Tuesday, January 07, 2014

Jetro, Restaurant Depot and Tradeoffs

There's something beautiful and elegant about a great strategy when it comes together. I came across this article on the founder of Restaurant Depot, Nathan Kirsch (BusinessWeek):

“When we arrived here, everybody just frowned on cash and carry as a meaningless form of distribution,” said Stanley Fleishman, Jetro Holdings CEO, who worked for Kirsh’s wholesale operation in South Africa and has been running the U.S. company since 1986. “The competition just blew us off as those guys selling second-tier product. That was the secret of our success.”

By the early 1990s, Jetro had grown to 10 outlets across the U.S. and was generating more than $400 million in revenue. Looking to modernize his management systems and fund expansion, Kirsh sold 80 percent of the business to Metro Holding AG, a Swiss supermarket business that was also a shareholder in Metro AG, one of Germany’s largest grocery conglomerates.

Jetro’s sales growth leveled off. Kirsh noticed that the restaurateurs shopping at his warehouses didn’t like jostling with bodega owners, who would shop less often and enter the checkout lines with ten-times the amount of goods.
It's an idea that can't have been easy - focusing on a small minority of undersserviced customers, he reeducated and fundamentally changed a highly fragmented low margin business. Too bad it's not a public company.

No comments: