CareerBuilder Menu Search Search
Employer Quick Look

Smart & Final

Founded in 1871, Smart & Final Inc. operates 229 non-membership warehouse stores in the western United States and northwest Mexico under the Smart & Final (183 stores) and United Grocers Cash & Carry (46 stores) names. The stores carry a broad range of restaurant-quality food, foodservice supplies and culinary equipment.

While Smart & Final stores target both the foodservice and household markets, United Grocers Cash & Carry stores are focused exclusively on serving foodservice professionals. Foodservice customers typically include operators of small restaurants, catering companies, businesses, clubs and civic organizations. For household customers, Smart & Final stores provide a convenient, low-cost source for cooking and cleaning needs and are seen as the preferred destination for stocking-up their kitchens and preparing for holidays, parties and events.

The company is headquartered in Los Angeles, where it was started more than 130 years ago as the Hellman-Haas Grocery Company. It later took the names of subsequent owners J.S. Smart and H.D. Final.

Building from its strong foundation in Southern California, Smart & Final expanded throughout the state beginning in the early 1980s. It extended its operations beyond the California state border by opening stores in Nevada in the late 1980s, and in 1990 introduced the Smart & Final concept to Arizona. In 1998, it acquired Portland, Oregon-based United Grocers Cash & Carry, which operates 46 stores in the Pacific Northwest.

Industry Overview

Smart & Final competes across several traditional industry classifications. It has evolved from a traditional “Cash and Carry” concept, to a hybrid serving both the wholesale and retail market for food, supplies and culinary equipment. Although it competes with supermarkets for the purchasing dollars of household consumers, its low-price, warehouse format and restaurant-quality product assortment clearly differentiate it from other competitors in that segment. It also competes with warehouse club stores, but is clearly differentiated by its smaller store size, focus on a single product category and lack of a membership fee. It might also be considered as a “category killer” (for restaurant-quality food and supplies) although the average size of a Smart & Final or United Grocers Cash & Carry store and number of SKUs carried is clearly at the low end of companies generally considered under this group.

Both of Smart & Final’s store concepts are well-positioned to benefit from current trends in foodservice, including:

consolidation of the foodservice direct delivery industry
growth in “away from home” food consumption
the rise in discount purchasing of food by households
Traditionally, the foodservice customer was served by direct delivery companies. However, the industry has become highly consolidated. The direct delivery companies that remain are increasingly raising their minimums for “drops” of merchandise. These minimums are often beyond the level of what a smaller foodservice operator requires.

Warehouse-format stores such as Smart & Final and United Grocers Cash & Carry have been filling this vacuum by offering restaurant-quality, institutional size merchandise and products devoted specifically to the foodservice market. At the same time, the growth of this market has been fueled by the increase in “away from home” food consumption by families with two working parents.

Those same busy households also are increasingly seeking low-cost options for meeting their “in the home” food consumption needs, as evidenced by the growth of warehouse club stores and supercenters and food sales by mass merchant discounters. In addition, the access to and acceptance of bulk-packaged products by household consumers has broadened the customer mix and increased the proportion of retail shoppers’ spending dollars in warehouse stores. Smart & Final stores provide busy, value-conscious households a convenient, low-cost source for the same restaurant-quality food, supplies and culinary equipment used by foodservice professionals. In addition, customers do not pay a membership fee to shop at Smart & Final.
The 183 Smart & Final Stores are located in California (157), Arizona (9), Nevada (7) and northern Mexico (10). The company operates the Mexico stores under a joint venture agreement with the operators of Calimax, a major grocery store chain in northwest Mexico.

The stores are designed to provide a blend of value and convenience that is superior to both the large warehouse club stores and traditional supermarkets. Averaging 17,500 square feet in size, their smaller format is designed to be a more convenient, easily accessible option to the larger warehouse club format (averaging 100,000 square feet). Also, the company strategically clusters stores in a market to provide its customers geographic convenience. In recent years, the company has opened 10-12 stores per year concentrating on existing markets, and it is expected that this strategy will continue for the near-term.

The stores offer a consistent assortment of between 7,000 and 9,000 items (depending on store size, location and customer mix) in both national and private label brands. Product selection includes:

•perishable (fresh vegetables, meat and poultry, deli and dairy) and non-perishable food items
•frozen and refrigerated food
•candy, snacks and wine
•paper and janitorial products

In addition, Smart & Final stores carry a wide variety of professional culinary offerings, including appliances, cooking equipment and restaurant supplies.

The company offers an everyday low price strategy, although it also uses special pricing and coupon promotions, particularly during holiday and special events. Smart & Final shopping requires no membership fee, and makes available a Smart Advantage affinity card for customers to take advantage of special discounts. Smart & Final closely guards the privacy of its card holders and uses the information collected through the program to identify ways to better serve its customers.

While foodservice professionals and other business customers remain an important customer base for Smart & Final stores, the chain also has been successful at penetrating the household market, which now accounts for more than half of its sales. (Foodservice professionals and other business customers continue to be the sole focus of United Grocers Cash & Carry stores.)