Watch out, Publix: Kroger backing organic grocer with Florida expansion plans

Apr 1, 2016, 1:10pm EDT Updated Apr 1, 2016, 1:19pm EDT

Ashley Gurbal KritzerReporterTampa Bay Business Journal

A specialty grocer that's expanding in Florida now has the backing of one ofPublix Super Markets Inc.'s biggest competitors.

Kroger Co. (NYSE: KR) based in Cincinnati, said Friday that it has entered a "strategic partnership" with Colorado-based Lucky's Market.

A Lucky's Market storefront in Louisville, Kentucky.

"Kroger has made a meaningful investment in Lucky's, which will significantly accelerate Lucky's Market's growth in new and existing markets. The financial terms of the transaction, which closed today, were not disclosed," the companies said in a statement.

Lucky's has three locations in Florida — in Naples, Gainesville and Coral Springs. Four more stores are planned, in Neptune Beach, Melbourne, Orlando and Plantation. It has plans to open seven Florida stores in 2016.

The grocer has 17 stores in 13 states.

But there's likely a lot more to come, especially with the backing of a powerhouse like Kroger. In 2014, Lucky's told the Tampa Bay Business Journalthat Florida was one of its target growth markets. Retail real estate brokers in the Tampa Bay region say the grocer is one of a handful new concepts scouting the market for space.

A Lucky's spokeswoman did not immediately return a request for comment Friday.

With Kroger behind it, Lucky's is likely to become a much more significant competitor in the grocery world — and yet another new concept to chip away at Publix's market share. In recent years, Publix has held its own against specialty grocers by offering more organic and natural items and increasing its prepared foods departments.

Both Publix and Kroger have seen success from adding upscale touches to their mainstream stores — it's been particularly effective at luring in shoppers fromWhole Foods Market Inc. (NASDAQ: WFM), which is struggling.

"This strategic partnership is designed to further enhance the best products, practices and techniques Lucky's Market has to offer," the companies said. "These strengths, combined with Kroger's scale and experience, will in turn create benefits for customers and help Lucky's Market grow over time."

The partnership may also give Kroger an upper hand in its mainstream stores, in markets where it competes with Publix — metro Atlanta and the Carolinas. Ties with a company like Lucky's could strengthen Kroger's organic and specialty offerings across the board.

Lucky's competes on both price and quality. Its tagline is "organic for the 99 percent." The company's 30,000-square-foot stores are built to resemble "an indoor farmers market," with "garage door entrances, field bins, barrels and wooden crates."

It's also known for its prepared foods and private label goods — two big growth areas in the grocery world.

Lucky's isn't the only organic grocer with Florida in its crosshairs. Sprouts Farmers Market (NASDAQ: SFM) has big plans for the Sunshine State — with the first confirmed location in Palm Harbor. A prime corner in South Tampa is also said to be a target for Sprouts.

Analyst: Dunkin’ Donuts tests grab-and-go options

Stephen Anderson suggests kiosk test could boost sales 1 to 2 percent

Mar 29, 2016Jonathan Maze

Dunkin’ Donuts is testing kiosks with a selection of sandwiches at some of its locations, according to a research analyst who suggested that the effort could boost sales at the coffee chain.

Stephen Anderson, analyst with Maxim Group, said Dunkin’ is testing “Ready-to-Go Choices” kiosks in some markets. The kiosks, placed near the front of the ordering line inside units, include various sub and sandwich items, like an Italian Sub for $5.49 or a Fruit-and-Cheese Platter for $6.29.

Anderson spotted the kiosk inside a unit in Connecticut, and said the company confirmed the kiosk was part of a market test. He estimated the effort could boost same-store sales by 1 percent to 2 percent, assuming a broader rollout “in late 2016 or 2017.”

“We believe that morning customers may pick up an additional item, such as a sandwich or salad, for consumption later that day, while afternoon beverage customers can pick up a snack on the run,” Anderson wrote in a note on Monday. He also said the kiosks would help with franchisees’ cost structure because operators will have to keep prepared food on hand and the items are made at a central commissary, which keeps costs down.

