Blog

Aug 11, 2023

Growing Fareway reaches Kansas City, eyes Wisconsin, CEO says

While Hy-Vee, Iowa's supermarket leader, prepares for a dramatic expansion into

While Hy-Vee, Iowa's supermarket leader, prepares for a dramatic expansion into the Southeast, Fareway, the state's other supermarket chain, is widening its footprint, too, with a push into the Kansas City metro market and plans to enter Wisconsin, says CEO Reynolds Cramer.

But it's not envisioning the sort of flashy, multi-category mega-marts that West Des Moines-based Hy-Vee boasts. Emblematic of that chain's ambitions: the nearly 93,000-square-foot Grimes store that opened in September 2021 with a nail salon, shoe and clothing departments, a bar, food hall and even a walk-in humidor.

Instead, Boone-based Fareway emphasizes what it believes it already does best, offering well-tended 25,000-30,000 square-foot stores with appealing displays of produce, a full-service meat counter and folksy customer service. Its new store concept doubles down on a company strength: neighborhood markets with jumbo meat counters offering custom cuts.

Cramer, visiting one of those Fareway Meat Market stores in Ames a few weeks ago, said the company has about 130 locations now and plans to add a dozen more ― a nearly 10% expansion ― in the next two years, extending its territory to eight states.

Analysts who follow the supermarket industry said Fareway's push is being done carefully and aligns with the company's values. But it is transforming Fareway from a small, regional chain into a sizable one, Cramer said.

"Right now 2023 for us, for building, is full, 2024 is almost full and 2025 is about halfway full," Cramer said. "We’re already looking at signing some agreements for 2026."

As recently as 2014 the company had just over 100 stores and its style bordered on the frumpy. Employees wore white dress shirts with black ties. Meat counter employees wore old-fashioned paper butcher's hats.

"That's the way it was," Cramer said.

But company executives that year launched a modernization drive that has updated Fareway's appearance, if not its down-home values. Most employees now wear black slacks and red polo shirts, with fashionable black baseball-style caps. And though there are not yet robots wandering Fareway's aisles like the shelf-scanning units at some Hy-Vee stores, Fareway has updated its logos and signage, opened new stores with a sleeker, more modern appearance and, where practical, added video screens and self-checkout counters, Cramer said.

"What we realized was, customers today, they want a better customer experience," he said.

Cramer is the great-grandson of the founders of Fareway and the fourth generation to be employed there. His father, Robert, managed a Fareway store in Algona, then worked his way up to become the company's president and chief operating officer. Cramer, who started at the Boone store when he was 16, also worked his way through the ranks before stepping up to the CEO job in 2014, succeeding his uncle Rick Beckwith, under whose leadership, Cramer said, growth had accelerated.

For Fareway, getting bigger doesn't necessarily mean getting larger. The 3,000-8,000-square-foot meat market concept is leading its reach into Kansas City, a 1.7 million-population metro where Hy-Vee and Price Chopper are dominant.

The concept debuted in Omaha, Nebraska, in 2016. The second one opened in Lincoln, Nebraska, the following year. The Ames location opened in 2018, in the shadow of a Hy-Vee store, and another began doing business on a corner in the heart of Des Moines' Beaverdale neighborhood last year. In all the company now has seven meat markets.

Like the convenience stores they resembles size-wise, the meat markets offer quick-grab items like energy drinks, sodas and potato chips, and some other basic grocery goods. But the focal point is the sprawling meat counters, up to 8 feet longer than the ones in standard Fareway stores.

They offers a selection of standard cuts. But there also is USDA Prime and wagyu beef, premium Duroc pork, full racks of ribs with a wide variety of sauces and rubs, and even bison, all hand-cut to ensure quality.

"We offer more variety, more prime items, more specialty items," Cramer said. "When people come to a meat market, that's what they’re looking for."

Meat packages, ranging up to a $379.99 collection of Prime ribeyes, strip steaks and filet mignon, are offered. Customers also can buy large cuts and then have them cut to order. And mail order is available anywhere in the continental U.S.

"We sell a ton of primal (meat cuts) that are going on people's smokers," Cramer said. "We take pride that we’re one of the best, if not the best, in meat."

There are also prepared side dishes like baked beans, corn casserole and macaroni and cheese. The idea is to create a market where people can snag dinner without spending 20 or 30 minutes in a store, Cramer said.

Tyler Carpenter, 32, manages the Ames meat market. A former assistant manager at the Lincoln, Nebraska meat market, he said the meat markets also carry more seafood than the regular stores.

"We get to be able to carry more stuff because we have so much more room," Carpenter said.

