Tuesday, July 1, 2008

Tuesday (Fresh & Easy) Tidbits: New Store Opening Gala; A Real Estate Transaction of Note; Cheap, Good Eats; Reno 411...Tesco, Hugh and the Chickens

Tesco's Fresh & Easy Neighborhood Market

Manhattan Beach new store grand opening tomorrow: Tesco's Fresh & Easy Neighborhood Market will open its first new store tomorrow (Wednesday, July 2) morning in a shopping center in Manhattan Beach (Southern) California since declaring a three month new store opening pause in April. The store's address is 1700 Rosecrans, Manhattan Beach, California.

There will be a grand opening celebration and ribbon cutting at the Manhattan Beach store tomorrow morning from 8am -to 10am, with various events planned during those two hours.

The Fresh & Easy is located almost next door to a Trader Joe's grocery market in the shopping center. The Trader Joe's market is at 1800 Rosecrans. The F&E and TJ's even share the same parking lot.

Read this piece from yesterday, "Breaking News: UFCW Union Launches Preemptive Anti-Tesco Fresh & Easy Brochure Distribution Drop on the Eve of Manhattan Beach Store Grand Opening," about the UFCW union campaign targeting the Manhattan Beach Fresh & Easy grocery market opening tomorrow morning.

Fresh & Easy Real Estate: From the Costar Commercial Real Estate Group: Turner Island Farms purchased the Fresh & Easy grocery store in Norwalk, (Southern) California from a private investor called Amsted Residuals LLC for $4.75 million, or about $339 per square foot. The sale included the land, in a leased fee interest.

The 14,015-square-foot building at 10930 Rosecrans Ave. is in the Mid-Cities submarket. The tenant, (Tesco's) Fresh & Easy Neighborhood Market, has an absolute triple-net 20-year lease and generates a cash flow of $285,000. This is the second Fresh & Easy store sold in Southern California.

The sale was the buyer's upleg in a 1031 exchange. There were 8 offers submitted on the property. Shaun Riley of Faris Lee Investments represented the seller. Jeffrey Douglas of Colliers Tingey International, Inc. represented the buyer.

More San Diego Fresh & Easy markets on the way: Tesco will open at least two more new Fresh & Easy grocery markets in the San Diego County region in far Southern California in the next few months, Fresh & Easy Buzz has learned from a commercial real estate source in the market.

These two new Fresh & Easy grocery stores will be in the San Diego County cities of Point Loma and in Mira Mesa. Tesco already has one store in Point Loma.

There currently are six small-format (10,000 -to- 13,000 square feet) Fresh & Easy Neighborhood Market combination basic grocery and fresh foods stores in San Diego County. The two new, additional units will bring the store count in the County to eight.

Fresh & Easy offering A 4th of July cookout for the frugal: Tesco's Fresh & Easy Neighborhood Market is promoting a special mixed meat grill pack and a 12-pack of beer for ten bucks for the upcoming July 4th Independence Day holiday.

Fresh & Easy's mixed grill pack includes a mixture of eight hand-trimmed and lightly chili-seasoned chicken thighs and drumsticks, four freshly ground mild Italian pork sausages and four quarter-pound, 80 percent lean beef patties.

The 4th of July special runs from July 1 -to- July 8th

Also included in the cookout promotion is a 12-pack of Taurino Cerveza, Fresh & Easy's specially selected Latin-style beer. The Latin-style beer is traditionally brewed and is a Monde Section award-winner. [Raise your hand if you know what a Monde Section award-winner is Independence Day celebrants? Monde sounds French to Fresh & Easy Buzz. Good angle though actually: After all, were it not for the French, America may not have defeated the Brits in the war of independence, which we celebrate on July 4.]

Five pounds of combined chicken parts, beef and pork sausage patties, along with a 12-pack of quality beer, is a hot deal though, no matter how you slice it.

For example, $5.99 would be a firecracker-hot buy for a 12-pack of similar quality branded beer at any supermarket or beverage store. And, of course, there's the tax on that 12-pack, which adds about 50-cents or so, depending on the state and city. This means shoppers are getting the five pounds of chicken parts, hamburger and sausage patties for under $1 dollar a pound. As Paris Hilton says: "That's hot." Of course, non-beer drinkers are a bit out of luck.

If we created the mixed grill meat pack and beer promotion, we likely would have changed a couple things. Instead of including the sausage patties, we would have just gone with the chicken parts and hamburger patties, since sausage patties aren't one of America's top grilling choices for the 4th of July, or for summer grilling in general for that matter. However, at that price, perhaps Americans will bite the bullet and grill the pork anyway for their holiday backyard celebrations.