Dunkin’ Donuts parent company, Dunkin’ Brands Group Inc., did not respond to requests for comment.

The Canton, Mass., chain has more than 11,000 units worldwide, but is looking at efforts to boost sales following a 0.8-percent same-store sales decline in the fourth quarter ended Dec. 26.

Dunkin’ Donuts is also looking to replace declining sales of packaged coffee inside its units. Packaged coffee sales declined by 1.2 percent in the quarter, and Anderson said grab-and-go items could offset that decline. 

Kroger, Lucky's Market Ink Strategic Partnership

‘Meaningful investment’ to help accelerate specialty chain’s growth

April 1, 2016, 01:52 pm

Making good on rampant reports that its acquisition appetite has not yet been satiated following its recent purchases of Harris Teeter and Roundy's, The Kroger Co. has forged a “strategic partnership” with Boulder, Colo.-based specialty grocer Lucky’s Market. The hybrid deal, terms of which were not disclosed, is expected to significantly accelerate the growth of the 17-store Lucky’s banner in new and existing markets.

Kroger officials said the partnership, which closed on April 1, is designed to further enhance the best products, practices and techniques of Lucky's Market, combining them with the Cincinnati-based retailer's scale and experience to generate more benefits for customers. The alliance further demonstrates the Cincinnati-based grocery giant’s “deep ongoing commitment to providing customers with affordable fresh organic and natural foods as a part of its Customer 1st strategy,” according to Kroger, which indicated that the deal will gel well with its first-ever small format Main & Vine concept store in Gig Harbor, Wash., which mixes local, specialty and everyday products.

The alliance with Lucky's follows in the wake of Kroger’s attempted acquisition of The Fresh Market and its successful merger with Roundy’s, operator of the popular Mariano’s Fresh Market chain in the Chicago area.

Sagent Advisors LLC and Wilson Sonsini Goodrich & Rosati acted as financial advisor and legal advisor, respectively, to Lucky's Market. Weil, Gotshal & Manges LLP acted as legal advisor to Kroger.

“It is a very special day in our industry when our largest traditional grocer and one of our fastest-growing specialty grocers form a strategic growth partnership," Scott Moses, managing director and head of food, drug and specialty retail investment banking at New York-based Sagent, told PG. "Lucky’s is truly unique in its mission, its ethos and its egalitarian approach to good, healthy food. With Kroger’s help, we expect Bo and the Lucky’s team to continue their rapid growth and really make a mark in the sector over the next few years.  We are honored to have played a part in helping these two great companies embark on this exciting journey together.” 

Organic for the Masses

Founded in 2003, Lucky's Market and its affiliates employ more than 1,800 associates in 13 states throughout the Midwest and Southeastern United States.  Lucky's "Organic for the 99%" store format emphasizes its expansive selection of natural and organic food, including fresh produce, meat and seafood, prepared foods and baked goods, as well as wine and beer and personal care goods. 

With stores averaging about 30,000 square feet, Lucky's layout resembles an indoor farmers market, with "garage door" entrances, field bins, barrels and wooden crates. Its culinary department showcases restaurant-quality prepared foods made from recipes that include those developed by CEO and former chef Bo Sharon and his wife Trish, who together founded the banner that grew from a single location in a former convenience store.

Through its "L" private label, Lucky's provides a broad range of grocery items that have no artificial colors, flavors or preservatives, and 10 percent of profits from its private label are reinvested in the communities it serves.

Kroger operates 2,778 retail food stores under a variety of local banner names in 35 states and the District of Columbia. 

Waitrose To Open First Cashless Store

Waitrose is to become the UK’s first major supermarket to operate a cashless store when it opens at Sky’s new flagship head office building at its campus in Osterley this summer.

At 1,400 sq. ft., the little Waitrose shop will become the second smallest store in the retailer's estate. The convenience outlet will be located inside Sky's new office building - Sky Central - which will be home to more than 3,500 staff when work is completed in the summer.

Sky employees will only be able to pay by card or their mobile devices at one of the five self-service checkouts in the store.

