Fresh & Easy Has A Difficult Road Ahead

Tesco, the UK supermarket behemoth, has just announced record pre-tax annual profits of £3.13bn ($4.5bn), which is surprising, given that the UK is in the middle of a raging recession.

What's not surprising--to me, anyway--is that Fresh & Easy, Tesco's US operation, has, at the same time, made a loss of £142mn ($205mn).

I recently revisited Fresh & Easy, after a disappointing first trip last year. This time, I was impressed with certain items, such as bags of salad that were outstandingly fresh (OK, hardly groundbreaking stuff), plus tangy lemon and cilantro houmous and good-value ($8) family meals that would feed a small army, including some perfectly edible, if not terribly authentic, chicken burritos. There are plenty of bargains, too, including 98¢ produce packs and huge boxes of tea bags for less than $2.

I'm also impressed by the some of the wines. Indeed, I'm not the only one: so far they've garnered around 60 awards, including no less than nine from the San Francisco Chronicle's Wine Competition in February. One, Vista Point Chardonnay, which retails at a stunningly low $1.99, took a bronze medal at last year's San Francisco International Wine Competition, and also beat Trader Joe's "Two-Buck Chuck" in a recent blind tasting on the marvelously entitled Caroline on Crack website.

On the other hand, the two major downsides I'd noticed on my initial visit were very much still in evidence. There's simply not enough choice when it comes to non-Fresh & Easy-branded goods (cases in point: toiletries, dry goods and candy bars).

And expiration dates, a bugbear even with loyal customers, are still within the next few days. I welcome the idea of fresh food, but it gets ridiculous when you have to eat your entire week's groceries within the next three days. Anyway, I'm not sure I even trust the dates: a pack of cooked chicken ended up in the trash as it had gone bad by the morning of the expiration date (isn't there usually a little leeway?).

Fresh & Easy confirmed to me that they won't break even by the end of 2009 (as suspected), and there's no date for when they will. They are continuing to open in the US, but there are no further OC stores planned for the near future.

What's your experience of F&E? Have you been impressed or disappointed?


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