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    Published on: March 1, 2017

    by Kate McMahon

    Two decades ago, a retired IBM executive and a Culinary Institute of America- trained chef teamed up to launch Pasta Vita, a wholesale ravioli company in the Connecticut shoreline community of Old Saybrook.

    While chef Luis Castanho perfected his signature striped ravioli in an industrial park kitchen, his partner Rich Cersosimo hit the road to market their product, including weekly sampling trips to Stew Leonard’s stores for five years.

    “Chef Lou” was itching to expand the menu to gourmet take-out meals, so they started with seven entrees. Cersosimo set up a retail shop with a desk, one refrigerator case and a cash register.

    Today, Pasta Vita is a gourmet-to-go juggernaut just off busy Interstate 95, the largest in Connecticut, and a perfect case study on how to successfully grow a small retail food business. But I think there are important lessons that retailers of all sizes can learn from Pasta Vita about quality, service and listening to your customer.

    I first learned about Pasta Vita when several neighbors asked if I wanted to join in on a group order from a gourmet-to-go shop 75 minutes away. Families placed orders and pre-paid, Pasta Vita packaged each order separately and one neighbor did the round trip drive. Our suburban community is hardly a food desert. I was puzzled, and politely declined.

    When I happened to be driving past Pasta Vita on I-95, I remembered it and pulled off the exit and found a small store bustling with activity and a dizzying assortment of entrees, side dishes, salads, sauces, soups and desserts, with frozen food to the left and fresh to the right. I soon understood why the parking lot was full, including weekenders with license plates from New York, Rhode Island and Massachusetts.

    Chef Lou’s repertoire of entrees has skyrocketed from just seven into the triple digits. Specials change daily, weekly and seasonally. Fresh entrees include Tuscan short ribs, fried shrimp with remoulade sauce, chicken tikka masala and the classic chicken parmesan and pasta dinner. That’s not including the 26 ravioli choices and 11 lasagnas. Prices range from cheese ravioli at $6.50 a pound (which serves four), a chicken piccata entrée for two or three people at $9.50, and a whole roasted chicken dinner with potatoes and vegetables for four people at $17.95. Not cheap, but not even close to Whole Foods or gourmet retailers near my home.

    Cersosimo credits Chef Lou for quality, personally overseeing the in-house preparation of all the entrees, sides, sauces and pasta in a 4,000-square foot kitchen. Additionally, the head chef can “shift very quickly to make dinners that our customers are asking for” – such as a wide array of gluten-free, low-sodium and vegan options and dishes with Asian or Middle Eastern flavors. As for Cersosimo, he runs the front of the house daily, making sure there are enough “upbeat, friendly employees on hand so that the customer is happy with their experience.” There are typically two employees at each register to keep the check-out lines moving quickly. Just last August the store opened on Sundays, with limited hours of 9-3.

    While Cersosimo estimates he is approached about franchising as far as away as Florida at least twice a week, he has ventured beyond his single location - a bit. Pasta Vita last year partnered with the Mohegan Tribe to open a branch at the Mohegan Sun Casino in nearby Uncasville, Connecticut, and is considering additional opportunities.

    But where I think Pasta Vita really excels - and why I find myself stopping there on my now-frequent drives in that direction - is in being both highly targeted in its approach and a dedication to making sure that the food is never of the lowest-common-denominator variety. Sometimes, I think, traditional supermarkets err on the aide of being too conservative and too focused on efficiency at the expense of being distinctive and differentiated.

    Operations like Pasta Vita show us where traditional stores may be vulnerable; they also show us where the opportunities are, if retailers are willing to take advantage of them.

    Comments? As always, send them to me at .
    KC's View:

    Published on: March 1, 2017

    by Kevin Coupe

    It was just a couple of weeks ago that Playboy, having tried to publish a magazine without nudity, announced that it would once again feature naked centerfolds. It ended up, apparently, that not nearly enough people wanted to read the magazine just for the articles. (It remains to be seen whether in a world where nudity is as close as a cellphone or laptop - so I'm told - Playboy has any sort of relevance.)

