BristolFarms/LSP/26″/mike1st/mark2nd

LISA STEEN PROCTOR

Staff Reporter

The L.A. area is chock full of frazzled two-income families with more discretionary money than time.

And those are exactly the people El Segundo-based Bristol Farms is targeting folks earning more money and having less time to prepare dinner but with an increasing appetite for higher-quality food.

Bristol Farms’ recent success indicates it has hit on something.

In the last 16 months, the chain has doubled its number of stores and almost doubled its sales. Bristol Farms now has six stores in the L.A. area primarily in tonier zip codes such as Manhattan Beach and Westlake Village ringing up sales of about $90 million in 1996, up from about $50 million in 1995.

The impetus for this rapid expansion? Kidd Kamm & Co., a Beverly Hills investment firm that usually invests in and then expands companies for five or six years before taking the companies public or selling them off.

In 1995, Kidd Kamm purchased the Bristol Farms chain from founders Irving and Audrey Gronsky, with plans to put the small operation into high gear.

The Gronskys, who will not reveal the purchase price, said they have no regrets about selling out.

“I pretty much felt it was time to retire there are a lot of places I want to see, a lot of things I want to do,” said 71-year-old Irving, in a phone interview last week from his and his wife’s 80-foot sport fishing boat in San Diego, just before they disembarked for a three-month trip down the coast of Mexico.

“Selling of Bristol Farms came at the right time in my life. I was not ready to go forward with an expansion, and Bristol Farms is the kind of company that needs to be expanded,” said Gronsky.

Retaining a minority share in the company was not an option. “When you’re a sole proprietor all your life, you don’t think in terms of minority ownership,” said Gronsky.

Kidd Kamm took the original chain with stores in Rolling Hills Estates, Pasadena and Manhattan Beach and doubled the number of stores. Stores were opened in Woodland Hills, Westlake Village and, in February, Long Beach.

And there’s more to come, says Kurt Kamm, a partner at Kidd Kamm. “Over the next three to five years, we plan to open 15 stores or more.”

The investment group was actively searching for a gourmet food market when it came across Bristol Farms.

“What we look for is a niche business that fills a special need with limited competitors,” says Kamm. “Growth rates in the gourmet area were three times that of regular supermarkets. It is really an underserved market.”

After looking at chains on the East Coast and in the Midwest, Kidd Kamm was most impressed with Bristol Farms. “We thought their execution was the best they had the best food presentation, best selection,” says Kamm. “We loved the concept.”

The stores, averaging about 30,000 square feet in size, are larger than most other gourmet food stores. And each store is built to reflect its particular location; the Manhattan Beach store, for instance, has ocean-themed murals and bakery and deli stands designed to look like beach vendors.

Shoppers can purchase the basics such as fresh produce, meats and milk (but no dog food or toilet paper, company officials point out). They can also splurge on the not-so-basics including $99-a-pound Kobe beef and an 11-ounce bottle of B.R. Cohn Sonoma Estate Extra Virgin olive oil at $69.

The company also takes pains to stock its stores with the right employees. Called owner-partners (even part-timers earn stock in the company), the workers clad in red-and-white checked shirts and exhibiting a Disneyland-like friendliness stand ready to answer questions on anything from the right wine to serve with lobster to the best balsamic vinegar for the buck.

Shoppers clearly pay more for all this ambiance and helpfulness. But they don’t seem to mind.

“You can’t beat it for finding fresh ingredients,” says Holly Neville, a 32-year-old restaurant manager, who says she stops in at the Manhattan Beach store three to four times a week. “The prepared stuff is great when I’m lazy and don’t want to cook after work.”

Prepared foods are one of the chain’s big draws, says President and CEO Kevin Davis. “The growth potential is huge. As people have more expendable income and find that time is critical, they want the meals we make,” said Davis.

Davis, who spent 24 years working for Ralphs Grocery Co. before joining Bristol Farms in the spring of 1996, recognizes that the company faces competition from larger chains, including Ralphs and Vons Cos., getting into prepared foods. But Davis insists Bristol Farms has developed a unique niche.

“I don’t believe we have a specific competitor some markets just peel off certain portions,” says Davis. Whole Foods Market, which sells natural foods, and Gelson’s, a chain Davis calls “a supermarket with carpeting” (it does sell dog food and toilet paper) are competitors on certain levels, says Davis, as are restaurants with take-out.

“But none of them competes with us on all fronts,” he says.

Pat Ford, a retail analyst with KPMG Peat Marwick, agrees that Bristol Farms is well-positioned to fill an under-represented market.

“It is difficult for someone to come into the L.A. market the most competitive supermarket area in the country. But the opportunity does exist for grocery store chains that operate in a niche. Bristol Farms has an opportunity in the high-end of the market,” says Ford.

But she adds that Bristol Farms must remain focused on its niche to remain successful. “People that shop there have generally above-average incomes, which is probably a corollary to the hours they spend at work. If Bristol Farms deviates from that demographic, they would run smack into Ralphs and Vons, a tough market,” says Ford.

Bristol Farms plans to take advantage of its opportunity.

The company now operates a 16,500-square-foot distribution center in Bell. The center has the capability of distributing food products to 25 to 30 stores the number of stores the company hopes to eventually have between Santa Barbara and La Jolla, says Davis.

“We will try to concentrate on Southern California first before moving out of the state,” says Davis, “But we could eventually have as many as 300 high-end specialty stores nationally.”