In addition to The Journal’s regular ‘A dinner conversation with…’ articles, alternating months will feature a new series called ‘Lunch express with…’ This month, we sat down with Foster’s Food Fair Managing Director Woody Foster for lunch at The Black Trumpet Gourmet Delicatessen at Camana Bay to discuss a variety of topics.
These are exciting times for Woody Foster and the Foster’s Group of companies. On a personal level, he married his long-time companion Sabrina Leacock just days after we sat down for lunch at the Black Trumpet Gourmet Delicatessen, a restaurant that will become his competition in just a couple of months when the Foster’s Group opens the Bay Market at Camana Bay.
The Foster’s Group is also forging ahead with building a 75,000-square-foot distribution centre near Owen Roberts International Airport. The centre will likely open sometime in late summer 2012.
“The new warehouse is been in the cards for a very long time,” Foster said. “We got delayed by the economy. When we were right about ready to pull the trigger, the bottom dropped out so to speak and we said, ‘you know what, let’s just wait and see where we’re at, because if it gets too bad, we don’t want to be here with a big hulking building’.”
Since Hurricane Ivan caused major damage in September 2004 to the Foster’s Food Fair grocery stores at the Airport Centre and the Strand, the Group has gone through rapid expansion. After repairing the two badly damaged stores, it opened additional stores in Savannah and East End and tripled the size of its store in West Bay. In addition, it opened Priced Right, a warehouse-type store that sells to the general public, in May 2005.
Foster said the Group wanted to get its new stores open and settled in before going forward with the distribution centre.
“Once we completed that in terms of our strategy of having the stores where we wanted them, we’re now at the situation where we needed the proper [storage] facilities,” he said.
Although the Foster’s Group has confidence in Cayman’s economy, Foster said the decision to go forward with the distribution centre is more a reflection of need.
“We felt if we were going to run proper stores that we’re happy to put our name on and where our customers are happy to shop at, we have to treat the product the way it deserves,” he said. “That means we have to store it properly, we have to hang it properly, and in our current facilities, that was becoming difficult. We’re proud of our name and we have to maintain the integrity of our name and, by extension, we have to treat our products properly. Right now, we have to try very hard [to maintain the integrity of the products] and this will make it that much easier.”
The new distribution centre will not impact the company’s relationship with Progressive Distributors, a food wholesaler business in which the Foster’s Group is a partner with the Kirkconnell Group, Foster said.
“I know there have been some providers who are worried that we’re going to put more pressure on [Progressive] because we’ll have a bigger facility,” he said. “But we’re not going to put any more pressure than we already put on them. From that I mean… just making sure that they’re staying competitive, because if they don’t stay competitive, then we’ll go get it from somewhere else. At the end of the day, we feel we have a duty to our customers. The customers are more important to us in what they pay than any alliances we may have.”
Keeping prices down
With food prices rising significantly in the past couple of years and with increases in government import duties, Foster’s does what it can to keep food prices down.
“We try to buy right,” Foster said. “In other words… just because [a product] is locally supplied, it doesn’t mean we’re going to buy it from them. If we can buy it cheaper in Miami, [the local supplier] either needs to come to the table or we switch to Miami. And vise versa; if we’re buying something from Miami and a local supplier gets distribution of it and are able to offer us a better price, then we switch. So we’re not tied to alliances. Obviously, alliances are good – loyalty and all the rest of it – but it’s not the be-all, end-all.”
Foster said the Group tries to find deals on products when it can and then passes the savings on to consumers.
“But it’s becoming increasingly difficult.”
Foster’s already absorbs some of its increases in expenses without passing it on to customers.
“What we absorb is typically the local stuff – electricity, work permits, all of the local usual taxes – generally do not get passed on,” he said. “We haven’t had Foster’s price increase in a very long time. What we pass on is the price increase we get from… suppliers.”
In addition to import duty, higher shipping and holding costs also impact grocery prices here, Foster said. But something else impacts prices in Cayman even more.
“The biggest item would probably be purchasing power,” he said.
Although Fosters has five stores in Cayman, its sales volume is very low compared to grocery chains in the US.
“We might be big in the Cayman Islands, but in the scheme of things, we don’t even show up on anybody’s radar. That’s not quite accurate, but we’re pretty small in the scheme of things,” he said. “Take milk for instance. I walk into Publix [Supermarket in Florida] right now and look at their prices. I can’t even buy it for what they sell it at.”
In addition, places like Publix can buy milk on an as-needed basis because their supplier is close by, something that can’t be done by stores in Cayman.
