David and Doug Hendrix learned the retail grocery business from the bottom, starting as sackers at Safeway and working their way up to district managers at Harvest Foods Inc. of Little Rock, the company that emerged from the 1989 merger of Safeway and Skaggs Alpha Beta stores.
And when Harvest Foods went belly up, filing for Chapter 11 bankruptcy protection in 1996 — its second filing in less than two years — its creditors turned to the brothers to steer the company through, with David as CEO and Doug as CFO. At the time of its bankruptcy, Harvest Foods had annual sales of $400 million and employed more than 3,000 workers.
After a difficult 18 months during which the brothers sold off most of the stores, “our options were either leave the state or start a business,” Doug, 51, said.
They chose option No. 2, buying a group of five convenience stores and a fuel distributorship in 1997 and forming Summerwood Partners LLC of Bryant. Summerwood owns and operates 29 Big Red convenience stores in central Arkansas — soon to be 30 — and serves as a wholesale fuel distributor for brands including Valero. It has a number of co-branded locations that include McDonald’s, Baskin-Robbins, Burger King, Hardee’s and Pizza Pro.
Summerwood, which reported revenue of $193.9 million in fiscal 2014 and 377 employees, has three subsidiaries: Family Markets, consisting of three grocery stores in Malvern, Shannon Hills and Pangburn (White County), and AF Partners and RJ Properties, the development companies that build Summerwood’s Big Red Stores.
The brothers, raised in Benton, have been partners for at least 43 years, having formed their first enterprise when David, now 53, was about 10: a lawn-mowing business. “We cut someone’s grass every day of the week,” David said in an interview at Summerwood’s Bryant headquarters.
They came at the convenience store business from an angle different from most others, Doug said. “Our background was totally in retail grocery, and we had no background in the fuel business,” Doug said.
When the brothers started out, “we sold gasoline because we had to to sell some groceries,” Doug said. “Most people in our industry sell the groceries because they have to to sell the gasoline. So our perspective’s a little different. We’ve been very focused on bringing grocery store principles to the convenience store business.”
Those principles include an emphasis on data and category management.
“We’re very data-driven,” Doug said. When they entered the convenience store business 18 years ago, the lack of technology surprised them. “People weren’t even scanning at the time, and we’d been scanning for 25 years in the grocery business.”
“The merchandise we carry — we try to be very customer-driven,” Doug said. “We let our scan movement and our customer data tell us what to sell.”
“I think we’re a lot more family-oriented than some convenience stores,” David said. “We don’t focus on the cigarettes and the beer sales as much as others.”
Going for the Mom Market
Early on, the brothers said, they sought to appeal to the “soccer mom” (though, in Arkansas, they note, “baseball mom” might be more apt). They focus on well-lit parking lots, clean restrooms and co-branding with popular fast-food restaurants. The Hendrix brothers want to draw to their Big Red Stores not just men seeking a fill-up and a cup of coffee, but the entire family, a family that might buy an armload of snacks for the road after feeding the kids at McDonald’s.
At Summerwood, David’s title is president; Doug is the secretary-treasurer. “We’re a very flat organization,” Doug said. “I think that’s another part of our grocery experience.”
After 51 years as brothers and decades as partners, they pretty much know what the other thinks. “If Doug wants to make a decision, that’s fine with me,” David said.
David and Doug aren’t the only Hendrixes at Summerwood, as a journey down the phone directory tree reveals. They each have a son and two daughters. Both sons work at the company; three of the daughters have other jobs and one is still in school, but all the daughters have worked or still work part-time at Summerwood. The brothers’ wives also have jobs with Summerwood.
And then there are the nieces and nephews. “They’ve worked for us over the years while they’re going to college or in high school,” David said. “We’ve really been blessed to do that. It’s been …”
Doug: “… a lot of fun.”
David: “A lot of fun.”
The brothers became grocery store owners for the first time in 1997, when they bought a store in Malvern. “We said we weren’t going to get back in the grocery business [after the Harvest Foods experience], but we bought a grocery store almost immediately,” Doug said.
“I tell people, we’re in the C-store business but we play in the grocery business,” he said of Summerwood’s three grocery stores.
“I enjoy the grocery business,” David said. But it, too, is competitive. “You never know when a Walmart Supercenter or a Neighborhood Market will come in on you,” he said. “It’s just so hard for the independents to compete with those guys. We’d like to have more grocery stores in the right small towns.”
But Summerwood’s main business — and its growth — comes from the Big Red Stores. Here, they said, they’re aiming to build two to three convenience stores a year.
And though lower gasoline prices drove Summerwood’s revenue down slightly in 2014 compared with 2013 — 1.4 percent — the Hendrix brothers are optimistic. Although people are spending less on fuel, they’re spending more on inside sales. “In the last two months, we have enjoyed our highest inside sales in our company’s 18-year history,” David said.
After decades in the grocery business, the brothers said, they understand the importance of customer service. “We take it real personally when we upset a customer,” David said. “We want to make it right, because they’ve got plenty of choices.”
“And we’re proud to be Arkansas-owned and operated,” he said. “We’re your neighbors. The Mapcos of the world and the Kum & Gos of the world, they take your money and leave the state. We’re hiring local people and we give to charities. One of the things I’m really proud of: Our employees in the last seven years have raised $250,000 for Children’s Hospital.”
“We grew up here in central Arkansas, worked in central Arkansas,” Doug said. “I think it’s a competitive advantage we have in that we know the terrain, we know the back streets, we know the traffic flow, and we know a lot of people.”
Some of those people worked with them in the old days at Safeway and later Harvest Foods. “We have a lot of employees who’ve been with us since the beginning,” David said.
“We knew a lot of people who were out of a job when we started this, a lot of quality people with great knowledge,” Doug said, referring to Summerwood’s start in 1997, after the Harvest Foods bankruptcy and sale of 37 of its 47 stores to Affiliated Foods Southwest Inc. of Little Rock, Kroger Co. of Cincinnati, and Brookshire Grocery Co. of Tyler, Texas.
“The training experience we got with Safeway and Harvest Foods I think was invaluable,” Doug said. “A lot of those people came to work for us.”
The Harvest Foods bankruptcy wasn’t the only grocery store storm weathered by a Hendrix. David was the brand-new chairman of Affiliated Foods when it declared bankruptcy in 2009. The brothers’ Family Market grocery stores were Affiliated Foods members.
David Hendrix’s election to the board had been in response to a desire for the board to be headed by a member of the cooperative.
Affiliated Foods CEO John Mills and CFO Lex Martinez earned prison sentences for their roles in the collapse of the company, now in its seventh year in bankruptcy court.
David Hendrix said both experiences — with Harvest Foods and Affiliated — taught him lessons. “In both cases, there were a lot of people hurt by things,” he said. “I think that probably I learned that in business, you can never be too careful. Every day, you’ve got to come to work and check everything.”