In-store feeders offer value bundles, branded fare to sate shoppers

Industry observers who might wonder why quick-service chains feel the need to market $1 menus haven’t been tracking some of foodservice’s less obvious though no less formidable competitors, such as the snack bars operated by the Second 100’s in-store feeders.

Clearly pushing the value proposition on top of their already evident convenience pitch are the retail-chain feeders Costco Wholesale Corp., with its proprietary food courts; Target Corp. and its homegrown Food Avenue concept; and Wal-Mart Stores Inc.’s proprietary snack bars.

They are powered by everyday-value bundles, such as the chicken and Italian sausage on a whole-wheat roll with a medium fountain drink for $2 at Food Avenue or Costco’s all-beef hot dog and fountain drink for $1.50.

Those mass merchandisers’ feeding divisions contrast greatly with the higher-end concepts of another Second 100 in-store chain, Barnes & Noble Cafe from Barnes & Noble Inc., and the multiconcept foodservice division of Second 100 company qualifier Nordstrom Inc.

“We sell over 60 million a year,” Costco’s Alan Bubitz says of the hot dog bundle. “We’re doing very good” this year because “in a tough economy people recognize us as even more of a value.”

The Costco vice president and general manager of food courts, bakeries and delis notes the chain’s “average ring,” or per-person spending, is “a little over $2.”

IN-STORE CHAINS RANKED BY U.S. SYSTEMWIDE SALESU.S. SYSTEMWIDE FOODSERVICE SALES* (BY FISCAL YEAR, IN MILLIONS)*Actual results, estimates or projectionsSource: NRN research

Though Costco’s food court menu is limited, with most prices below $3, the Issaquah, Wash.-based chain recently added a cold turkey and havarti cheese wrap for $3.99 to complement its pizza and warm “Chicken Bakes” hand-held foods line. The wrap cannibalized chicken Caesar salad sales by a small percentage, but the gains are nonetheless “incremental” for the new item, Bubitz says.

IN-STORE CHAINS RANKED BY NUMBER OF U.S. UNITSYEAR-END NUMBER OF UNITS**Actual results, estimates or projectionsSource: NRN research

The menu at Minneapolis-based Target’s Food Avenue has evolved in recent years to go beyond popcorn and soda for $1.50, personal pan pizzas for $3, and chicken tenders and a soft drink for $2.50. It now features the likes of soup or chili in a bread bowl, $3.99, and organic macaroni and cheese, $3.

IN-STORE CHAINS RANKED BY GROWTH IN U.S. SYSTEMWIDE SALES (Year-to-year percentage change)*Actual results, estimates or projectionsSource: NRN research

Also offered are numerous grab-and-go cold-case items appropriate for a number of dayparts or snacking, such as raw vegetables and dip, 99 cents; yogurt-and-granola parfaits, $1.99; a peanut butter and jelly sandwich with small Slushee drink combo, $2; turkey and Provolone cheese sandwiches, $2.99; and a chicken Caesar or “California” salad with poppy seed vinaigrette, $3.99.

Food Avenue also merchandises and promotes Target’s proprietary Archer Farms brand of prepared foods and ingredients by serving them and noting the Archer Farms affiliation on the menu.

The outlets of New York-based Barnes & Noble Cafe offer nonbranded, commissary prepared sandwiches, panini and egg-based “strattas,” as well as a full line of branded and prepared Starbucks coffee, espresso and blended drinks, and numerous baked goods from The Cheesecake Factory Inc. Food prices range from $1.50 for a bagel to $2.95 for warm pretzels with such stuffings as spinach and feta cheese, to $5.95 for a turkey and cheese panini on seasoned bread with chipotle-infused mayonnaise.

IN-STORE CHAINS RANKED BY GROWTH IN NUMBER OF U.S. UNITS (Year-to-year percentage change)*Actual results, estimates or projectionsSource: NRN research

Though piggybacking extensively on the marketing punch and materials of Starbucks, and the cache of Cheesecake Factory, Barnes & Noble leverages the marketing and frequency benefits of the bookseller’s Barnes & Noble Member rewards program, offering all card carriers a 10-percent discount on cafe fare.

In the latest year Borders Group Inc. of Ann Arbor, Mich., virtually completed the conversion of its proprietary Borders Cafe operations to licensed Seattle’s Best Coffee outlets in the nearly 500 bookstores that contain cafes. The higher per-unit-sales yield from the SBC concept contributed to Borders’ 18.75-percent rise in estimated foodservice revenue, to $133.0 million, to No. 180 among Second 100 companies.

Nordstrom Inc. in the latest fiscal year bumped its estimated foodservice revenue to $175 million, ranking No. 153 among Second 100 companies. It did that by relying on its established portfolio of full-service and upscale fast-casual concepts, including Cafe Nordstrom, Marketplace Cafe, Cafe Bistro and ebar-brand coffee bars. But the latest news from the Seattle-based luxury retailer revolves around the recent debut in Burlington, Mass., of the Blue Stove small-plates cuisine and wine-bar concept on the second level of a new store there.

A second Blue Stove is slated to open later this year in a Nordstrom in Thousand Oaks, Calif.

Though Nordstrom foodservice officials declined to provide details about the menu or operations of full-service Blue Stove, the 92-seat Boston-area restaurant with exhibition kitchen has enjoyed positive buzz in online chat areas. Amateur Internet reviewers have said mostly good things about the pricing—most items range between $5 and $12—and the menu, which contains such selections as risotto with scallops and asparagus, chicken tacos with lime and cilantro, short ribs, clams with toasted pasta and chorizo, and fried calamari.

Second 100 chains see slowed sales growth for second consecutive year