    Now comes word that Hooters - a restaurant/bar that traditionally has marketed waitresses wearing tight tank tops and short orange shorts more than it has the food or drink - has launched a new format without that signature waitress uniform.

    The name: Hoots.

    According to Eater Chicago, the first of the concept, "which offers counter service and a full bar, is now open in Cicero. The spin-off serves fewer items than the original Hooters, but the menu still centers on the chain’s familiar breaded chicken wings ... The food comes in containers that fast-food aficionados would be familiar with, as Hoots is positioning itself to handle massive to-go orders to fill man caves and basements with Buffalo shrimp and buckets of wings for sports-watching and other domestic activities."

    Orders are placed at a fast-food-style front counter, and then delivered to tables. The company seems to believe that a fast-food concept might have growth potential that the restaurant business does not.

    The question, it seems to me, is whether people have been going to Hooters for the food or for the waitresses. I've been to one in my entire life ... and to be honest, the food was barely mediocre. So I wouldn't be hopeful. (Unless they improve the food. Which doesn't seem to be on the menu.)

    But at least they're going to find out what the real value proposition is.

    It'll be an Eye-Opener.
    KC's View:

    Published on: March 1, 2017

    Coming off a fourth quarter in which its profits were down to $817 million from $1.43 billion a year earlier, sales were down 4.3 percent and same-store sales were down 1.5 percent, Target CEO Brian Cornell "vowed to invest billions of dollars to lower prices and remodel hundreds of stores, an admission that the retailer’s focus on trendy merchandise wasn’t enough to attract shoppers," according to a story in the Wall Street Journal.

    Cornell called 2017 “a year of investment,” and said that "Target would spend $7 billion over the next three years to improve its stores, launch exclusive brands and develop its supply- chain and digital capabilities. The company also said it was prepared to sacrifice about $1 billion worth of potential profit, by cutting prices and driving lower-margin digital sales."

    The Journal writes that "Cornell said he expects Target to return to earnings growth in 2019." He said that "Target plans to revamp as many as 600 locations over the next three years and open 100 smaller locations in college towns and urban areas," and that there are no plans for mass closings.

    According to the story, "The changes come more than a year after rival Wal-Mart began pouring money into revamping its stores, lowering prices and expanding its e-commerce operations—changes that reversed a sales slump. Target also has been squeezed by the expansion of Inc., which shares many customers and products with Target.

    "For decades, Target’s formula of offering stylish but affordable merchandise helped set the retailer apart from competitors. Under Mr. Cornell, Target has centered much of its growth strategy on its roughly 1,800 stores and regaining its cachet for selling fashionable products. He pushed the addition of specialty foods and trendy labels developed in-house, such as children’s apparel brand Cat & Jack.

    "Although Mr. Cornell said Target would continue to push style and new brands, on Tuesday he took a page out of Wal-Mart’s script by saying Target needed to return to 'everyday low pricing'."

    In addition, Target said that it needs to get faster and more nimble in the e-commerce side of the business; Q4 comp e-commerce sales were up 34 percent, "but still make up only a fraction of overall revenue."
    KC's View:
    Maybe it is just perception, but it seems to me that Target execs have been spending a lot of time lately recalculating the company's marketing and merchandising approaches. They try new things, they make statements of strategy and tactics, but then they have to tack this way or that way because things don't turn out the way they expected.

    I have no idea how to fix Target. But I'm beginning to wonder if there is some sort of foundational problem that needs to be addressed before price cuts and remodels can have any sort of impact.

    Published on: March 1, 2017

    Business Insider reports that as soon as tomorrow, Costco could announce a hike in its membership fees - "by $5, to $60, for its basic membership and by $10, to $120, for its executive membership."

    It has been five years since Costco raised its membership fees, and the story notes that Costco generally has raised fees every five to six years. Costco CFO Richard Galanti has said that the "time may be right" for a fee increase, though he never set a target date.

    Business Insider writes that analysts believe that "fee increases shouldn't have a major impact on sales and membership renewals, which are at a rate above 90% in the US and Canada."
    KC's View:
    I'll probably pay the extra few bucks, just because it is nice to know that Costco is there in case I need it. But, as I've said here before, a lot of the purchases that I used to make at Costco have migrated to Amazon, and I'm not sure that Costco has yet figured out the best response to this sort of behavior change.

