When meal replacement made its debut a decade or so ago, supermarkets touted it as the ultimate solution for time-starved consumers. The hype was so huge it made your brain hurt. The problem? In many cases, it was a great idea killed by bad execution. You remember seeing coagulated stuffed peppers and getting a whiff of funky fish that made the stomach churn.

Fortunately, retailers learned fresh trumps the mighty convenience trend when it comes to competing in the food service arena. Now many supermarkets are stepping up the competition for food service dollars by building dining areas within their stores. The good ones are not only serving hot and fresh food but also remodeling their in-store bakery/deli areas to provide the proverbial “ultimate food service experience.” Here’s a godsend for savvy bakers facing declining unit volumes in the packaged bread aisle and for those companies seeking new opportunities for growth in conventional supermarket and food service channels.

“The new food fights are between restaurants and supermarkets,” noted Steve Beekhuizen, president of the International Dairy-Deli-Bakery Association (IDDBA), during its show last month. “Often,” he added, “the latest restaurant in town is in a supermarket.”

In his presentation, he outlined the punch and counterpunch. For example, restaurants are fighting back by selling packaged retail products in their outlets. Supermarkets counter by providing four meals for the price of one dining out. Restaurants react by offering coupons and menu discounts such as Applebee’s two meals for $20. Retailers are trying to capture the “accidental eater” who, by impulse, decides to eat in the in-store restaurant while doing the family’s shopping.

At the IDDBA show, many bakers provided food service solutions for these so-called new super-restaurants. Uncle Wally’s, known for its traditional sweet muffins, branched out into the savory arena with new Sweet Country Corn Dinner Muffins in traditional Buttery Corn and Jalapeño and Cheese flavors as well as a potato-based muffin for delis that sell chili or rotisserie chicken meals.

Likewise, Gagné Foods showed off multiple varieties of its cream cheese biscuits, including Triple Ginger, Double Chocolate, Sweet Potato and Herb Parmesan varieties, for eating occasions throughout the day. “We like to have fun and see what we can put in a biscuit,” said Somerset Gagné, national sales director.

Yes, a little fun can result in serious business. Several Dairy-Deli-Bake 2012 exhibitors such as artisan baker Bakery de France and flatbread producer Damascus Bakeries featured chefs demonstrating how in-store bakery/delis can incorporate their artisan breads into fresh meal solutions. Yes, show them how to use it in the super-restaurant. You’ll be rewarded for your creativity.

A headline in a recent American Bakers Association bulletin noted: “Bakers must innovate to keep up with consumer demands.” Innovation is about not only developing new products but also exploring new channels and helping longtime customers discover additional ways to expand their businesses. And yours.