Business as Usual at Draeger's in California

ELLIOT ZWIEBACH

SOUTH SAN FRANCISCO — The downturn affecting much of the economy across the United States is not having any discernible impact at Draeger's Supermarkets here, according to Richard Draeger, vice president of the four-store upscale chain.

“The impact has been negligible — it really has not affected us at all,” he told SN.

Draeger's stores are in upper-income areas in Northern California — three on the San Francisco Peninsula and one in the East Bay — where the primary competition is Whole Foods and Safeway lifestyle stores.

“We're not doing anything differently,” Draeger said. “What we're doing now is what we've always done, which is provide as high a level of service as we can. We know the national economy is suffering, but we're not seeing any impact in the Silicon Valley.”

Although Draeger's is keeping up with inflation — “just as other companies are doing, to preserve margins,” he pointed out — he believes supermarkets are likely to benefit from the general economic downturn.

“What most people in this industry do when the economy goes bad is try to cut back on back-of-the-house costs. But honestly, food is one area that's been impacted in a positive way by the economy.

“If you look back to the last time we had inflation this high — the period from 1987 through 1992 — it was a period in which supermarkets saw increases in same-store sales of 6%, and our business is moving in that direction now.”

Draeger said he's aware that restaurants nationally are experiencing a drop in patronage, “and maybe that will occur here. But so far we haven't seen it at restaurants in our area, nor at the white tablecloth restaurant we operate at one of our stores.”

Nor has he seen any changes in demand for private-label items, he said.