Additionally, we probably would have offered a good old American beer rather than a Latin or Hispanic-style beer, since it is American Independence Day after all.

However, since America took a good chunk of the Western USA, the states where Fresh & Easy does business, from Mexico, it is somewhat fitting in a geopolitical way to offer a Latin-style beer as part of the promotional package. Plus, Latino's or Hispanics are the largest ethnic population group in California, Arizona and Nevada, so there's a logic to the offer from that angle as well.

And yes, we get the chili seasoned chicken parts and Latin-style beer tie-in. But perhaps that would be better for Mexican Independence Day, celebrated by Latino's in the U.S. in September. But, the America as a melting pot scenario should go both ways...so why not a bit of Latin accent--and flavor--for the 4th of July.

Either way, it's a good value...and you can always take the sausage patties out, grill the chicken and hamburger patties on July 4th, drink all the beer too, and then prepare the sausage with some eggs and toast for your July 5th breakfast. That's even stretching the ten buck value over two meals.

Reno 411: Upcoming Reno Fresh & Easy: Grocery store or Sandwich shop?

Fresh & Easy Buzz reported in this May 22 piece that Tesco plans to open its first Northern Nevada Fresh & Easy grocery store in Reno, Nevada. The store, in a new mixed used commercial/residential development named North McCarran Crossing at Northtowne Lane & McCarran Blvd. in Reno, will likely open early next year.

Not everybody in Reno is clear on the Fresh & Easy as a grocery store concept though. Among the confused include the construction project manager of the firm that's building the Fresh & Easy grocery store, along with the writer (and editors) of the Carson City, Nevada Carson Times newspaper. Carson City is next door to Reno.

As you can see in the two paragraphs highlighted in bold in the June 19 Carson Times which is reprinted below, the construction company project manager and the reporter describe the Fresh & Easy grocery store as a 14,000 square foot sandwich shop. Imagine how many sandwiches a day one would have to sell to make the sales per square foot numbers for 14,000 square foot sandwich shop?

Reno 411: Perhaps Tesco's Fresh & Easy Neighborhood Market needs to make a couple calls: One to the construction company manager who's heading up the building crew (after all they don't want to find a sandwich shop instead of a grocery store next time they check the site out); and a call to the reporter (and editor) for the Carson Times. Although, since Fresh & Easy stores devote a good deal of store square footage to fresh, prepared foods, including ready-to-eat sandwiches, we don't fault either the construction firm project head or the reporter all that much. It happens to the best of us.

Carson Times, Carson City, Nevada - Jun 19, 2008
Northtowne work causes woes

A detour outside a shopping center on Reno's Northtowne Lane is causing headaches for motorists, business owners and shoppers said Wednesday.

The detour is caused by road work and construction on a commercial project across from the center, which is anchored by Wal-Mart and WinCo Foods and includes smaller businesses.

For the past month, the detour on Northtowne has closed an entrance to the center near the intersection with North McCarran Boulevard, leaving one entrance and exit for cars at Lund Lane.

Signs slow traffic to 15 mph on the street around the project, which has closed sidewalks and blocks a covered bus stop. Shoppers outside WinCo say they have no other choice but to deal with the detour.

"We put up with it," said Clark Leedy, as he loaded groceries into his vehicle on Wednesday with his wife, Pat. The couple drives down from Mogul every week to shop at WinCo.

"What a pain," Pat Leedy said.

The project under construction is a retail/residential center with a business called Fresh and Easy, according to a public notice hanging on a fence at Northtowne and Lund. Plans call for a 14,000-square-foot commercial building on a 6-acre site, with more space available for lease.

The applicant is North McCarran Crossing, LLC. The project also includes 118 planned housing
units, according to a Web site for commercial real estate firm NAI Alliance.

Lucas Olive, a project manager with United Construction, described Fresh and Easy as a sandwich shop. The detour is scheduled to be removed by early July, Olive said.

In the meantime, business is down at shops such as Dollar or Plus, said store owner Mohammed Muhaimin.

"We are hurting right now," Muhaimin said. "People are saying it's hard to come in, and I've seen cars almost getting into accidents."

Alma Stankevicne of Sun Valley said she too will deal with the inconvenience in order to shop for groceries.
"There's nothing you can do if you have to come shop here," Stankevicne said.