The retailer met with Sky employees to determine what products they would like to see in the store. As a result, Waitorse said there will be a focus on evening meals and food to go, including fresh sandwiches, wraps and sushi, as well as a selection of fresh produce and ingredients, celebration cakes, freshly cut flowers and store cupboard staples. Travel accessories and mini health and beauty ranges will also be available for those needing to travel at late notice or choosing to take advantage of the on-site gym.

Waitrose Director, Convenience, Jackie Wharton, said: “Opening on the Sky campus is an exciting opportunity for us to respond to how customers wish to shop in this flagship workplace setting. Our convenience model is now more flexible than ever, especially as payment methods and ranges continue to evolve, so we'll look forward to exploring other opportunities like this in the future.”

Waitrose’s only other store based in a workplace was opened in 1998 at British Airways’ Waterside headquarters in Harmondsworth. 

Supply Chain News: Walmart and Amazon by the Numbers 2016 Our Annual Review of the World's Two Most Important Retailers

I think it is rather safe to say that the two most prominent US retailers today are Walmart and Amazon.com. Walmart earns that place due to its stature as the world's largest merchant (and company) and one that represents often a substantial share of many consumer goods companies' total sales. Amazon obviously earns a spot as the dominant ecommerce company, which is where all the action seems to be right now. Amazon continues its phenomenal growth - hardly even slowing down in the face of the law of big numbers - and has been an innovation machine in terms of fulfillment and more (e.g., Dash button). Gilmore Says.... By our measure, Walmart had an 11.2% of US retail sales in 2015, basically flat over the past 5 years, and down from a peak of 12.2% in 2009. What do you say? Click here to send us your comments   So we've been looking at both of these retail giants "by the numbers" in recent years - which as I will explain in a second, is harder than you might think. I have received many positive comments for this effort each year. What Walmart and Amazon are doing is obviously of interest to most other retail and consumer goods manufacturers, and I hope others as well, as in the end almost every company is connected to the retail supply chain. So let's start with Walmart, which reported its full year earnings, ending its 2016 fiscal year, at the end of January. I will simply say that while Walmart is an incredible giant, its growth has slowed dramatically of late. As can be seen in the chart below, Walmart's US sales (Walmart stores + Sam's Club) grew very rapidly in the beginning years of the 2000s, primarily by adding new superstores carrying groceries at a rapid pace into new markets. But that growth soon decelerated, and in the recession year of 2009 started a pattern of very low growth that is not much above inflation on average, meaning real growth is almost flat. US sales reached $355 billion last year, not quite double the $188 billion the company had in 2002, but the pace of that growth obviously slowed substantially down. The Cumulative Average Growth Rate (CAGR) has averaged almost 5% since 2002, but slowed to 2.77% since 2010. And surprising to me, international growth has also plateaued, despite an awful lot of attention and investment there. International sales last year were $123 billion, down from $136 billion the year before that, though the rising dollar is a key factor in that decline. Still, international is clearly not the Walmart growth engine once imagined. Walmart for the first time this year is detailing its ecommerce sales, saying on a global and constant currency basis that on-line sales increased approximately 12% to $13.7 billion last year. That means the rate was probably less than 10% on a absolute basis ignoring the impact of the rising dollar. Either measure would put it well behind Amazon's growth, which as we willl see below saw merchandise sales up 24.1% worldwide in 2015. Not all that many years ago, there were (I think legitimately at the time) concerns about Walmart gobbling a giant, monopolistic share of the US retail market, but with the recent very modest sales growth Walmart's share of retail has simply flatlined. SCDigest developed a methodology several years ago, where we compare Walmart's US sales versus relevant US retail figures - total retail minus autos and parts, gas station sales, and restaurants/bars. It's not quite perfect because Yes Walmart does sell some gasoline, but they don't break it out in a way we can use. Nevertheless, I think what we have is pretty good - and does reflect a higher share of US retail for Walmart than if you do not exclude those categories, which is how it is usually reported. By our measure, Walmart had an 11.2% of US retail sales in 2015, basically flat over the past 5 years, and down from a peak of 12.2% in 2009. It simply does not appear any more that Walmart will take over the retail industry. That is an interesting and important change - and seems unlikely to change to me. Would the FTC let Walmart buy say Kroger? Now let's turn to Amazon, a company that provides a lot of numbers to analysts but getting real insight from them takes some work. That is because of its several business units and how it computes certain ratios, as I will explain in a moment. Overall Amazon 2015 revenues were up 20% to $107 billion, but that includes digital media sales and its rapidly growing web services unit. I think it is more interesting to look at Amazon's merchandise sales, as shown in the chart below. That shows Amazon was able to grow merchandise sales an amazing 30.8% in North America last year, up 2 percentage points from the year before even as the baseline level continues to rise. International merchandise sales growth was a slower 12.6%, but again the rising US dollar cut growth about in half of what it would have been otherwise. One thing that vexes me is that I do not understand how and where Amazon books revenue for its "marketplace" service, where a customer is buying not from Amazon but direct from the supplier. Do Amazon's fees for that go into merchandise sales, or its web services unit? I think the latter, but I am trying to confirm. All this is complicated by the fact that sometimes Amazon does the fulfillment for these marketplace sellers. In the end, I am trying to adjust the numbers Amazon reports for things like shipping and fulfillment costs against the right denominator. For example, Amazon reports its net shipping costs - what it spends versus how much it receives from Amazon customers. Net shipping costs in Q4, for example, were an incredible $1.8 billion, and about $5 billion for all of 2015. Let me say that again - that was $5 billion with a B in net shipping costs. No wonder Amazon struggles to turn a profit. And we remember when companies used to make money on shipping. The Amazon figures do report shipping costs as a percent of worldwide sales - and over the last five quarters that was in the 4-5% range. That's high enough, but SCDigest then compared those shipping costs just against merchandise sales - eliminating revenues from web services and digital media that have no shipping. Logically, this makes the picture worse, as shown in the graphic below, with net cots hitting a whopping 7.3% in Q4. So much for building fulfillment centers closer to customers. I will note the Gilmore household is on the Amazon Prime bandwagon, and easily make up our annual $99 fee in free shipping.

