S&R Quisberg has three grocery stores – one in Brainerd, Minn., another in Baxter and the third in Alexandria, Minn. – that are branded Cub Foods, a SuperValu brand. The company has an additional grocery store in Pequot Lakes, Minn., that is branded SuperValu. It also owns two gasoline stations in Brainerd and Crosslake, Minn., that carry the Holiday brand.
“One nice thing about having a brand like Holiday – where they can dictate a little bit on what you have in the store – they can get you in with certain vendors that may not go to all gas stations,” Quisberg declares. “They have Holiday-only exclusive deals and offer a better selection on everything.”
The stores and stations are roughly two-and-a-half hours north of Minneapolis in a region dotted with lakes, which creates a strong tourist presence, mostly in the summer. “The Brainerd Lakes area has a year-round population of around 50,000 to 60,000 people, whereas in the summer, that jumps to over 200,000 people,” Quisberg estimates. That makes for a strong use of seasonal employees at the stores. “We get quite a few college kids coming back from school to work for us for the summer year after year,” he says.
Appeals to Everybody
The format of Quisberg’s Cub Foods stores is large for his area, ranging from 55,000 to 65,000 square feet. “That is actually a little bit small for the Cub brand,” Quisberg maintains. “Most of the Cub stores in the Minneapolis market are 70,000 to 80,000 square feet – some are over 100,000 square feet.”
When entering many Cub Foods stores, customers are flanked by towers of dry goods in cut-open shipping boxes, which Quisberg calls Cub’s “wall of values.” But that format quickly gives way to a more conventional-looking grocery store. “It’s kind of a unique area that we play in, because we’re not mass-market like Walmart and Target that are focused strictly on price,” Quisberg explains. “We have a little bit of price impression, but then we also try to have the better shopping experience like Whole Foods, but we don’t go to as high a price as Whole Foods.”
Cub Foods has all of the departments that a full-service grocery store does – produce, bakery, deli and meat. Quisberg says one reason his company chose Cub Foods as a brand was the range of people to whom it appeals, from the high-end tourists in the summer to the more blue-collar permanent residents in the winter.
S&R Quisberg buys approximately 75 percent of its inventory from Supervalu. “Product selection varies from store to store to a point,” Quisberg says. “We do have the ability to tweak SuperValu’s planograms, and we leave that up to each department manager.”
Interestingly, although the Baxter and Brainerd stores are only three to four miles apart, each one has extremely different customer demographics. Baxter is more white-collar and Brainerd more blue-collar. “In Brainerd, we sell pallets of what we can’t sell in Baxter,” Quisberg points out. “That’s just the way the two towns are set up.”
Much of store management is delegated to the local level. “We try to give each store its own autonomy,” Quisberg says. “How they’re hiring and employee issues are taken care of at each store separately. Each store has a store manager, and we have a general manager that oversees all the stores.”
Cub Foods has certain requirements of its franchisees. “We don’t have as much leeway on how it looks when you come in or anything like that,” Quisberg notes. “That’s a little bit more mandated from Cub themselves. They want it so when you walk into a Cub, you know it’s a Cub.”
S&R Quisberg markets its stores through weekly circulars that are provided by SuperValu in newspaper inserts or by direct mail depending on the coverage that the newspapers have in their areas. For special events, such as Orange Friday – the start of deer hunting season in Minnesota – radio ads are added to the marketing mix.
The Cub and Holiday franchises take care of the stores’ websites and social media, but the Pequot Lakes Supervalu’s social media is handled by S&R Quisberg. Another promotional device is the reward card for the grocery stores, which includes gasoline price cuts at the Holiday gas stations and at the Pequot Lakes SuperValu’s standalone gas station.
S&R Quisberg has invested in a new front-end point-of-sales system for its grocery stores. “We were having trouble finding parts for the old system,” Quisberg says. “You can only go so far patching your old system, so you need to pull the trigger on buying a new one. The capabilities of the newer front-end systems are so much greater.”
The company has upgraded the lighting in its Pequot Lakes store, which was built in 2010, to a more efficient system. In Brainerd, S&R Quisberg spent $300,000 installing new energy-efficient LED and fluorescent lighting systems. The Alexandria store was converted from its previous brand, County Market, to a Cub Foods from November 2014 to May 2015. As part of that conversion, not only was the lighting replaced with energy-efficient systems, but nearly every “coffin” freezer case was replaced by one with a door. Before the remodeling, “The store could be 40 degrees,” Quisberg insists. “People were freezing in there.”
The grocery stores’ employees are unionized except for those at the Alexandria store, whose pay scales are similar to the union employees. However, their benefits differ, with union benefits including health, welfare and pensions, and non-union employees receiving 401(k) pension plans and health insurance. Quisberg sometimes finds himself in the position of explaining to an employee who has been offered a $2-per-hour raise at a competitor that the value of his company’s benefits far outweighs the hourly raise.
S&R Quisberg has many long-time employees with 10 or more years of service. The general manager has been with the company for 42 years. “He was hired by my grandpa,” Quisberg says. Other union employees work 30 years until they are fully vested in the union’s pension plan. Although they can be vested by working at other unionized grocery stores, most of them stay with S&R Quisberg. “We do feel it’s because we treat our people right, and we’ve proved it,” Quisberg stresses. “They are extremely important to us.”