When Bo and Trish Sharon decided to make the switch from restaurateurs to grocers, they thought of it as a natural transition. It's all food, right?
"The thought [was] when we started that, well, the similarities are so blatantly obvious, it's roughly the same business," says Bo Sharon. "But the reality is that it truly wasn't at all."
The Sharons have learned this in the course of establishing Lucky's Market, a chain of seven (soon to be twelve) upscale groceries in five (soon to be nine) states. Lucky's is very much going for the high-quality locavore market; the philosophy statement on its website says, "We seek the freshest local, organic, sustainable and traditionally crafted foods."
There's nothing new about that. What's more unusual is Lucky's growth pattern. The Sharons opened the first Lucky's when they converted a convenience store in Boulder, Colo., in 2003. Since then, Lucky's has been hopscotching around the country, opening stores in St. Louis; Billings, Mont.; Columbia, Mo.; Ann Arbor, Mich.; Bloomington, Ind., and other widely scattered locations. It now has stores in states from Colorado to Kentucky. After the second store, in Longmont, Colo., opened in August, 2013, no two Lucky's openings have been in the same state.
It's very much a case of pouncing on opportunities as they present themselves, Sharon says. As a small, specialized grocer, Lucky's can move into new neighborhoods and introduce itself to a new crowd. Finding the right location, wherever it may be, is more important to the Sharons than building a contiguous territory.
"People need to eat everywhere, and, real estate, real estate, real estate," Sharon says. "If you can find the right place and you feel you can be successful, you can be."
Several of those locations are in university towns, including the latest one in Bloomington, Ind., near the campus of the University of Indiana. Locating in college towns is "not [a matter of] policy, but our concept seems to be working really well in university towns," says Lucky's COO Mike Phillips. "The students are educated and informed. This format is somewhat new to the masses, but educated people understand the benefits of buying local product, eating organic, and are more likely to experiment with affordable natural foods."
It's possible for Lucky's to jump on opportunities throughout the U.S. because the initial investment is so low. Sharon estimates that the build-out cost for a Lucky's is perhaps one-sixth that of a full-sized supermarket. The Sharons save money by using refurbished dairy cases instead of new ones. More generally, since the company has such a small upper management structure–basically, it's the Sharons–it's more nimble and can carry a store that might be underperforming, but has great potential, longer than a company with shareholders might be willing to.
"As far as a return on investment goes, we're already playing in a different league," Sharon says. "It's no longer baseball, it's soccer... As a private company, it's much easier to do because all I have to do is answer to my wife."
Sharon realizes that there's plenty of competition at the high end of the grocery market, starting with Whole Foods Market. But he figures Lucky's can outmaneuver the high-end grocery giant.
"We're obviously much leaner" than Whole Foods, he says. "More importantly, they are a different company than they once were. The 'Whole Paycheck' thing–today, the reality is that price is the math equation of grocers. Everybody understands that."
So how can Lucky's provide enticing foods, especially produce, while keeping prices low? It's partly due to local sourcing.
"Our shelves are curated, as opposed to completely going off SPINS data and what the trends are nationwide," Sharon says. "If you look at the community and listen, people will guide you as to what's important to them." Local involvement means getting to know the local food artisans: "As a chef, you're always looking for that farmer that has that one thing, like Easter radishes, more beautifully than anybody else. And that's where you buy your Easter radishes....There's an amazing number of passionate foodies out there."
"Our shelves are curated, as opposed to completely going off SPINS data and what the trends are nationwide. If you look at the community and listen, people will guide you as to what's important to them."
It's an approach that seems to be working, says Sandra Skovan, research director-US for Planet Retail. "It's my opinion that Lucky's Markets are checking a lot of the boxes of the hot trends right now," Skovan says, including small store sizes, natural/organic, value, sustainability and health/wellness. "So I think they do have a good prototype on their hands to roll out."
Lucky's site selection–Midwestern locations away from big cities–looks like it's working as well, Skovan says: "Part of their opening scheme is to go into America's heartland. What that does for them in picking locations is, they can be close to farmers, close to ranchers, close to where a lot of the product is grown, so they can deliver on this whole farm-to-fork philosophy that they've got going. In a way, a return to the greengrocer mentality."
The locations may be in the heartland, but they don't exactly form a circulatory system. The Sharons are taking a hopscotch approach to expansion, staking out promising locations no matter where they are, instead of the more usual method of building a contiguous territory.
Skovan says Lucky's expansion plan is unusual, but the emphasis on local products and local service might make it work.
"I think it is a big drawback for them, the way they're going about it," she says. "But again, they focus on that whole local community feel, and within those communities, there is a lot of that neighborhood feeling, word-of-mouth. The store manager and the employees get to know their local customers. They know the area very well, and they're very involved in the community from what I can tell, as far as aligning with the right organizations and doing community activities and things like that. It is an individual effort every time they open a store to build up that support system and that advertising and word of mouth, and get their name out there."
To build that kind of community rapport takes the right kind of staff. Lucky's looks for staffers who share at least a little of the Sharons' passion for food.
"If there's anything we've learned, we are a family," Bo Sharon says. "We're diligent, and we're very selective in store directors. It's their store. We empower them. We look for a certain sense of entrepreneurialism within our store directors because we can't be there all the time."
Sharon says that while the restaurant and grocery businesses are very different, there's enough similarity between them that it helped launch the kind of grocery business he wanted.
"There's a common language of food and ingredients that still runs parallel between the two businesses," he says. "At the end of the day it's a grocery store, but if you're passionate about where your ingredients come from, the food tastes that much better."