Battle of the Crab Cakes ·

07 Aug 2024, 00:00

correction

An article in the July 5 Business section misidentified Jeffrey M. Cohen. He was the founding managing partner of Sutton Place Gourmet but was not associated with the Fresh Fields supermarket chain. (Published 7/6/01)

Before Dean & DeLuca and Fresh Fields, before Giant's Someplace Special in McLean -- before, in fact, Washington became so cuisine-courant that even convenience stores carry balsamic vinegar and chipotle peppers -- there was Sutton Place Gourmet.

Twenty-one years after the original store on New Mexico Avenue NW dazzled the District with 400 cheeses, 150 brands of beer and gourmet-to-go pasta and pastries, Sutton is one of the largest players in the $25 billion-a-year specialty foods industry. Yet the challenges facing the new Sutton management team -- the store's third since 1989 -- are no less daunting for all that stature.

Chief executive Clifford C. Smith Jr. and president and chief operating officer Leslie Christon were recruited about a year ago. Their goals are to refocus Sutton on fine food and service and to get the company on solid financial footing in order to further expand. The chain now includes seven Suttons, plus, by acquisition, four Hay Day Farm Markets in Connecticut and Westchester County, N.Y., and two Balducci's stores in Manhattan, one of them opened while under the Sutton umbrella.

Christon estimates that Sutton could add 11 stores in the Washington area, 10 or so in New York and maybe another 10 in Connecticut.

Those aspirations are not so different from those of Sutton's former president, Thomas Johnston, who, in 1996, talked about plans to expand. Or those of former chief executive Mark Berey, who said in 1991 that the company planned eight new stores and might open in Chicago and Los Angeles.

And there was growth. Sutton added stores in Alexandria, Baltimore, Bethesda, McLean and Reston. More recently, though, the new management closed a pocket-size Sutton in Northwest Washington's affluent Spring Valley neighborhood, saying the store wasn't large enough to carry all of Sutton's products.

But other food retailers were expanding too, right into Sutton's geographic and demographic territory. There was the 1991 birth of Fresh Fields supermarkets, co-founded by the original Sutton managing partner, Jeffrey M. Cohen, and later acquired by Austin-based Whole Foods Market Inc. Its emphasis on "healthy" somehow seemed more modern than Sutton's image as "gourmet." Then there was the December 1992 arrival of Manhattan's premier fancy-food store, Dean & DeLuca, which made Sutton seem a bit less special in its category. More recently, Trader Joe's arrived from California, and Eatzi's from Texas. And there has been the steadily increasing sophistication of the grocery behemoths Giant and Safeway.

Over the years, Sutton's Washington area sales volume has risen: a reported $50 million in 1994, $60.3 million in 2000 and $61.6 million for the 12 months ended March 31, according to Chief Financial Officer Gary Evans. The privately held company does not report earnings. But the chain's market share has remained about 1 percent for about five years. Sutton claims 0.9 percent of the area's grocery sales for the 12 months ended March 31. That's the same as the year before.

"Sutton Place has been kind of ahead of the wave on what their consumers want and what you see in stores in other parts of the country," said Ron Tanner, vice president for communications for the National Association for the Specialty Food Trade. "They're one of the old historic companies in the specialty food industry," he said.

Sutton is also a big player, with the 13 stores under its three banners. "There are not a lot of multiple store operators" in the industry, Tanner said.

The rap on Sutton among many of those associated with it over the years is its loss of a sense of mission, of its focus on food and service. "You need to have a passion for food," said Ann Brody, a specialty-food consultant who opened Giant's Someplace Special in 1982 and who is a former senior vice president of Sutton.

Critics say that the chain's focus became "muddied" over the years as Sutton seemed to hop from one concept to the next. When the buzz was "home-meal replacement," the previous management opened four small Sutton on the Run takeout stores, which it subsequently closed. There was an attempt to compete on price rather than food quality. Too much mahogany was thought to make some stores look too upscale. Consumers became confused about what to expect, the critics said.

"There have been problems in the past," Smith acknowledged. "Leslie and I . . . were brought in to refocus the emphasis on food and service."

In 1989, three passive investors -- Boston-based real estate developers -- bought out the original operating partner. That's when the company tried new approaches and acquired Hay Day Farm Market, a group of fresh produce markets, in 1995.

In 1996, Johnston, a former Hallmark Cards Inc. executive, was brought in as president. Three years later, Sutton acquired New York's Balducci's, a family-owned specialty food store in Greenwich Village. Under Sutton ownership, Balducci's, some longtime customers complained, was a shell of its former self.