    I have to wonder if perhaps this time around a fee increase might be greeted with more hostility, simply because Costco does not seem to have an e-commerce position that differentiates it; people may say that they'll save the money and just keep paying for Amazon Prime membership, which seems to have a lot more benefits.

    That's the issue that Costco really has to address. If they don't, the competitive problems they'll face will only be compounded.

    Published on: March 1, 2017

    Howard Schultz famously was inspired by Italian espresso cafes to envision a future for Starbucks in the US and beyond, but it has taken awhile for the company to identify a way for it to bring its stores to Italy.

    But now, the Seattle Times reports, Starbucks has decided to open its first store there - a "big, high-end Roastery located in a historic building in central Milan. The 25,500-square-foot store, to be located in the turn-of-the-century Palazzo Delle Poste (post office) building on Piazza Cordusio, will open in late 2018."

    It is slated to be Starbucks' first Roastery store in Europe.

    This represents a change of plans for Starbucks, which originally planned to open one of its traditional stores in Milan. But the success of the Roastery in the US - where the average purchase is roughly four times that of regular Starbucks - led the company to believe that the higher end concept was the better way to go.

    Starbucks says that it will wait to see how the Milan Roastery does before deciding how to move forward. The company has a number of sites available to it in Milan, but says it is "agnostic" about whether they should be used for its traditional format or something more upscale.
    KC's View:
    When this finally opens, I'll be curious to see the ratio of tourists to residents who patronize the store. The question is whether it'll be an authentic enough coffee experience to satisfy Italians, who pretty much invented it.

    Published on: March 1, 2017

    Reuters reports that two California shoppers have sued Craft Brew Alliance, maker of Kona craft beer,, claiming that "they were deceived into believing the beer was made in Hawaii, causing them to overpay for it." Kona actually is made in New Hampshire, Oregon, Tennessee and Washington state.

    According to the story, "The plaintiffs said the alleged deception includes the use on labels of hula dancers, surfers, the Kilauea volcano, Waikiki beach, and other images and phrases associated with Hawaii, as well as beer names such as Big Wave Golden Ale, Castaway IPA, Fire Rock Pale Ale and Longboard Island Lager."

    Craft Brew Alliance, which also makes Redhook and Widmer Brothers brands, has not yet commented on the suit.
    KC's View:
    To be honest, I've bought and enjoyed Longboard Island Lager, but it never occurred to me that it wasn't made in Hawaii. I also never checked the label - I just bought into the marketing. I'm not sure how the litigation will turn out, but there's a part of me that thinks that this is all a little deceptive ... and it'll be a long while before I buy a Kona beer again.

    That said, the whole "craft beer" thing has gotten a little dodgy. There are a lot of craft brewers being bought up by multinational conglomerates, and a lot of big brewers that are making beer brands designed to look like craft beers. Is this all a little deceptive? Sure. Is it actionable? I have no idea.

    There is currently a suit against Walmart for selling a beer positioned as a craft beer that actually is mass-produced by Rochester’s Genesee Brewing and meets none of the accepted criteria for what makes up a craft beer. Maybe the resolution of this suit will give us some guidance for how future litigation will turn out.

    Maybe I'm getting into "get off my lawn" territory here, but I'm increasingly cranky about companies that are too cute by half about honestly telling customers where and how things are made, and what is in them. I'm not a big fan of lawsuits, but maybe it is going to take one big, highly visible courtroom defeat for companies to stop screwing around with consumer perceptions.

    Published on: March 1, 2017

    • Al Carey, CEO of PepsiCo North America, reportedly told a Consumer Analyst Group of New York conference that the company is making the changes necessary to be successful in the online arena.

    “Some parts of our portfolio play better than others in e-commerce," he said. "It’s not a material share of the business yet, but it is an extremely fast growing part of our business and we feel very grounded in how we are doing well in it.”

