Foam may sound cushy, but running a foam business is anything but.
Andrea Weiss became president of Foam Mart, her father’s retail business, in 2005, just as Hurricane Katrina and rising oil prices drove up the cost of their raw material by 300 percent.
She was lucky: Her biggest clients, NBC Universal, Warner Bros. and ABC Studios, were willing to write bigger checks. Her other customers, however, were shocked. She had to type up a fact sheet to post on the window of the Burbank store explaining the skyrocketing prices.
Meanwhile, Weiss’ father, Foam Mart-founder Jerry Goldstein, retired to Carlsbad. But he wasn’t quite ready to give up control. He still watched a live video feed of Foam Mart’s operations from his home and came up to Burbank a couple of times each week.
“I was still the boss’s daughter,” she said. “I knew my boundaries. I would still be making the decisions but I would confer with him.”
Since then, he’s learned to let her make more decisions, and she’s ready to implement new ideas, such as putting more emphasis on furniture sales and developing an online presence.
“Now I feel like I’m running the family business,” she said.
Weiss said she has kept the company profitable every year since taking over. Revenue was down 10 percent last year to $2.5 million, but is back up 6 percent through August of this year.
To keep the company growing, she recently signed a lease on a small warehouse nearby, where Foam Mart will cut up the raw product – which arrives in 8 feet-by-8-feet pieces called buns that are shaped into what they sell: cushions, chairs, mattresses and even the heads worn by the characters at Disneyland.
She expects the new facility will help her cut costs by eliminating the subcontractors Foam Mart has been using to cut the buns. She’s also planning to expand her furniture business, which is centered on low-budget pieces such as beanbags and futons. Higher-priced and chic “memory foam” mattresses are still only a small part of Foam Mart’s inventory.
Looming on the horizon is the prospect of a shift in the industry. The majority of the company’s foam sales are now for soft foams, a petroleum-based product. But pricier and eco-friendly biofoams are expected to become more commonplace – eventually replacing traditional foam when it’s banned for environmental reasons.
Taking a chance
Jerry Goldstein opened Foam Mart in 1963 while he was a salesman of industrial parts such as power transmissions and bearings. He was friendly with another salesman, who happened to be selling his small foam business in Burbank. Goldstein bought it for $1,500 and ran it for a few months while he kept his main job. Later that year, he found the current location, a warehouse on Victory Boulevard. The high-traffic site convinced him it was time to commit.
Foam sales to movie studios picked up after 1989, when the store supplied the material for an enormous shoe in “Honey, I Shrunk the Kids.” Soon after, studio sales became a big part of Foam Mart’s business.
Half of the store’s sales still go to customers looking for a mattress, couch cushions or a Halloween costume. One of those was Motley Crüe drummer Tommy Lee, who ordered a custom 7-and-a-half-foot circular mattress last year – made of memory foam. Foam Mart has also provided couch cushions for the Playboy Mansion.
The other half of the sales come from studios. They buy foam not only for props such as the big shoe, but for camera-carrying cases and set decoration. The cartoon characters walking around Disneyland rely on Foam Mart for their oversized heads. Weiss proudly shows off a swath of marble-painted foam that was recently used for flooring in a CSI Miami hospital room. The foam also provides cushioning for action scenes.
The business is the only foam company listed in the NBC “preferred redbook,” a Yellow Pages-style list of services used by the studio.
Despite tightened studio budgets, foam remains a relatively low-cost product to factor into a movie budget.
“If you’re doing costumes for Disney, you’re going to buy some foam. But you’re not buying a thousand pounds of it,” said Jason Asch, owner of competitor Diamond Foam and Fabric Co. on Miracle Mile, who also sells to studios.
But Asch has phased his business out of foams and into fabrics, where he sees more opportunity.
Weiss said that her only indication of budget-tightening at studios was last year, when major buyers started price-checking purchases; that hadn’t happened very often in the past.
Challenges and opportunities
Weiss had been at her father’s business in the 1980s, then took a break from the working world to raise her kids, and returned to the company in 2003. She was named president two years later. That’s when Hurricane Katrina struck.
The storm destroyed the largest foam emulsifier in the country, causing prices to quadruple amid shortages. In the three weeks after the hurricane, Weiss said that she couldn’t get any foam at all. Even after manufacturers started making foam again, prices kept climbing as the cost of oil increased.
“It was pretty hairy for a couple years,” she said. “The prices were increasing every month.”
It got so bad that she posted a sign on the front window explaining the cause of the price increase. “People would come in and say, ‘Wow, that’s so expensive.’ And I would say, ‘Here, read this.’”
Prices stabilized in 2008, but a piece of foam that would have cost consumers $10 before Hurricane Katrina still costs $40.
In the future, selling foam may become even more challenging.
Mark Polasky, an analyst who tracks the problems facing the petroleum industry, said there are serious environmental concerns related to the material.
“There’s a big push in the biofoams,” said Polasky, an analyst at Nerac Inc. in Akron, Ohio. “That’s going to gain a lot more traction as we move forward. What do you do with the foam after it’s used up? Landfills don’t like it. The material will never disappear; it will be around forever.”
But Weiss said that she isn’t planning to increase the small amount of biofoams in her inventory, although she knows the day may come. She recently received a sales visit from Preserve Foam – a Hickory, N.C., company that bills itself as the first biofoam company, and replaces petrochemicals with soy.
“It’s costly,” Weiss said. “Eventually it’s going to catch on, but I don’t think it will be a trend until it’s legislated.”
Polasky expects California voters will eventually approve a ballot measure restricting petroleum-based foam sales in the state.
Foam Mart does carry a limited selection of eco-friendly soy and latex-based foams that are popular among a younger clientele buying baby cribs and children’s bedding.
But the rest of the warehouse is filled with nonorganic foam and vinyl. A shelf just below ceiling level of the warehouse is lined with beanbag chairs. The halls are covered in vinyl material, in colors including faux ostrich skin and magenta, that is used to cover custom beanbags and couches.
Goldstein said the foam business has always had a distinct advantage: The material is ubiquitous.
“Nobody thinks about foam,” he said. “But everyone’s got it in their home.”
Foam Mart
FOUNDED: 1963
HEADQUARTERS: Burbank
CORE BUSINESS: Sales of foam, upholstery and fabrics to movie studios and individuals.
EMPLOYEES: 7
GOAL: Increase sales 10 percent to 15 percent.
THE NUMBERS: Revenue of $2.5 million in 2009.
