Quick Stats

Quick Stats

    You are here

    Supermarket FRESH FOOD Business: Selling bread short

    Some claim supermarkets are giving away sales to the bakery cafes that are rapidly proliferating in small towns and suburbs.

    While many of the players are relative newcomers that began arriving on the scene in the mid-1990s, the report affirms a belief among industry experts that the upscale sandwich trend will have more staying power than yesteryear's fleeting restaurant fads like bagel and yogurt shops.

    In most cases, bakery cafes specialize in many of the things the average supermarket is already selling—on-premise baked breads, sandwiches, soups, salads, and coffees. And while some would rightly argue that a supermarket would have a hard time competing with their cozy ambiance and rustic appeal, other observers say some grocery retailers seem content to simply hand over this segment of the business.

    But fighting back is certainly not unheard of. For example, rather than surrendering valuable sales to the profitable coffee house competitors, Albertson's in late 1999 embarked on a highly successful alliance with Starbucks to add in-store coffee bars in 100 stores. The partnership, which originally began as an experiment, continues to expand as an important component of the Boise, Idaho-based chain's mission to enhance the customer experience and increase loyalty.

    "Americans purchase two-thirds of their coffee—whole bean and ground—in grocery stores," says Starbucks spokeswoman Sanja Gould. "These coffee bars provide a great opportunity for Starbucks to introduce new customers to the Starbucks experience, while conveniently serving existing customers in a new venue."

    Peter Franklin, president of PeterBread Consulting, Inc., a bakery and foodservice consultancy in Marblehead, Mass., says the popularity of bakery cafés "stems from the heightened, ongoing awareness of good food and people's increasing desire for a convenient, comfortable place to consume it."

    Doug Armantrout, publisher of Chain Account Menu Survey, a Wheaton, Ill.-based data tracking service that monitors items and ingredients on the menus of the nation's top 200 restaurant chains, says the format's potential is greater than that of any of the fast-casual competitors. "There's been a real demand for these kinds of concepts in small-town America," says Armantrout, "because traditionally those communities have only offered consumers two choices—fast food or local restaurants."

    While he expects that bakery cafés will continue stealing share from quick-serve restaurant chains—especially the burger joints, whose menus lack nutrition and variety—Armantrout also anticipates continued growth of the format resulting from an increase in dine-out frequency. "Overall, these formats offer consumers greater choices and much better quality that really stand out when compared with the menus of the QSRs," he says.

    On a big roll in the segment is St. Louis-based Panera, which at the end of 2001 operated 369 bakery cafés in 30 states, 110 of them company-owned and the rest franchised. Through a network of 10 fresh dough distribution facilities, Panera bakes its bread on-site throughout the day for a menu that is built around an extensive line of fresh-baked bread and related products. Formerly part of the Boston-based Au Bon Pain Co., Panera meets four consumer dining needs with its menu—breakfast, lunch, daytime, and take-home bread—with fresh baked goods, made-to-order sandwiches, soups, salads, and café beverages.

    By emphasizing freshness and a perception of healthier food, "bakery cafés are becoming ever-popular dining alternatives and are symbolic of the shift in what people want to eat and how they want to eat it," says Marcia Schurer, president of Culinary Connections, a Chicago-based prepared foods consulting and training company.

    "Bakery cafés are proliferating because they fill a real niche," adds Schurer, noting the "customization that allows customers to select their own breads, fillings, and condiments, or half portions of sandwiches, soups, and salads. People want choices," she says, "and these operators know how to deliver by reinforcing the message with descriptive signage everywhere they look that tells customers why their products taste so good, why they are better for you, and that they are made as they like it."

    The biggest mistake made by many supermarket retailers, says Schurer, is their lack of interest in adding a specialty bread program to the in-store bakery mix. "All too often, when they do have a quality bread program," she adds, "they fail to cross-merchandise or bundle it with other fresh departments and are thus failing to take full advantage of it."

    PeterBread's Franklin concurs. "Why aren't we seeing more than just a few supermarket operators using high-quality breads for sandwiches and other special items?" he asks. "Whatever retailers can do to cross-merchandise items and make it more of an event to go to the market—rather than an errand—is mutually beneficial."

