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Marczyk Fine Foods

After seven years in business, this Denver retailer switched to open book finance and it has transformed the culture and economics of the store. But a passion for food is still what drives the business.

There’s often a divide among specialty food entrepreneurs. Some do it because they love food; others, because they see the pure business potential. The most successful are those who marry the two. Pete Marczyk and his wife Barbara Macfarlane first opened Marczyk Fine Foods in Denver, Colo., eight years ago with the hope of becoming, “a world-class neighborhood market.” The couple quickly learned, like many small business owners, that sometimes love just isn’t enough. “It’s a hard business to make money in. At the dream level, we expected that we’d have all local chicken,” says Pete. But the reality is, he notes, “it’s hard to manage on the supply end.”

After a few years of growing pains, Pete, whose title is grocer and wine merchant, re-evaluated the store’s mission in 2004. He brought in his brother Paul as general manager and created a doctrine of consistency and reliability. “By making it core to our ethos, we saw a pretty dramatic improvement in our bottom line. We gave up dream stuff, like having fresh pheasants in the meat case,” says Pete, and “[instead focused on basics] so that we’d never run out of chicken.”

Most Successful Business Change…Paul began espousing the principles of open book finance, which he’d learned about from colleagues in the beer industry while working as Director of Brewery Operations for Flying Dog Brewery. After a few years of research about the model, championed by Jack Stack in The Great Game of Business, which promotes transparent finances and reframes all employees as stakeholders, they began to implement it in 2009. To the family’s surprise, staff contributions have helped raise the bottom line by 80 percent in one year. “Open book has absolutely, by far, had the most impact on our business,” says Pete.

At weekly departmental business meetings every worker has a certain responsibility—reporting sales, purchases, gross profit or product. And every week, each department’s performance is measured by reading the financial statements. “We’re teaching them business,” explains Paul, who is thrilled by the results. “The level of conversation over the past year keeps going up. The solutions employees are bringing to the table are more and more complex, the answers and strategies more and more sophisticated. Our station guy figured out that he could increase sales by decreasing the product mix and he did it—the numbers don’t lie,” says Paul. “That’s the power of what letting go and letting this happen does—it’s a lot of work, but it’s pretty cool.”

Pete agrees. “For me, this strategy came down to a more equitable distribution of stress. Before we were just two guys, but now we have many eyeballs on problems, and a fraction of the stress that we had a year ago...I also get fewer ‘Pete to the front,’ calls to answer a question about the products. Our staff can answer a lot of these questions now because they’re involved. They know why we do not carry a certain item. It’s not just a blank stare or ‘I don’t know’…We can take our energy and focus it on other things instead of the little details.”

He continues, “What’s been most interesting has been the evolution of the business since we started in open book finance. The most creative and best ideas for the market to grow the business may come from the cashier, not the president.”

Customer Base…“It’s an extremely diverse group of people,” says Pete. “The thread that connects all of our regular customers is that they are educated, probably well-traveled, and take time to inform themselves about their food. We’ll have single moms who shop here for certain items—they can’t afford to do all their shopping, but they come here to cherry pick. They know that we tell them the truth about what we’re selling.”

Pricing Strategy…“We make a fair margin on what we sell,” explains Pete, but are careful not to overcharge. “Customers here are not shopping only with an eye on price. For example, we’ll take three dollars off on tenderloin just to see if customers react, and it doesn’t affect sales,” he adds.

Product Mix…Produce and grocery are 35 percent; meat and seafood are 21 percent; wine is 18 percent; deli and cheese are 14 percent; and prepared foods are 12 percent of the mix.

Highest Grossing Department...“Our grocery department. It’s the staples like milk (local milk is $2.99, Morning Fresh Dairy), bread, eggs, condiments, canned soup, canned vegetables, frozen stuff,” says Paul. “People like that we allow them to purchase eggs for $0.30 each if they bring their own carton,” he adds.

Key Categories…Marczyk’s is known for its meats, which come from Niman Ranch, prized for its sustainable practices, says Pete. “We range from our 85 percent lean ground beef, Butcher’s Choice, which sells for $4.69 a pound, to a center-cut tenderloin for $29.99.”

Best-selling Products…A big seller is homemade, fresh-every-day mozzarella, which sells for $10.99 a pound. “People come for it every day, and in summer, house-made guacamole ($9.99/pound),” says Pete. “And people love the Butcher’s Choice ground beef.”

Surprising Successes…Have’a corn chips ($2.19) out of Laguna Beach, Calif., are popular. Pete also says that Coke that was manufactured in Mexico ($1.69, 500 milliliters) and made with cane sugar instead of corn syrup has been a runaway hit. “We’ve been doing it for eight years—Coke, Fanta and Orange. People want to avoid high-fructose corn syrup from GMO corn, so they’re looking for stuff not made in America.”

Product Sourcing…The Marczyks focus on local and sustainable. “All our meat and seafood is domestic, but a lot of our grocery items are imported, and our cheeses run heavily toward international—France, Spain and Italy. In wine, we skew toward European and Southern hemisphere wines because of the value. We carry 200 labels, but I’ll bet out of that, 130 are not from the U.S.,” says Pete.

Full- and Part-Time Employees…30 employees—85 percent are full time.

Square Footage of Store and Selling Space…8,000 square feet total, including 4,000 square feet for the food market, 1,000 square feet for the wine shop.

Special Programs…Casual events have proven most beneficial. “At Friday Burger Night, we’ll do 300 burgers in a three-hour period. It’s about getting meat into people’s mouths—once we do, they can taste the difference,” says Paul.

How the Economy Affected the Business… “In 2009, we had pretty steady customer counts. Our average basket was down a little bit, the SKUs were down slightly. If a customer used to buy rib eye, now he was buying tenderloin,” explains Pete. “It was hard to grow the business, but we’re more profitable because we were more efficient inside the company on things like labor, purchasing and overhead.” Paul attributes it to divvying up the responsibility to find efficiencies among the staff. “We have 30 people pulling in the same direction—now we’re all in this together.”

Future Plans…“We feel like it’s a format worth copying. For us that means a few more stores,” says Pete. |SFM|

Meghann Foye is a freelance writer specializing in food and travel.

STORE STATS

Total Space:
8,000 square feet
Selling Space:
4,000 square feet in food market
1,000 square feet in wine shop

Employees
Full time: 25
Part time: 5

Sales Distribution
Produce and grocery:
35 percent
Meat and seafood: 21 percent
Wine: 18 percent
Deli and cheese:
14 percent
Prepared foods:
12 percent

Year Opened: 2002