Photo courtesy of I5 Design & Manufacture/I5Design.com
SEATTLE — Metropolitan Market here, an upscale chain operating five stores, has what it takes to compete in today’s food-retailing marketplace, according to the investment group that recently took a stake in the privately owned company.
“It has a wonderful combination of high quality and being a local brand, which we think increasingly is going to be important for non-everyday-low-price-leaning grocery retailers,” said Stephen Babson, managing director in the Portland, Ore., office of Endeavour Capital. “If you are not in that [EDLP] category, we think you need to be doing what Metropolitan is doing.”
Endeavour has long had a focus on investing in food and consumer companies, and in fact also currently has stakes in Portland-based New Seasons Market and in Carson, Calif.-based Bristol Farms, two small, local chains that share some things in common with Metropolitan Market.
“In Metropolitan, we see very much the same things we saw in Bristol Farms — a highly differentiated, local brand, with a superior product offering, very high-touch with the consumer, and an employee base of great longevity,” Babson explained.
He also praised Metropolitan’s merchandising acumen, its local reputation and its strong site locations.
“Bristol Farms and Metropolitan Market have what we consider an affiliation,” Babson said. “They are kind of like cousins, in terms of their similarity and their ability to work together on projects, and potentially scale together on projects.”
And while New Seasons has less in common with Endeavour’s other two food-retail holdings, it does share some attributes that the investment firm finds attractive, Babson explained.
“We think New Seasons is a very valuable brand, and offers a unique solution in the Portland market,” he said. “It is a unique crossover that offers a selection of both natural and organic and conventional products, but what it shares in common with Metropolitan Market and Bristol Farms is that it really owns being ‘local,’ and like Metropolitan, it walks the talk in terms of supporting local causes, and hiring people from the local community. Each New Seasons store, I think, very aptly reflects the neighborhood that it is located in.”
All three chains also have what Babson described as a group of “extremely loyal core customers.”
At Metropolitan Market, Babson said he believes the company has room to open more locations in the Puget Sound area. In connection with the Endeavour investment, Metropolitan revealed that it has agreed to acquire Magnolia Thriftway, which it plans to begin operating in September. It will seek to remodel the store over the next 18 months.
“There is ample opportunity to find additional sites over time in their own region,” Babson said of Metropolitan’s expansion potential.
Asked if the chain would consider expansion to additional markets, Babson said he thinks the company’s merchandising skills and its brand are “very exportable.”
Babson declined to discuss the terms of Endeavour’s investment in Metropolitan, other than to say it was a “material” infusion of capital that will result in Endeavour having representation on Metropolitan’s board of directors. The current management at Metropolitan Market will continue to run the chain, he said.