Making natural and organic retail food service efficient and profitable

Prepared foods is one of the fastest-growing retail departments, as consumers increasingly turn to their local grocery store for convenient, high-quality alternatives to traditional restaurant fare.

Creating a successful prepared foods offering, however, requires careful attention to space and labor allocation, especially at a time when labor costs are at an all-time high and qualified workers can be difficult to find and retain. Some independent natural and organic retailers are finding that a thoughtfully designed grab-and-go prepared foods assortment can go a long way toward achieving labor efficiencies and overall department profitability.

Retailers such as Grass Valley, California-based BriarPatch Food Co-op make prepared foods a centerpiece of their offerings, where these items reflect the sustainable and organic ethos of their product assortments overall.

Chris Maher, general manager at BriarPatch, which has one location each in Grass Valley and Auburn, California, says his company sees its use of high-quality, organic ingredients as a significant point of differentiation in the market.

“The quality of the ingredients and the fact that we do 100% scratch cooking in both stores is really what sets us apart,” he says.

BriarPatch generates 20% of its total sales though prepared foods at one store and 17% at the other, with overall annual volume for both stores of about $50 million. About 95 workers are employed in the retailer’s massive prepared foods operation. Its success stems from a deliberate approach to managing its labor investment in food production and the right balance of grab-and-go and made-to-order prepared foods, Maher says.

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Grab-and-go items such as its highly popular Cornish pasties (pronounced PAH-stees), a local favorite similar to empanadas, and boxed salads can be produced efficiently from a labor standpoint, generating good margins that help fund the overall department, he explains.

“The pasties and the salad boxes make our grab-and-go program work,” Maher says. “Just a couple of signature items really are the key to the successful financial management of the department.”

BriarPatch also offers an assortment of made-to-order prepared foods, such as bowls, sandwiches and burgers—which are also strong sellers as grab-and-go items—and seeks to cultivate a welcoming environment for dine-in customers, he said. At the same time, it seeks to meet the needs of those customers seeking to take out fully prepared meals or meal components for offsite dining. The retailer encourages customers to build family-sized salads at the salad bar, for example, to take home and serve as part of a home-cooked meal.

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Offering some of the most popular items—including hot sandwiches and BriarPatch’s popular hamburgers—in a heated grab-and-go case helps ease some of the pressure on the service counter, Maher says. BriarPatch has also incorporated digital kiosks for ordering prepared foods, which is another labor-saving strategy.

“I was skeptical of it at first, but I’ve become a believer,” he says.

Although the self-ordering kiosks could have a negative impact on some aspects of personal service, they also appear to boost sales and contribute to labor cost efficiency. Maher cites recent reports noting that McDonald’s has seen its customers place larger orders from kiosks, driven by the kiosk’s ability to display add-on items such as sides and desserts, and he says BriarPatch has experienced the same phenomenon.

Planning for efficiency and profits

Allen Seidner, principal of Thought For Food Consulting, has worked with BriarPatch for several years, as well as other natural foods co-ops and independents around the country.

The extensive array of salads and other items that retailers display under glass in the deli service case can often be pre-packaged for grab-and-go instead, helping drive both labor efficiencies and higher sales volumes, he says.

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“Almost every food in a deli service case can be made to look wonderful and portioned right in a container for grab-and-go,” Seidner says. This is a proven strategy that can multiply sales tremendously and make those items more convenient for customers.

When he’s working with retailers on implementing or optimizing their prepared foods offerings, he seeks to drive as much volume as possible through self-service programs.

“When we maximize that potential, the labor rate going into producing the foods for those programs is inordinately low,” he says. “That subsidizes the ability to pay for the labor needed in the service programs.”

He often recommends that retailers target a blended labor cost rate of about 35% for the grab-and-go and service areas combined. That would likely include a rate in the 20%-plus range for the grab-and-go items, and 40%-plus for the made-to-order items.

Carefully planning the prep work in a retail food service department is among the keys to success, Seidner says. Operators need to have a good understanding of both the sales trends for each item as well as the shelf life. These key data points will help dictate the daily production and, if executed correctly, will optimize product freshness and minimize both out-of-stocks and waste.

If a retailer’s house-made hummus remains good for five days, for example, Seidner suggests making three days’ worth at a time. “That way you will be making hummus only 2.3 times per week,” he says. “If you’re making it three or four times a week, that’s time spent unnecessarily producing hummus that could have been spent producing something else.”

 In addition, it’s important for operators to focus the efforts of their most talented and highest-paid food service workers on the tasks that require their skill and expertise, rather than having them spending time on basic prep tasks that could be performed by a lower-level employee in the department, he points out.

Seidner also advocates segregating vendor-supplied prepared foods from the retailer’s assortment of house-made items.

“My advice and my philosophy about vendor product in the deli is that there shouldn’t be any, period,” he said. Products such as dips and spreads from local vendors should be managed by other departments, such as those overseeing grocery or refrigerated products.

“Every hour that a deli manager has to spend ordering and receiving finished product is an hour they’re not available to make scratch, homemade foods,” which will often generate higher margins, he adds.

It could make sense for some retailers to operate an in-house commissary-style prepared foods facility, however, Seidner says. For example, one retailer he is working with acquired a second, larger location that already housed a full scratch bakery, which will enable it to supply both fresh baked goods and other grab-and-go foods for both locations.

“A limited commissary program absolutely can make some financial sense,” he says.