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Gotta love clients.
I would leave the logo as is.
I would leave the half and half background. Maybe try pulling the red down so it cuts off at the same place as the main image. I know that would cause some disharmony -- but see if that is their issue. Or -- perhaps try a light shadow to break up the foreground and background.
As far as the categories - do they have content to support this? I like the way the categories are lined up in the second screen shot. But prefer the header in the first screen shot. Also - are they willing to lose the category headers that you have in the first screen shot?
Overall the detail in the site is great. I like the highlight at the very top - the one pixel white line separating the background, the space left for the cart at the top, and the categories we serve at the bottom.
Nice design.

Excellent feedback Angie, thanks!