Food Safety Modernization Act—Not Just a One-Way Ticket

BY JACK PAYNE ON MAR 31, 2016

Jack Payne

The Centers for Disease Control and Prevention (CDC) estimates that roughly one in six Americans (or 48 million people) get sick from foodborne diseases each year. The obvious response when someone reports a foodborne illness is to find where the contamination occurred and issue a recall. The Food Safety Modernization Act (FSMA), however, seeks to shift the focus from responding to contamination to preventing it. The FSMA is increasing the need to track what happens to food across the supply chain.

Confirming the integrity and safety of your food is no longer just an issue of what happens inside the manufacturing walls. Tracking your food across the entire supply chain ensures that manufacturers and distributors take a one-up-and-one-back approach—meaning being able to know where it came from (one back) and whom you sold it to (one up). It’s all about being able to rapidly respond to a recall in the unfortunate event of a food safety issue.

One Back—the Supplier

Part of the FSMA focuses on tracking back to the supplier. For example, if you are a deli meat producer, it is likely that you do not get your deli meat directly from the farm. You probably buy it upstream from a meat supplier and process it into the deli meat that is sold in stores. While it is important to know which supplier your meat came from, the FSMA focuses on where the supplier got their meat from. If chicken comes into your deli meat factory contaminated, it will need to be traced back through each step to find the source of contamination.

One Up—the Distributor

Another part of the FSMA focuses one up to the distributor. You need to trace whom you’re selling your product to, where it’s going and how it got there. Traceability plays a big role in this. As the importance of track and trace moves downstream into the food supply chain, manufacturers and distributors will benefit by using traceability solutions to meet FSMA standards and compliance. Although compliance is a huge reason for traceability and understanding where your product is going, there are other benefits as well. Labor is more efficient and easy to time and track, and food is moved more quickly through the supply chain with less risk of spoilage or contamination.

Roundtrip Focus

Many producers, manufacturers and retailers have product-tracing systems already in place. However, they vary depending on the amount of information the system records, and how far forward or backwards in the supply chain the system tracks.

