sandwiches, the company said.

The new emphasis on hot sandwiches is a wise move for the company, which probably suffers from misperceptions consumers have about prepackaged, refrigerated foods, one industry observer told SN.

"They have good-looking stores," said Ron Paul, president of Technomic, a Chicago food-industry consulting firm familiar with Briazz.

"They started out with refrigerated sandwiches. I think what they've learned is that's an option for grab-and-go, but there's still a large part of the public that doesn't buy into that concept."