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O.C.'s Claim Jumper Negotiates to Sell Frozen Food Unit

Retail: The pending deal 'will allow us to focus our energy on our restaurant chain,' company president and founder says.

April 03, 1999|GREG HERNANDEZ | TIMES STAFF WRITER

Claim Jumper, the Irvine restaurant chain known for serving huge portions, is negotiating to sell its frozen food unit, which provides items under the Claim Jumper label to various supermarkets, restaurant officials said Friday.

The deal, which is close to being finalized, would turn over the frozen food unit to American Pie Inc., which sells Marie Callender pies and pie crusts in supermarkets.

"It's a good thing for Claim Jumper and will allow us to focus our energy on our restaurant chain," said Craig Nickoloff, president and founder of the Claim Jumper chain. Nickoloff would not discuss details of the pending deal.

Food industry experts say Claim Jumper's decision reflects a trend. Chains such as Irvine-based Taco Bell Corp., Marie Callender in Orange, Cheesecake Factory Inc. in Calabasas and Wolfgang Puck Food Co. in Santa Monica also have sold their retail food divisions to companies with more expertise in manufacturing and marketing these products.

Marie Callender entrees are produced by ConAgra Inc. of Omaha, Neb. Taco Bell sold its growing line of grocery products to Kraft Foods Inc., the nation's largest packaged foods company.

"Larger companies know the supermarket game quite well and normally control sizable shelf space," said Irvine restaurant consultant Randall Hiatt. "Generally, they will have some quality protection in their agreement. It seems at this point the quality has been preserved with Marie Callender."

While some restaurant chains may worry that quality may suffer if they enter these licensing agreements, consumer studies show that grocery shoppers do not have the same expectations as with food prepared at the restaurants, said restaurant consultant Ron Paul of Chicago-based Technomic Inc.

"Consumers don't expect it to be as good," Paul said. "If they pick up a Taco Bell taco-making kit, they know it's not going to be like getting a taco at Taco Bell."

Restaurant and food consultant Janet Lowder also called the move a good business strategy.

Restaurants begin selling frozen foods "to increase sales in other outlets," she said. "Once they do that, they realize they are in the restaurant business and not really manufacturers of retail items."

Claim Jumper's supermarket items, introduced in 1996, include several flavors of bottled barbecue sauce and frozen entrees such as pork baby back ribs, chicken tenderloins, garlic cheese bread, mashed potatoes and buffalo-style chicken wings. The unit also sells desserts, including carrot cake and chocolate cake.

The items now are sold in most major grocery store chains in Southern California.

These licensing agreements also help restaurant chains increase their geographical appeal, Lowder said.

"Marie Callender products have gone far beyond where their restaurants have gone in geographical terms, and I think the same thing will happen with Claim Jumper, she said. "Of course, Taco Bell already has a national presence."

Claim Jumper operates about two dozen restaurants, most of them in Southern California.

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