Note: The Reno Fresh & Easy grocery market in the center will be directly across the street from a Wal-Mart Supercenter and a WinCo Foods supermarket. WinCo, an employee-owned supermarket chain, operates large, deep-discount yet very fresh foods-oriented supermarkets.

This is going to be a very price competitive corner of Reno once the Fresh & Easy store opens, since all three retailers--Wal-Mart, WinCo and Tesco's Fresh & Easy--position their respective chains as being low-price leaders.

Speaking of Wal-Mart: In addition to looking to open one of its new small-format Marketside combination grocery and fresh, in-store prepared foods community grocery stores in Reno, as we wrote about here on June 6, the mega-retailer also has created a new Supercenter store design prototype. The design has earth-tone colors instead of the traditional grey and blue, has some curves and lines to it rather than the traditional square big box edges, and looks far more upscale then the current basic Supercenter design.

Additionally, the new Supercenter design prototype incorporates what will become Wal-Mart's new corporate logo this fall. The food and grocery industry publication Natural~Specialty Foods Memo has a story, along with an artist's rendering of the new Supercenter design, as well as a picture of the new Wal-Mart logo, in this recent June 27 piece.

Page Ender: A Word or Two About Tesco, Hugh and the Chickens:

It seemed--as one of our UK-born and raised regular readers who now lives and works among the elected officials (who often exhibit chicken-like behavior) in Washington D.C. reminded us in an email today--ironic more people were talking about chicken rights than human rights at Tesco's Annual General Meeting (AGM) last Friday, June 27.

As you may recall, British celebrity chef and animal rights activist Hugh Fearnley-Whittingstall placed a shareholder resolution, which he paid for from supporter donations along with his own money, on the AGM agenda Friday, which if it had passed would have required Tesco to sell fewer broiler chickens raised in small or battery cages and more free-range-raised birds. Fearnley-Whittingstall's resolution failed by a 90% against, to 10% for. Very few big, institutional shareholders attend the AGM's these days, which means the 90% against vote was cast primarily by mid-range and smaller Tesco shareholders.

We strongly support larger cages for both broiler chickens and egg-laying hens. The battery cages currently used in nearly all cases in the U.S. and to a lessor but still majority extent in the UK are just to damn small for the birds. The chickens can't move in the cages at all.

We also support free-range chicken farmers and the retailers who sell the birds We buy free-range as often as is economically feasible, especially when we find a retailer who realizes it doesn't need to mark the birds up an additional 10% or more margin points just because the birds are free-range. Yes, we all know retailers like to take higher margins on free-range chickens.

However, at the risk of offending some readers, were we a Tesco shareholder, which we are not, we would have voted against Mr. Fearnley-Whittingstall's chicken welfare Tesco-specific resolution for a few reasons.

First, we don't believe in retailer-specific restrictions. Although if the majority of shareholders would have voted for the resolution, we would support it. We do believe in majority consensus by democratic vote.

However, in terms of changing industry behavior, it does no good in our view to have only one food retailer--even if it's the largest one in a nation--have competitive restrictions on it that allows it's competitors an advantage. We particularly believe this to be the case when it comes to ethical issues like chicken welfare and similar issues.

Now, were Tesco to announce that say beginning in 2010, it would only procure and sell broiler chickens raised in larger cages (which is a trend among UK chicken farmers by the way) and free-range birds, and do so for a competitive advantage, that would be interesting. It also would cause many UK farmers to rapidly get rid of their small cages and use the larger, more roomer ones.

[Note: Tesco and all the top UK supermarket chains have agreed to only sell eggs from hens raised in the larger cages beginning in 2012.]

Second, is the issue of price. We love free-range chickens and love the farmers who raise them that way. However, the fact is both in the U.S. and the UK, free-range birds are just to darn expensive for middle and lower income consumers to buy and eat on a regular basis. They even can be a bit too high priced for upper income folks to buy regularly in many cases.

In the UK, Tesco is famous for being the first food retailer to offer the $1.99-British pound "cheap chicken," which if you do the conversion to dollars wouldn't be considered a cheap chicken in America. But then we complain about $4 a gallon gas, while most Brits alive today can't even remember when gasoline was that price, since a gallon of the precious fossil fuel currently sells for nearly three times the U.S. price at the pump in the UK.

Last week in the U.S., Safeway Stores was promoting a brand (a California grown chicken) for 69-cents a pound. The birds are all natural, nothing added, and are raised in small cages like nearly every chicken in the U.S. is raised, except for free-range, which makes up about 1% of all chickens sold in America.

