Hoping to succeed where another upscale supermarket failed, Irvine Ranch Farmers Market is open for business in Northridge, betting that its name and wares will pull in free-spending food fanciers from around the northwest San Fernando Valley.
But success will not be a piece of cake for Jon Hubbard, whose Irvine Ranch chain now numbers eight, and whose Beverly Center store has become a kind of yuppie pantry for those with disposable income and a yen for foods ranging from swordfish to sorrel.
For one thing, The Grocery, another fancy food store, failed at the same Nordhoff Street location last May after about three months in business. Also, Irvine Ranch is nestled in a busy collection of stores and restaurants between Corbin and Tampa avenues where parking can be tight.
"The only time it's bad is between 12 and 2," Hubbard said. "We're looking at valet parking during those two hours."
Store manager Timothy Johnson said business at the new store, Irvine's first in the Valley, has been good since it opened on Sept. 11, and that it is getting better.
Area's Affluence a Plus
Hubbard said he had been looking for a site in Northridge because of the area's affluence, and because rents on Ventura Boulevard are too high. He said he hopes for sales of $125,000 or $150,000 a week at the 18,000-square-foot store he finally rented.
If the Northridge store comes close to doing as well as the other Irvine Ranch stores, it will be quite a success. Privately held Irvine Ranch should gross $55 million this year, Hubbard said, up from $38 million last year and $28 million the year before.
The 44,000-square-foot Beverly Center store alone generates weekly sales exceeding $420,000, he said.
Hubbard said a second Valley store, in Woodland Hills, should open by April 15 at Victory Boulevard and Canoga Avenue.
Irvine Ranch is not the Valley's only upscale food store. Gelson's Markets, which also targets affluent consumers, has been in the Valley since 1951, when it opened its first store in Burbank. That store is closed now, but Gelson's has seven markets these days, including ones in North Hollywood, Encino and Tarzana.
(A unit of Compton-based Arden Group, Gelson's does not disclose sales or profits, but the Directory of Corporate Affiliations estimates its sales at $101 million.)
Several Other Competitors
Also in the upscale food business in the Valley are Trader Joe's, which has stores in Sherman Oaks, Encino and Granada Hills, and Mrs. Gooch, which has stores in Northridge and Sherman Oaks.
"I think they're good competition," Gelson's general manager Donald Lee said of Irvine Ranch. "We regard anyone who sells what we sell as competition. But are we going to lose sleep over it? No."
Indeed, most people in the upscale food business see boom times ahead, thanks to a surging interest in food and an increasing number of two-income couples with more money and less time than their parents had at their age.
"They seem to have the knowledge, the desire, and the income" to buy expensive foods, said Hubbard.
"It's happening all over the country," said Kenneth Partch, editor of Supermarket Business, a trade magazine in New York.
For retailers willing to depart from the traditional supermarket concept, the trend is welcome, Partch said, basically because gourmet supermarkets and other specialty food stores offer far greater profit margins than the average Ralphs, Vons, or Hughes.
"The margins are higher if they get the demographics they're looking for," Partch said of stores like Irvine Ranch. Prices tend to be higher at such markets, but the owners usually insist that their quality is superior, and that they offer exotic products regular supermarkets don't stock.
Most supermarkets, in fact, operate on razor-thin margins--a net profit of 1% on sales is common--to compete for price-conscious consumers, relying on volume to make money.
Stores like Irvine Ranch instead stress quality, variety and convenience, although Hubbard insists his prices aren't much higher than at regular supermarkets.
In recent comparison visits, fresh swordfish at Irvine Ranch was $9.99 a pound, contrasted with $6.98 at Gelson's in Encino and $4.49 at Ralphs in Winnetka. Gelson's charged $5.49 for Porterhouse steak, contrasted with $4.99 at Irvine. But Ralphs charged $3.19.
Ralphs Tends to Be Cheaper
Ralphs was cheaper on almost all the eight items sampled, although a few, such as red leaf lettuce, cost the same (59 cents) across the board.
Stores such as Irvine also emphasize high-profit deli, bakery items, and prepared foods such as pasta salads. These products have found their way into more conventional supermarkets as well because they carry higher mark-ups.
Irvine Ranch is planning an expansion program that includes new stores in Pasadena, Rancho Mirage, and San Diego, in addition to Woodland Hills.
For reasons of space, the Northridge outlet lacks some of the frills featured at other Irvine Ranch stores. The 63,000-square-foot store in Newport Beach, for example, has a piano player.