While the Food and Drug Administration (FDA) does not have the legal authority to require companies across the supply chain to use electronic traceability solutions, companies are recognizing that electronic record-keeping is the way the FDA prefers to receive information. Electronic traceability gives you the capacity to view information at both a high level and a more drilled-down version. Having access to these different views helps you to understand and track the supply chain process roundtrip—from receipt of raw materials to shipment to customers and all the way back again.

Ultimately, no matter which part of the supply chain your organization falls in, ensuring the safety of your consumers puts your company’s reputation on the line all the time. The FSMA warrants manufacturers to take a proactive stance, and dedicate necessary time and resources toward compliance planning for prevention and supply chain traceability implementation.

Fast-food workers reveal the items you should never order

• Kate Taylor
 
•  

• Mar. 29, 2016, 11:34 AM
 

Kate Taylor

If you want to know the real story behind your favorite fast-food items, ask the workers.

A recent Reddit thread asked fast-food employees "what should we never order from you?"

Thousands of people responded.

Some had info on what items are overpriced, while others named favorites that they think are gross.

While the thread was anonymous and Business Insider can't verify the identity of the workers, many of the points they made were interesting.

Here are some of the items that people said they refuse to order:

Subway's oven-roasted chicken

"The 'oven roasted' chicken was actually boiled in a microwave," says Reddit user Hotpotabo.

Starbucks' 'secret menu'

Hollis Johnson

"Don't order something from the 'secret menu,'" writes justine7179. "We sure as s--- don't know what a Snickerdoodle frappuccino is, as it is not a menu item. Employees would be more than happy to make you a drink if you just explain the recipe rather than the name of it. I'll make you diabetes in a goddamn cup if you just tell me what you want in there."

Chipotle's tacos

Flickr/Janet Hudson

"I used to work at Chipotle, and never ever ever order the Tacos," says KourageWolf. "You get less than half the regular portions. Instead, order a bowl with whatever you want in it, then ask for the taco shells, hard or soft, on the side."

Any hot Starbucks food

Starbucks Facebook

"All Starbucks food is reheated frozen food," says likeabaker. "Ridiculous how little people realize that. Doesn't mean it doesn't taste good, it's just not fresh at all and incredibly overpriced."

Dairy Queen's salads

"Salads from DQ are a rip-off," writes obeyyourbrain "They just recently down-sized them while changing the bowl to make it look like the same amount. Over $5 for 3 oz. of old lettuce, cabbage, carrots and even older grilled chicken."

Anything but wings at Buffalo Wild Wings

Buffalo Wild Wings on Facebook

"I work at a Buffalo Wild Wings. Don't get anything other than the wings. That's the onlyquality thing there. Everything else is frozen s---," says HunterOfTheSky.

Auntie Anne's Pretzel Dogs

Flickr/Rusty Clark - hottnfunkyradio.com

"The only thing I can say is that sometimes the pretzel dogs (hotdogs) can be icky when you don't order one fresh. When they sit in the warmer, they shrivel up and get all chewy," saysblamethecranes.

Carl's Jr./Hardee's chicken tenders

Carl's Jr

"We were supposed to throw them out after 20 minutes," says i_Ryan. "We were told not to do that. We would sometimes serve 1-2 hour old tenders. Now when they are fresh they are f------ great as we would hand bread them. You can always ask to make them fresh but expect to wait 5-10 minutes."

Wendy's fries

Facebook/Wendy's

"My brother's girlfriend used to work at Wendy's and a saying there was (about fries) 'They aren't old until they're sold,'" says Wrinklestiltskin.

Jimmy John's Gourmet Veggie Club

"If you're trying to order a healthy option, don't order the Gourmet Veggie Club," says lolutah. "It's the second most caloric sandwich behind something called the 'Gargantuan.' 8 slices of provolone cheese will do that."

Unsalted fries from McDonald's

Biz Carson/Business Insider

"Don't be one of those people that orders fries from McDonalds with no salt then ask us for salt packets right after we give you your food," says anti-food hack Reddit userStrawberryMarmalade. "I understand people can't have salt for medical reasons, but 90% of the time it's people in their mid-20s, who 100% of the time ask for salt afterwards. I don't care what you read up on Buzzfeed. If you want fresh fries, ASK US."