INDUSTRY REFLECTS ON BOSTON CHICKEN'S CHALLENGE, CHAPTER 11

Brenda Lloyd

ATLANTA (FNS) -- Whatever happens to Boston Chicken, Golden, Colo., which filed for Chapter 11 bankruptcy protection Oct. 5, many supermarket retailers and industry experts credit the company with challenging them to proceed with their own meal-solution programs.

According to Scott Ruth, director of the meat and specialty department at Big Y Foods, Springfield, Mass., "this is a positive for retailers because [Boston Chicken] helped us get established in the rotisserie business. They made us see that there was a demand for it."

He said Big Y had been offering rotisserie chicken, but it had not been as well promoted before the arrival of Boston Chicken's Boston Market. Now, Big Y offers a rotisserie chicken that is 30% larger than the ones sold by the restaurant chain, and it advertises the fact heavily, calling its product World Class Bigger Chicken, with a subtitle that reads "30 percent larger than Boston Market."

Said Ruth, "They heightened the awareness to the fact that the consumer was willing to purchase that product. They put the challenge out to us."

Tom DeVries, director of food service at D&W Food Centers, Grand Rapids, Mich., said all retailers need to remember that meal replacement has grown past Boston Market-style programs.

"It's our ability to educate and communicate to the consumer that we have meal solutions that go beyond rotisserie chicken," he said.

Boston Chicken's Chapter 11 filing doesn't necessarily mean business will automatically become easier for retailers, he continued.

"Supermarkets now must convince customers that we're convenient sources for meal solutions. The food must satisfy three selling points -- price, convenience and the overall experience, meaning taste and packaging," he said.

D&W Food Centers believes it must meet three goals in its meal solutions program, he said. First is freshness; second, the perception of value around the product (specifically price value, convenience and experience); and third, the appropriate variety, such as pork loin, turkey breast and chicken. D&W, he said, has four basic meal solutions areas -- one for salads and soups, a sandwich/panini area, a pizza/pasta area, and the rotisserie area, where the Boston Market-type foods are served.

Ira Blumenthal, president and founder of Co-Opportunities here, advised supermarkets to learn as much about Boston Chicken and the company's mistakes as possible.

"Boston Market is the laboratory for companies to build their own business," he said. "This is a marvelous opportunity for the supermarkets and gives them a chance to make hay. If Boston Market becomes strong again, they'll become a viable competitor. This is a good time for supermarkets to gear up because [Boston Chicken] will be back. They're weak and wounded, but they're not dead."

And, Blumenthal further believes the Boston Market restaurant concept will survive. While Boston Chicken has closed more than 175 of its 1,143 restaurants, Blumenthal said he believes the stock will rebound and the company will improve. "Boston Market has a wonderful new management team and is poised and ready if they take lessons from their history," he said. "I look to see Boston Market regain a position of prominence."

Blumenthal said he now fears some players who have expressed skepticism about the importance of the fresh-meals segment will proclaim the entire business dead.

"That is so off-track. HMR is an emerging trend and, when it becomes full-blown, my belief is that it will be the most important trend to hit the food industry," he said. "That's because double-income families now prevail in American society, and will include 76% of American households by 2000. Regardless of the naysayers, you can't run away from this consumer trend."

He also credits Boston Chicken as the first food-service chain to provide meal solutions. "I think we owe Boston Market a debt of gratitude. They went for it and made a lot of mistakes and by doing that gave birth to an emerging trend."

The company made three critical mistakes that brought it down, he continued. According to Blumenthal, the operator should have brought in more value-added foods, which would have reduced shrink; devoted more attention to its time-poor customers and revamped its much criticized slow drive-through; and spent less time watching its stock value and more time on its food and service.

Terry Roberts, president of Merchandising by Design, Design Associates, Pittsford, N.Y., sees the bankruptcy filing as an opportunity for supermarkets, but fears it may set some retailers back.

"The reaction by supermarkets concerns me because there are people who are just beginning to believe in this and getting into it, and now they could say, 'I knew this wouldn't work,' " she said, adding that more progressive retailers are looking beyond the food-service deli area to include the entire store in meal solutions. "[It] can also include the value-added, ready-to-cook items, the precut, premarinated, prestuffed meals that allow the consumer to prepare dinner at home. We see this as the biggest growth area."

Supermarkets, she continued, are doing an excellent job with rotisserie chicken and their pricing. Specifically, she cited the high quality of the products currently available in supermarket rotisserie programs, as well as improved levels of convenience and freshness.

Brian Salus, president, Salus & Associates, Richmond, Va., said he believes the Chapter 11 filing bodes well for supermarkets because the consumers looking at that kind of menu are still there. If supermarkets have a comparable offering in areas where Boston Market had stores, they should see some increase in business.

Like Blumenthal, Salus said the supermarket industry should thank Boston Chicken for its pioneering attitude. "The supermarket industry probably owes Boston Market and some other early participants in the quick-comfort food business a sincere thank you because it was a wake-up call that galvanized supermarkets to understand that their market share was eroding," he said. "It taught them that they had to do more than just put rotisserie chicken out and sell it. They had to do marketing of meals and bundling."

The Chapter 11 filing also spotlights the results of operating poorly a hybrid meal market that depends on customer volume, he continued. "The ability to combine restaurant expertise, a background that supermarkets don't have, and to handle high volumes of customers, which restaurants don't have, is what is making some supermarkets, such as Wegmans and Ukrop's, successful," he said.

Big Y's Ruth said his company will feature its meal solutions more prominently now that Boston Market will be less visible in his area, and will add value to the program by including another item with the purchase, such as a bottle of Coke or a side dish (i.e., mashed potatoes or French bread) for free.

Ruth said Big Y has been successful in part because of its limited menu, which is comprised of "restaurant-quality comfort foods," including pizza, chicken, meat loaf and lasagna. He said Boston Market's expansion beyond its core product line was one of its problems.

"They started out with a great concept like KFC and then went on to other things. You have to do what you do best," he said.

D&W Food Centers' DeVries said his company has always heavily marketed its meal solutions program on a consistent basis. "Boston Market has only two restaurants in the greater Grand Rapids area anyway," he said. "So I don't see us doing anything different" as a result of the filing.