As we stated, we support chicken producers moving to the use of larger cages. We've told many of them we know so.

However, we can't tell you how pleased the 200 low-income families we were a part of buying 200 of these 69-cent per-pound chickens for were when a group of us presented the birds (five pounders) through the local foodbank--along with all the other fixings for a family of up to five: fresh corn on the cob, salad greens and salad dressing, potatoes, beans, milk and other beverages, charcoal briquets, a mini bbq grill, a gourmet apple pie, and cookies for the kids--for their surprise Father's Day gourmet cookout meal about a week ago.

We believe an industry-wide move in both the U.S. and UK to larger cages, and the elimination of the battery cages, could be done without adding much to the per-pound cost of chickens. The key is industry-wide. California will have ballot initiative on the November, 2008 statewide ballot that would create a law to do just that--eliminate the use of small, battery cages by 2015. We support the measure.

Regarding free-range, the birds taste better and we like allowing the chickens to roam free. However, the price has to come down.

When shoppers go into a supermarket they don't look at the cheaper chickens and think to themselves: 'Lovely, I think I will buy one of those ~1.99-p per-pound Tesco chickens (or 69-cent per-pound Safeway birds on sale) raised in the tiny cages. Rather, most consumers say to themselves: 'I can buy a ~1.99-p per-pound Tesco chicken, some fresh vegetables, potatoes and a few other things, provide my family with a nutritious and tasty dinner, and still hopefully have enough money left over for gasoline, the kids dental appointments, some new school clothes, and the like. We didn't even mention the health insurance premiums, houshold utilities and other regular bills.

In other words, policy changes need to be industrywide, not piecemeal. We also suggest those advocating free-range-only birds start talking more about making the cost of such birds more reasonable. Yes, increases in consumer demand (increased sales) will help. However, in the UK, the Waitrose and Sainsbury's supermarket chains recently reported free-range broiler chicken sales were nearing the 50% - 50% mark vis-a-vis conventional birds. (That was before the food inflation spike started hitting the UK severly though.) However, despite the huge sales growth in free-range chicken sales in the UK, the per-pound price of the birds hasn't come down in any appreciable way.

Lastly, the timing of Mr. Fearnly-Whittingstall's shareholder resolution couldn't have been worse. The UK like the U.S. is in the midst of bad economic times, including a very bad period of soaring food inflation. Human rights--preventing people, including hard working people, from going hungry is the more appropriate focus riight now rather than chicken welfare (which is important) in our analysis and opinion.

In fact, Tesco should give a couple hundred thousand British pounds (money not weight) worth of it's ~1.99-p per-pound chickens to UK food banks this week, as a way of showing it appreciates its shareholders voting down Hugh Fearnly-Whittingstall's chicken welfare resolution. That would be walking the walk, as well as talking the talk. Even more important, it would help feed numerous British consumers having problems making ends meet, just like their American brothers and sisters are experiencing.

Make no mistake about it, we respect Hugh Fearnley-Whittingstall for having the courage of his convictions and proposing the resolution. The publicity he's garnered will go a long way to elevating the chicken welfare issue, as it should. The chef also is a great cause marketer, which we appreciate.

For us, we want to see the chicken and egg production industries on both sides of the pond--and elsewhere in the world--get the chickens out of the tiny battery cages and into larger cages where the birds can move around in.

Imagine living in your bathroom full time as an analogy. Even if its a tiny bathroom, at least you could lay down on the floor and stretch a bit. The chickens can't. Nor can they exhibit any natural behaviors in the battery cages. That's wrong; and the industry needs to move to the larger cages even if it takes legislation to get them to do so.

As for free-range, it needs work; although we see it growing and encourage it with our wallets at the supermarket when we can. We would like to see folks like Hugh Fearnley-Whittingstall and others also spend some time working on the economic issue of free-range birds--finding ways to bring the price down, as part of their advocacy. Fresh & Easy Buzz will give them as much ink as we can on the issue.

Of course, there's also the pure form of animal welfare, which isn't eating living creatures at all. That, like most everything else, should be a personal choice.

In these times, liberty isn't something we should allow to deminish any more than we already have, after all. That's something important to think about--for both Americans and British--just three days before here in the U.S. we celebrate a holiday--Independence Day--which rather than casting the UK and America farther apart, as it would most nations, has actually brought us closer together in a special relationship.

Think about that as you grill your chicken--free-range, organic, or conventional--on Friday, July 4 , in the U.S., and on any day this week you do the same if living in the UK.

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