Student union

Given the choice, most college kids might skip the dining commons in favor of fast food or a take-home meal. Now, at Virginia Commonwealth University, students can find both in the same location.

McDonald's and Richmond-based Ukrop's Supermarkets are offering Fresh Express, a series of home-meal replacement products, ranging from macaroni and cheese to Grilled Dijon Chicken, at two new McDonald's campus stores. The two are also planning a second operation, Company Joe's, a campus cafe offering coffee and pastries, but with no launch date yet.

The unusual joint ventures give both McDonald's and Ukrop's a chance to expand their customer bases in what amounts to a captive market.

"We wanted a cash operation with a variety of foods available," says VCU food services manager Josie Sicheri, who approached McDonald's about partnering in a branded food-court concept.

Teaming up with Ukrop's, says McDonald's regional marketing manager Julie Glockner, is a way "into VCU with a food-court-type offering," tailored to time-crunched students, with both sit-down and take-out fare. Ukrop's gains entry to outside foodservice.

"There are customers who want burgers and fries, and customers who want something different," says Kevin Hade, Ukrop's VP of manufacturing. "This brings those choices together."

Under the arrangement, Ukrop's supplies McDonald's with a variety of items, from soups, salads, and sandwiches to entrees like Marinated London Broil, priced from $1.99-$4.49. The products are displayed in a refrigerated case, set off by an awning, chalkboard, and neon signage.

Vegetarians have grumbled about their limited HMR selection, Hade says, but feedback has otherwise been good. Sales of the products have so far exceeded the grocer's expectations, accounting for up to a third of the units' total sales, says fresh foods account manager Ted Ukrop.

The concept "certainly taps into this whole area of prepared meals," says analyst Wayne Daniels of Schroder & Co. Nevertheless, "McDonald's has more immediate growth opportunity in its core business," he says, adding that significant development of the program is likely years away.