“We have to forecast what we’re going to buy,” Foster said. “We have to ship it in here and hold it and hope we got the order right. If you get the order wrong, you can have out of stock situations, which upsets customers, or, in the other direction, you can buy too much and then we have a dating issue and a quality issue. And all of those wrongs cost money. Shipping is expensive and … the US doesn’t have all that extra shipping cost.”
The good news is that the rapid price increases in products seen last year and early this year seem to have stabilised.
“From what we’ve seen… it appears to have slowed down,” Foster said. “Will it continue? I’m not sure. Commodity pricing is still an issue. [The increases] are still coming, but it doesn’t seem as fast and furious as it was coming.”
The Black Trumpet Gourmet Delicatessen offers high-quality soups, salads and sandwiches. The Black Trumpet Reuben is made in the classic fashion – griddled marbled rye, hot corned beef, sauerkraut and Thousand Islands dressing. In addition to salads with greens, it offers inventive salads, like one made with couscous.
For lunch, Foster chooses a bowl of clam and vegetable chowder along with Black Trumpet Cobb salad. It’s as if he’s trying out the competition.
In February, the Foster’s Group will open the Bay Market, an organic market that, in addition to a variety of fresh, frozen and packaged foods, will offer many of the same things Black Trumpet does.
“We’ll be a salad, sandwich and soup type of an operation,” Foster said.
The Bay Market will have a deli component, but not with hot food like that found in the delis at the Foster’s Food Fair stores.
“It will have a high-end salad bar, but not what you’d see in our stores now,” he said.
The store will have two ovens, one for baking fresh bread on site and another where whole turkeys and beef roasts can be cooked, allowing the Bay Market to serve sandwiches with freshly made meats.
There will also be a coffee bar and areas to buy gourmet cheeses and meats. Foster said the Bay Market will have not have a meat shop.
“We’ll be bringing in natural meats that are already cyrovaced and shelf ready,” he said. “So instead of having to sell it in three days, you have like 21 days.”
There will also be produce, predominantly organic.
“We will focus on organic, but it won’t necessarily be every single item,” he said.
The Bay Market will also try to capture the imagination of pet owners, selling refrigerated, high-end organic dog and cat food.
Although the Bay Market is uncharted territory for the Foster’s Group in terms of its organic products, it has tried something similar before. The Fort Street Market in George Town enjoyed a decade-long run, but just wasn’t profitable enough.
“One of the big issues was size,” Foster said of the Fort Street Market. “All we were able to do there was sell cooked food. Cooked food is expensive and it’s labour intensive. And for the price – the rent and all the rest of it – we just had too much square footage for what we were doing.”
Foster said the problem had nothing to do with customer numbers, which he said were fantastic. He said people still often talk to him about missing the Fort Street Market.
“If we could have gotten a higher price, maybe we could have offset [too much space], but we felt the price was where it needed to be,” he said. “At the end of the day, my thought was that if we had the same profit in half the space, it would have worked out.”
Although the amount of locally grown produce has increased in recent years, there still isn’t a tremendous amount of it for sale in the Foster’s Food Fair stores.
“The problem is that the farmer wants to sell it at [a certain] price…” said Foster. “If they can sell something on the street for $5, they want to sell it to us for $5. Well… that can’t work for us because now we need to sell it for $7. So people will say ‘why should I buy it from you for $7 when I can buy it somewhere else for $5’? So the constant argument is they need to back off their wholesale price so that we can both sell it at the same price and that’s a chronic problem.”
As farmers in Cayman begin to produce more product, there will be a increasing need for the grocery stores to sell some of it.
“Getting $5 or it goes into the trash obviously doesn’t do any good,” Foster said. “To a certain extent you need the retailers to help you move the tonnage. Like mango season for instance; they have more mangoes than they can sell themselves, so they need us to assist with that. But more and more [the farmers are] doing a lot of that on their own. But you know what? – kudos to them. If they can get a dollar more by doing it on their own and it’s not costing them more in labour, transportation and the rest of it… at the end of the day, they have to eat as well.”
Local farmers are only a small part of the competition the Foster’s Group faces. Despite its relatively small size, Cayman has several other grocery stores.
But Foster takes it all in stride.
“We never worry about competition in that it is a good thing,” he said. “I don’t care what you say; if you don’t have it, you’ll absolutely get complacent. No question.”
Foster said the Foster’s Group will continue to explore opportunities as they arise.
“We’re always open [to new opportunities],” he said. “Our business is the Cayman Islands. We want to be where we need to be and we work toward that. The trick is getting there at the right time; too late you have a problem; too early you have a problem.”
Clam and Vegetable Chowder, Small Soup of the Day – $3.95 Black Trumpet Cobb Salad – $10.25 Black Trumpet Reuben Sandwich – $8.75 Small Couscous Salad – $3.95 Two bottled waters – $3.00 Total: $29.90