AP file photo Rachel Rangel, left, and Alexandra Rose prepare samples at a serving bar known as "The Kitchen Table" at the opening of the first of six Southern California Fresh & Easy Neighborhood Market branches as British grocery giant Tesco PLC enters the U.S. market, in Los Angeles'in this file photo taken Wednesday, Nov. 7, 2007. British supermarket giant Tesco PLC said Tuesday, April 1, 2008, it will delay opening any more of its Fresh & Easy Neighborhood Market stores in the United States.

British retailer Tesco did its homework before expanding into the U.S. market under its Fresh & Easy brand, conducting extensive market research on Americans' shopping, cooking and eating habits.

Even so, Tesco is not immune to a few speed bumps.

The company said Tuesday that it is taking a three-month break until early July from opening any new Fresh & Easy Neighborhood Markets. The company has opened 59 stores in the western United States since November, including one at Alamo and Tapo streets in Simi Valley, but several more are planned for Ventura County.

The decision had nothing to do with the state of the economy, said Brendan Wonnacott, a Fresh & Easy spokesman. In fact, it's something that Tesco has done before in other markets, and is nothing to be alarmed about, he said.

The break won't mean a lull in operation, construction or selecting new sites, Wonnacott said.

"It's an opportunity to step back and focus on the business overall," he said.

Jack Kyser doesn't buy it.

"I think the economy has a lot to do with it," said Kyser, chief economist with the Los Angeles County Economic Development Corp. "Consumers are under a lot of pressure with higher gas and food costs, and they don't want to make a lot of frequent runs to grocery stores."

That might work against Fresh & Easy's concept of consumers grabbing a fresh, pre-packaged meal on a lunch break or on the way home from work.

When money is tight, shoppers want to go to a store where they can save the most money, Kyser said. That might make them more inclined to buy in bulk from warehouse stores like Costco, or shop at stores that have club cards, which are not available at Fresh & Easy.

The economy aside, breaking into the competitive Southern California grocery arena is a difficult task, with independent stores such as Trader Joe's and Stater Bros. And supermarkets are expanding their "grab and go" food items. For example, Ralphs has launched its "Fresh Fare" market, and Vons is getting ready to roll out something similar, Kyser said. And super discount stores such as Wal-Mart and Target are expanding their food sections.

When a company seeks to make a major splash or entry into a market that it has not previously served, there are marketing and financial perils to expect, said Gary Wartik, economic development director for the city of Thousand Oaks.

Fresh & Easy is going head-to-head against major operators and is going to have to work hard to take customers away from other stores, Wartik said. Consumers ultimately will benefit because other stores will respond by improving products and services to retain customers, he said.

Mixed reviews

And if new stores don't meet expectations during the initial shakedown, consumers generally return to their old shopping habits.

Kyser already has heard mixed reviews.

He said he thinks that Fresh & Easy can compete, as long as the company pays close attention to what kind of products it stocks. He's heard that the ready-to-eat meals are good, but that customers who visit the store after midday find a picked-over selection.

Retail consultant Jim Hertel went further, saying the stores have been riddled with inventory problems and likely weren't meeting sales goals.

Stores visited by his researchers appeared to be logging about $50,000 a week in sales, well below the $200,000 that investors had expected, he said.

"We weren't alone in terms of questioning the prudence or maybe even the sanity of continuing to roll it out without the opportunity to fine-tune," said Hertel, who recently completed a report on the chain's prospects in the Phoenix market.

Inventory at the stores is about 10 percent the size of a traditional grocery store's and includes gourmet-prepared foods along with staples such as milk, bread and vegetables.

Hertel said Fresh & Easy will likely spend its hiatus bringing those offerings in line with customer expectations. One customer complaint involved prepared meals requiring too much cooking time.

Tesco seemed to be having trouble keeping some items in stock, Hertel said, and that about 20 percent of shelves in stores he visited were empty.

Wonnacott said the company has made changes to satisfy customers, such as deciding to accept American Express and other credit cards.

He also stressed that reception to the new stores has been strong, and that the company has seen an increase in sales each week.

A report by Piper Jaffray retail analyst Mike Dennis says research among Fresh & Easy suppliers indicates that sales have been off 70 percent. According to the report, the U.S. chain could have fetched as little as $30 million in sales since its launch, sorely missing Piper Jaffray's projected $100 million target.

Wonnacott could not say whether the three-month break has changed the time line of when other proposed Fresh & Easy Markets will open in Ventura County. Other planned locations are in residential areas of Newbury Park, Oak Park and Moorpark. Fresh & Easy also is pursuing sites in Oxnard and Ventura.

Number of stores unchanged

The hiatus should have no bearing on the number of stores Tesco had planned to open this year, Wonnacott said.

The company previously said it planned to have 150 stores throughout Southern California, Las Vegas and Phoenix by the end of 2008.

It's a rough estimate, but still true, Wonnacott said.

The break might have come as somewhat of a surprise to those familiar with Tesco's blitz strategy to open a store in every neighborhood.

Still, there is no question about Tesco's prowess. The company was able to stand up to Wal-Mart when Wal-Mart opened in the U.K. market, Kyser said.

"They probably will be able to persevere," he said. "They should survive."

— The Associated Press contributed to this report.