    A big part of the "event" equation, says Franklin, involves offering customers a seating area, "especially for those with kids." And while the seating areas in existing supermarkets "don't really smack of a bakery café," he says, "it's still important to offer people a place to sit down." He notes that the more opportunities shoppers are given to spend time in the store, the more dollars they are likely to spend.

    Though many have awakened to this concept, Franklin says most do not have sufficient space in existing units. "Adding a café would have to be done either with a retrofit or as part of a new store design package," the latter of which is an especially good option for smaller independents who may be reluctant to commit to a full-blown meal center.

    Target the 'quick crowd'

    Franklin is working on a project with a client who will operate a dedicated bakery café within the supermarket. "We are starting to see design teams thinking more creatively when planning new units to better cater to the 'quick crowd' with a place to sit down," he says.

    Noting that both Subway and Quiznos have now made bread a very prominent part of their image, Armantrout agrees that it is illogical to think most retailers can spare the square footage necessary to add a bakery café. "But certainly they can do takeout, which represents an increasing percentage of business at all these types of operations," he says.

    Pointing to a handful of new menu items introduced by bread chain operators in the first half of 2002, Armantrout says, "every one of them includes a specified bread by name or type—rosemary and onion focaccia, French sourdough, asiago cheese and focaccia." The flavor profiles, he continues, "are part of the total package, which is a totally different way of looking at bread. Yet supermarkets already sell many of these kinds of breads, and already have the fillings and condiments, so it isn't asking that they go and inventory new stuff. They can take items they have already and start with a really neat, limited set of sandwiches, and go from there. I don't see many grocery stores paying any real attention to bread, so to me there's a great opportunity here to romance these products and give them a name."

    Sarah Jones, product manager for Dawn Food Products, Inc., agrees: "The growth and success of bakery cafés has been huge, and I do see continued growth in the segment." Jones works closely with the Jackson, Mich.-based Dawn's newer 10-variety Bread Basket Trading Co. artisan bread program.

    Commenting on the early progress of the bakery café segment, Jones says several of today's most successful operators experienced slumps in the beginning, "primarily due to lack of focus. But once they finally decided what they were going to focus on, they have continued to thrive."

    It's a lesson supermarket retailers can learn from as well, says Jones. "It's interesting—everybody associates Panera with bread, but it's really a restaurant. But a lot of people stop there because they think they can get a better loaf of bread there than they can in the in-store bakery. Yet it's my personal belief that Panera's formula for success represents the truest form of perception-is-reality marketing that is based heavily on presentation, packaging, and atmosphere."

    The biggest struggle with supermarket artisan bread programs, Jones notes, is the "bargain shopping mentality that exists with most customers, who are not expecting to pay $5 for a loaf of bread in a traditional supermarket. It's a juxtaposed mindset, because many of those same people who would be sticker-shocked in a supermarket will go into a Panera and think nothing of dropping $5 or more for a loaf of bread. I think in-stores are way too price point focused with their bread programs, and I do think they can get a higher ring in certain stores."

    Jones cautions that not every supermarket is a candidate for an artisan bread program, because it's a niche item that performs best in specific stores. "Even if you're a chain of 10 stores, I wouldn't suggest putting the whole program in each unit, but only in those that make sense," she says, adding that it's equally important for retailers to charge what the product is worth "because if it's in the right location where consumers are already spending money at a Panera or St. Louis Bread Co., why not make it convenient for them?"

    Lots of effort

    Yet even in the ideal location, Jones says, it takes more than "putting the product out there and expecting it to sell. It's going to take effort, education, marketing, and sampling, because otherwise it will fail. Most in-stores are totally terrified of artisan breads," she adds, because of the potential risk of losing money. "I'm a firm believer that artisan bread programs can be successful, but it takes a greater amount of implementation than most people are willing to do."

    To minimize the risk, Jones recommends introducing two or three artisan varieties initially and building from there. The addition of an artisan bread program not only raises bakery sales and increases department traffic, it is also a great enhancement with bundled deli items like party trays, sandwiches, and soup-and-salad combos.

    "The bakery is a labor-intensive area that obviously doesn't make the same kind of contribution as the meat department, but the market is definitely there," says Jones. "It's a matter of being willing and committed to spending the time and effort to tap it."

    Fresh Food editor Meg Major can be reached at [email protected].

    • About

    Related Content

    Related Content