David Livington, a supermarket industry analyst, said that meat counters in major supermarket chains like Kroger and Hy-Vee account for about 15% of revenues. Full-sized Fareway stores get about 40% of revenues from them, Livingston said.

"So that's a big draw for them, and their pricing is probably going to be a lot lower than Hy-Vee," he said.

Fareway has a simple model based on good customer service, he said. Employees still carry groceries out to cars, and its full-sized stores are small and personable, as compared to competitors', he said.

The meat market concept is emblematic of the way Fareway sticks to things it's good at, Livingston said. While the company is privately held and doesn't share detailed financial information, "They’ve done pretty well with it," he said. "They haven't varied from their initial grocery model in years."

Pictures of Jack Trice Stadium and an old-time meat counter line the interior of Fareway's Ames store. Lighting looks brighter than in typical Fareway stores.

Some of the design cues are finding their way into the regular stores. For instance, the meat markets have a gray-and-white hardwood floor that feels softer and gives the space more color than the classic sterile white laminate floors in most Fareway stores. Now all new Fareway stores get this flooring.

"One of the things I’ve really enjoyed is listening to our team, our employees and not act in a way that Fareway used to act years ago," Cramer said, "living and growing with the times."

The move into Kansas City is bringing some more changes.

In 2020 Fareway bought McGonicle's Family Meat Market, a neighborhood market in Kansas City, Missouri, added a few Fareway touches and turned it into the company's first Fareway Meat Market there.

"Basically kept it the same way they were doing it, just the Fareway way," Cramer said.

A new Fareway Meat Market recently opened in Olathe, Kansas, a Kansas City suburb, and the company is building a third Kansas City-area meat market in Liberty, Missouri.

McGonicle's had a smoker and sold barbeque sandwiches. Cramer and other executives thought smokers would be a nice touch in new meat markets. So the company added them when it opened its Beaverdale Meat Market last year. Barbeque smokers also are being installed iin some existing meat markets, like the one in Ames.

Fareway hopes to leverage the Kansas City meat markets as ways to build full-sized stores there.

"I can't be sure in five years we’ll have some regular grocery stores in Kansas City," Cramer said. "But that's our goal. I can be sure that we’ll have quite a few meat markets there."

The vast majority of Fareway stores are in Iowa, but the company also has eight stores in Nebraska, four stores in the Sioux Falls, South Dakota, area, seven in southern Minnesota and three in western Illinois.

Cramer sees opportunities in the fast-growing Sioux Falls area and Minnesota and other possibilities in Kansas and Missouri. Wisconsin, where Fareway does not have any stores now, is the next place Cramer wants the company to expand.

"We're not in Wisconsin yet. I say 'yet 'because that's a goal," he said.

When Fareway was founded in 1938, the company had grocery stores in small communities and competed against family-owned grocers, Cramer said. Now Fareway is in urban areas and must hold its own against grocery giants like Walmart, Target and Hy-Vee.

The company is continuing to open urban stores. A new store near Jordan Creek Mall in West Des Moines will open in March. Next year Fareway will open a store in Norwalk.

But the company tries to stay connected to its rural roots and find opportunities in small towns, too, Cramer said. Fareway bought and is remodeling the Brick Street Market in Bondurant. Its cafe will be kept to add a local touch, he said. Last month Fareway opened a store in Ogden, just a few miles from an existing Boone store.

"A grocery store like Fareway is a great catalyst to help that growth to bring more homes, more jobs to an area," Cramer said. "I think our competitors aren't as nimble as we are to get that accomplished, and that's why we’re being so successful."

Livingston, the supermarket analyst, said Fareway expands judiciously as compared to Hy-Vee, which intends to build a Nashville, Tennessee, distribution center to serve the stores it is planning to build in Tennessee, Alabama, Kentucky and Indiana.

In Livingston's view, Hy-Vee is leapfrogging into areas where it has no name recognition, making the move risky. Fareway is expanding in areas near where the chain already has stores and distribution networks, he said. All but Kansas share borders with Iowa.

And unlike Hy-Vee, Fareway is not committing hundreds of millions of dollars to expand into new areas, he said.

"They’re not going to leapfrog 500 miles and build distribution networks," Livingston said. "They’re doing it the old-fashioned way,"

Cramer thinks Fareway's growth is sustainable, and while it will get bigger, it's not changing what it does best.

"We don't try to be someone we’re not," Cramer said. "We work with other businesses in communities and let them sell what they’re going to do really well at. So that's why we don't sell tires, we don't sell treadmills and things like that."

Philip Joens covers retail, real estate and RAGBRAI for the Des Moines Register. He can be reached at 515-284-8184, [email protected] or on Twitter @Philip_Joens.