Small Grocery Chain Puts Its Stock in Latino Customers

While his friends went to the beach and relaxed, Enrique Gonzalez Jr.’s high school summer vacations were filled with work at his father’s meat market in Van Nuys.

“I felt bad I couldn’t enjoy life as a teenager, but my attitude was to get ahead,” said Gonzalez, who worked up to 80 hours a week as a butcher, cashier, janitor and stock boy. “My plan was to help my father as much as I could.”

Now 28, Gonzalez is president of Vallarta Supermarkets, a chain of 12 Latino-themed stores across Los Angeles County. And Vallarta is on a roll: Next month, the Sylmar-based chain will open two supermarkets in Canoga Park, a 33,000-square-foot store at 21555 Roscoe Blvd. and a 20,000-square-foot market at 21208 Sherman Way.

The Roscoe store will be about the size of the chain’s large Sylmar store--still smaller than the average size of a Ralphs, which is about 45,000 square feet. Yet, at a time of increasing consolidation in the supermarket industry, the fact that a small chain like Vallarta is growing at all may seem like the biggest surprise.

Industry experts and Vallarta executives credit their success to their focus on Latino consumers. The store offers a comprehensive selection of Mexican products, such as pan dulce, carnitas, chicharrones, tamales and chiles rellenos. There are also many Mexican-made products, such as coffees, sugar, gelatins, creams, cheeses and even marshmallows.

Amid the palm trees and green decor are some American products--such as 7-Up and Downey fabric softener--prepared in Mexico with Mexican labels because nostalgic customers prefer subtle differences in taste and texture. Customers can also find such rarities as Peruvian yellow hot pepper sauce and beers from El Salvador and Guatemala.

Recognizing that many customers come long distances on bus or taxi to the store, Vallarta also offers free rides home with groceries.

“They’re giving customers what they want,” said Steven Soto, president and CEO of the Mexican American Grocers Assn. “They’ve used a common-sense attitude, like in politics, when politicians walk the precincts and see what is important to voters.”

Other small market chains catering to Latinos, including Northgate Market, Tapatio Market, Big Saver Foods and 32nd Street Market, are also growing, Soto said, as more Latinos seek stores that stock the products they want.

“Those independents that are surviving and thriving are those that carve out a particular niche,” said Dave Heylen, spokesman of the California Grocers Assn. in Sacramento.

Customers say the prices are competitive with the supermarket giants. Although they may lack the buying clout of larger chains, Vallarta and most of the independents have a nonunion labor force.

Also, the recent mergers forced giant chains to sell some stores, allowing independents to buy them and better position themselves, Soto said.

Regardless, it remains an extremely competitive industry for smaller players.

“There are tight margins--they’re tighter all the time,” said Mark Czerniakowski, general manager of Vallarta. “We spend a lot of time fighting for pennies with vendors and manufacturers to give customers value and make them regular customers.”

Vallarta officials say they take nothing for granted. Gonzalez said he visits up to four Vallarta stores a day, talking with customers and checking if products are well-stocked and if the stores are clean.

“I just go in like a customer,” Gonzalez said.

Gonzalez believes this simple strategy of keeping the stores presentable and the customers happy is the reason for Vallarta’s success.

“If there was something broke, we fixed it. If something was dirty, we cleaned it. It had to be clean,” he said.

Despite implementing a corporate structure in 1996 to handle growth, Vallarta is still family operated. Four of Gonzalez’s uncles help run the chain; his two brothers and one sister also manage the Sylmar store. About 20 of his relatives work with Vallarta, Gonzalez said.

Vallarta has about 900 employees, about three-fourths of whom work full-time, Czerniakowski said. The two new stores will create up to 180 jobs, 80% of them full-time, he said. These two are the first ones Vallarta has built from the ground up; the others were built with existing or remodeled structures.

Five of the Vallarta stores are supermarket size, while the rest are smaller. Although he is the owner, Enrique Gonzalez Sr. now takes a more hands-off approach, said the younger Gonzalez.

Company officials would not disclose revenues, but the Mexican American Grocers Assn. lists revenues at $77 million for the six stores owned by the corporate entity. Four other stores are owned individually by each of the elder Gonzalez’s four brothers.

The company traces its roots to 1965, when the elder Gonzalez came to the United States from Jalostotitlan, a small town near Guadalajara, Mexico. Arriving with little money, he worked as a cook and later owned a bar called Puerto Vallarta. He took his cue from the bar’s name when he opened his first small Vallarta market in Van Nuys in 1984.

With profits from that store, Gonzalez, joined by his brothers, opened several meat markets, and in 1990 the company opened its first supermarket in Van Nuys, at the site of a former Parklane Market, Czerniakowski said.

The two new Canoga Park stores are only one and a half miles apart. Czerniakowski said there were many requests from Canoga Park customers to open a store in their area and pointed out that other successful Vallarta stores are also near one other. He said the expansion is funded through corporate profits.

“We’re retailers. We’re not answering to the stock market, we’re not answering to anyone else but our customers,” Czerniakowski said.

At the Vallarta store in Sylmar, several customers seemed pleased to have access to several services--restaurant, tortilleria and bakery--under one roof, something the younger Gonzalez implemented. Customers also said they enjoyed the types of meat cuts, the low produce prices, the wide and fresh selection of Latino foods and the atmosphere.

“One feels more at home. Other places are more cold,” said Soledad Fregoso, 51. “Here I can buy everything without having to go elsewhere.”

“You can say this market is for us [Latinos],” added Emma Weda, 42.

Soto said that along with fresh produce, two qualities draw Latino consumers: a good meat department and a large produce selection. He figures independents get 60% of their business from their meat and produce departments.

Making sure the stores are well-stocked with these products keeps Gonzalez, who is married and has two children, working long hours.

“People ask, ‘How can you work 11-, 12-hour days?,’ ” he said. “Because I like it. This work is my passion.”

Vallarta locations

The Sylmar-based Vallarta market chain will add two new stores in Canoga Park next month.

Canoga Park, 21555 Roscoe Blvd., 21208 Sherman Way.

East Los Angeles, 619 S. Atlantic Blvd.

North Hills, 9136 Sepulveda Blvd.

North Hollywood, 10859 Oxnard St.

Northridge, 8323 Reseda Blvd.

Palmdale, 440 E. Palmdale Blvd.

Panorama City, 9134 Van Nuys Blvd.

Sylmar, 13820 Foothill Blvd.

Van Nuys, 13302 Victory Blvd., 16107 Victory Blvd., 6807 Woodman Ave.