    Carey added that the company needs "to do some work on packaging to be in more of e-commerce-friendly packaging, which we’re doing right now. We’ll get there, but we’re a little behind on that."
    KC's View:

    Published on: March 1, 2017

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • The Cincinnati Enquirer reports that 10-store Remke Markets has been sold to Fresh Encounter Inc., which also operates the Sack ‘n Save, Community Markets, Great Scot and Chief Markets chains.

    "The decision to sell Remke Markets was a difficult one, however, we are excited that these new resources will allow us to greatly enhance our customer experience," Remke president Matthew Remke wrote in a letter to customers. "This change will allow us to continue to deliver on our promise of a local, neighborhood grocery with exceptional service in convenient locations, as well as to preserve valuable employment for our dedicated associates."

    Terms of the deal were not disclosed.
    KC's View:

    Published on: March 1, 2017

    • Ahold Delhaize-owned Stop & Shop said yesterday that it has named Dean Wilkinson - a more than two-decade company veteran who most recently was SVP, store strategy and execution, at Ahold USA - to run the Fresh Formats business, which operates the bfresh small store concept.

    Wilkinson succeeds Scott Miller, interim SVP of operations at Fresh Formats, who is leaving the company.
    KC's View:
    I don't know Dean Wilkinson, but I will say this about bfresh. The power of the concept from the beginning was that it emerged from a skunkworks that Stop & Shop allowed to operate completely independently ... and I think if bfresh is going to continue to evolve, it has to be a separate business. Otherwise, it'll get diluted by corporate-think. It is inevitable.

    I hope that this is part of Wilkinson's charge - run the business, and run it independently.

    Published on: March 1, 2017

    We had a story the other day about Amazon considering an entry into the event ticket selling business, which prompted MNB reader Daniel McQuade to write:

    KC, think you might have missed a opportunity here with Amazon selling concert tickets...

    The secondary ticket market is scalping and making millions that even the artist are now taking a stand against...the use of computerized software that are used by ticket brokers to snap up tickets is unfair and we end up paying up to 10 times the face value!

    I would think that with Amazon being the channel we perhaps could have a level playing field in getting a ticket.

    Yesterday we posted an email from an MNB reader who was responding to our coverage of the Oscars this week:

    I’m proud to admit that I watched none of the movies, know none of the actors and could give a rats a** about Hollywood at all.

    MNB reader Tony Moore had a response to that:

    I have 3 words for the reader who expressed pride in being completely unengaged with the world of cinema- WHAT A BORE!

    And from another reader:

    It’s not often someone admits they are proud of their willing ignorance of popular culture.  At least I hope not. Living in a bubble that small would give me a severe case of claustrophobia.

    I do want to be a little careful here. While I love the movies and pretty much always have - there was one year, in my mid-twenties, when I actually saw 150 movies, which was a record for me - I think it is possible to not be engaged with the movies and not be boring. There are lots of other ways to be engaged with life and not live a claustrophobic existence.

    I grew up with parents who never went to the movies. They probably went years without ever entering a movie theatre, and I'm sure they have no idea where my passions came from.

    That said ... I think that there are some wonderful movies out there that illuminate parts of the world with which I'm unfamiliar, and they've made me think about and feel for those people. Not every movie does that - some are just meant to be entertainments. (And there is, to be sure, a lot of crap out there.)

    But if I had to point out two American movies in 2016 that were illuminating in this way, I'd point to Moonlight and Hell or High Water. Two very different movies about very different worlds ... I was moved by them, and came away with a greater knowledge of certain emotional truths about people in circumstances far from my own.

    If people want to avoid the movie theater and not give a rat's a** about the movies, that's their privilege. But cinema is an art form, and in my view and heart, critical to living a life that is full and continually growing.

    And to my reader who hates the movies, I'd gently suggest that sometimes it is worth getting outside one's comfort zone. I know nothing about music, and especially nothing about jazz and the blues, but I've lately been trying to educate myself a bit and listen to Art Pepper and Charles Mingus and Frank Morgan and Christian Scott and JJ Grey. And I find they touch my soul in ways I did not anticipate.

    It's nice to know that even at my age, personal growth remains possible.
    KC's View: