HARRIS TEETER TESTING ITS OWN HOT LINE, EYES BRANDED FOOD

PAT NATSCHKE LENIUS

CHICAGO -- Increased competition from home meal replacement operators is leading Harris Teeter, Charlotte, N.C., to test hot prepared foods and even to consider branded prepared foods merchandising.

Harris Teeter is one of the industry leaders in producing and marketing its own high-quality, chef-prepared chilled foods, so the contemplated shift to hot foods and someone else's brand is particularly striking.

Gianfranco DiCarlo, director of deli, bakery and food service for the 140-unit chain, said competitive pressure from food-service segments exemplified by Boston Market is driving his company to change its strategy.

At a seminar during the National Restaurant Association show here, DiCarlo acknowledged that Harris Teeter has been talking with representatives of branded food-service operator Popeyes Chicken, Atlanta, about a partnership.

On the seminar panel with DiCarlo was Popeyes Chicken executive Mark Rinna; Harry Buskirk, DiCarlo's counterpart from the Columbus division of Kroger Co., which currently has Popeyes outlets in some stores, and Anthony Tedesco of Brinker International, which is a partner in the food-service/grocery hybrid Eatzi's in Dallas. Appropriately, the subject of the seminar was the blurring of lines between restaurants and supermarkets.

Harris Teeter developed its prepared food program deliberately with a focus on cold

food, hoping to teach consumers to take the food home, reheat and serve in order to get optimum quality, DiCarlo told attendees.

"As a culinary, I want to be true to the food. Whenever you put cooked product or something ready to be served under constant heat, as time goes by you destroy the product," DiCarlo said.

"But now, we have restaurants such as Boston market and Kenny Rogers preparing meals, with good home-cooking type food. They are giving us a challenge. We have to do something about it. We are testing hot cooked foods to take home. We are providing the alternative of heating the food before the customer leaves the store," he said.

"Our shoppers told us they could use help with their meal preparation. Four years ago we began with a simple concept, restaurant-quality meals at supermarket prices. We put together culinary teams in-store, developing recipes. We tried to match the mix to the taste of customers in each market. The theme of our prepared foods program is "Fast and Fresh," he said.

The Fast and Fresh line consists of more than 100 prepackaged items to heat in minutes at home. The latest addition is "Dinner for Two" bagged and ready to pick up. Different specials are available each night, he said.

Due to the geographic distance between some of the stores, most of the food is prepared at store level as opposed to a central kitchen operation, he said.

Among Harris Teeter's current prepared food offerings are scratch pizza by the piece or pie, sandwiches made to order at many stores and hot sandwich bars in some stores, fried chicken in all locations, a wok program, coffee and espresso bars, sushi bars in some stores, salad bars in most stores, Caesar salad stations in some, and a grill serving breakfast and lunch entrees in some stores, he said.

"The grills do tremendous lunch business from upscale to blue collar. Our rotisserie chicken program is booming. Some stores also offer turkey. All stores now offer side dishes for a full takeout meal," DiCarlo said.

Recently, the chain has opened a wing with a test kitchen and laboratory where chemists can monitor the food for bacteria count. Also, every deli, bakery and food-service associate or chef has to undergo an in-depth training program and be certified, DiCarlo said.

"We go beyond what the Board of Health asks. We have our own standards. Our in-house inspections are twice as strict as the Board of Health. In some cases, we partner with an outside company to produce product for Harris Teeter based on our recipe. We send inspectors to the companies that produce for us. They have to pass an initial inspection, and we have an agreement that allows us to visit the facility without advance notice," he said.

Harris Teeter is in the process of gathering data to determine what incremental sales are being generated by its food-service program, DiCarlo said.

"We feel our food service has been a tremendous attribute and has given us a competitive edge in our area," he said.

In higher volume stores in Atlanta, food service can represent as much as 22% to 23% of total store sales. In smaller stores with fewer amenities, distribution may be 8% to 9% of total store sales, DiCarlo said.

"In the future, we hope to venture with some branded items, as Kroger is doing. We are putting together a training program for those companies to meet our standards. They will be great companies like Popeyes, but we want them to understand our culture," DiCarlo said.

Currently, Popeyes operates 18 restaurants in supermarkets, all in Kroger stores, said Mark Rinna, president of Popeyes Chicken in Atlanta. Eleven of those outlets are corporately run, and franchisees run the others.

"We are looking at [partnerships with companies] other than Kroger. We have had some conversations with Harris Teeter, Fiesta Mart and some other chains," Rinna said.