Johnston, who was replaced by Smith, remains a shareholder but is not involved in management, Smith said. The major investors in the Rockville-based company are management and American European Associates of New York, which acquired its interest in the company in 1999 and hired Smith and Christon.

Smith and Christon have backgrounds in food and proclaim a passion for it. Although most recently executive vice president of the Hechinger Investment Corp. after the investment company Leonard Green Cos. bought it, Smith was senior vice president for marketing and merchandising for Kash n' Karry food stores in Tampa. He also worked for Harris Teeter Supermarkets Inc. and Mayfair Supermarkets Inc.

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Christon has a chain-restaurant background, most recently as president of On the Border Restaurants, one of the chains of the Dallas-based Brinker International Inc. She's also a member of Les Dames d'Escoffier, an organization of women in the food industry.

While Sutton's market share its tiny compared with Giant's 44.69 percent of the market and even falls below Fresh Fields's 3.35 percent, the company is doing well financially, according to management. Christon said the current fiscal year's first-quarter profit its highest ever in a first quarter. Last year the company was "marginally" profitable, she said. "We'll be profitable this year," she said. "It will be the best year we've ever had."

Smith and Christon said their priority is to make sure that existing stores are operating properly and profitably before the company thinks about expanding again.

"We're going to grow within our means. We won't be a 200-store chain," Christon said.

The company has been remodeling its stores. In the Bethesda store on Old Georgetown Road, dark wood has given way to light wood. The low ceiling has been removed for an airier look. Backlit canvas canopies mark different areas of the store, and the produce section is under canvas aglow with green lights.

"Sutton Place is one of the largest gourmet food companies in the country," Smith said. "We feel with the proper management team and growth plan, we can turn it into a little jewel. . . . We had a couple of rocky years when food and service were not the primary focus."

Much of what Sutton sells -- 35 percent to 40 percent -- is prepared food, including entrees and other dishes prepared in the Sutton kitchens. In addition to the central Bethesda kitchen, there are satellite kitchens and chefs, and a bakery near the Bethesda store.

On a recent morning in the Bethesda kitchen, workers under the direction of corporate chef Dan Lewis were peeling and scooping out melons to fill them with fruit salad for in-store sales, decorating fruit platters for the catering department with the trimmed green tops of pineapples, tying beef tenderloins for cooking, making 400 pounds of tuna salad for stores and setting aside the trimmed stalks of asparagus to make soup.

The success of Sutton may depend in part on attracting new customers. The typical Sutton shopper is 35 to 65 years old, and most have children in college. Most are drawn from within five miles of its stores, Christon said.

Sutton must also win back old, disaffected customers.

Mark Caraluzzi, who has owned restaurants and is a supermarket consultant, said that may be difficult. "When you have baggage and people have impressions of you, it's hard to change that. It's difficult to get people to go back and try it again," he said. "Nobody raves about [Sutton] among people who like to shop and cook."

Still, Sutton has its attractions. "I shop here on occasion," said Myrna Weitz of Potomac, who was shopping at the Bethesda store on a recent evening. "It's really expensive," said Weitz, who said she does most of her shopping at Fresh Fields. But the fact that Sutton hand-slices its smoked salmon for customers brings her back, she said.

John Petsche of Cabin John hadn't been in the store in about five years, he said. And he wouldn't have been there that day except that traffic made him detour on his way to Fresh Fields. "Unless you jump in, you don't know. If you haven't been here in a while you need to reorient yourself to what they have," he said.

Petsche picked up crab cakes and asparagus to make dinner for his girlfriend. He said would probably be back.

Terri Lehman was a Sutton buyer, manager and coordinator for produce until she recently left to start a store, the Epicurious Cow, in Amissville, Va. "I think Leslie is fabulous and wonderful, and I think Cliff is a very good man," she said. "It's the first time in a long time there are people in key spots who are involved in food.

If Sutton held fast to its original values, she said, "there is no competition."

Clifford C. Smith Jr. and Leslie Christon were brought in to lead Sutton Place Gourmet as it refocuses on food and service. Corporate chef Dan Lewis puts a pizza in an oven at Sutton's Bethesda kitchen. Sutton Place Gourmet workers prepare dishes to sell in stores, ready-to-eat.

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Battle of the Crab Cakes

correction An article in the July 5 Business section misidentified Jeffrey M. Cohen. He was the founding managing partner of Sutton Place Gourmet but was not associated with the Fresh Fields supermarket chain. (Published 7/6/01)

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