Questions & Answers
About the Stores1. Following the transformation changes you announced today, do you anticipate changing more Minyard and Sack 'n Save stores to the Carnival banner?
As we've stated, Carnival is our primary growth vehicle, but we continue to see growth in our Minyard and Sack 'n Save banners. We are reviewing all our stores for the appropriate demographic mix, which means that a number of Sack 'n Save and some Minyard stores are likely candidates for conversion to Carnival. We also will be remodeling more of our existing Carnival stores to incorporate the concepts that have proven a success in our flagship. Beyond today's announcement, however, we don't have a definitive timeline to provide.
2. Will the Carnival concept work in all of the company's existing Minyard's and Sack 'n Save locations? If not, will you be sustaining multiple brands?
Minyards has been known throughout its long history as a grocery trendsetter. We believe that the Carnival brand and its focus on the Hispanic marketplace is an important niche that continues the company's rich history of innovation. Our research shows us that the growth potential in our predominantly Latino neighborhoods makes Carnival our primary growth vehicle. You will continue to see us remodel, convert and build new Carnival stores over the next few years.
We value all of our Minyards, Sack 'n Save and Carnival customers and pride ourselves in providing food and services tailored to the needs of each neighborhood. We are experiencing success in our Sack 'n Save and Minyards banners as well. Before making investments and changes, we will evaluate each neighborhood and store individually to determine how we can best serve and what makes sense for that community.
3. What is the selection criteria for stores that will be sold or closed?
We take any decision to close or divest one of our stores very seriously. Like any business, we engage in an ongoing evaluation of our stores, product offerings and value proposition to ensure that we deliver on that promise and at times we find opportunities for healthy pruning. In some cases neighborhood demographics or shopping patterns change causing the stores to become unprofitable, in others we have real estate issues or find that upgrading a particular property may not work for various reasons.
4. How does the company select stores for conversion?
First of all, we conducted extensive research. In Texas, Hispanics are the fastest-growing minority group and present a tremendous opportunity for us. We learned that the Hispanic base in North Texas was expected to grow 40 percent over the next few years. Many of our stores are located in neighborhoods that are already 60 percent to 70 percent Hispanic. We see Carnival as our primary growth vehicle for the company. We determined that our stores in certain neighborhoods could better serve their communities and could fill an underserved niche in the marketplace by focusing on our Carnival stores and creating a special shopping experience. Some of our Sack 'n Saves are in these high Latino population neighborhoods so it makes sense to convert some of them to Carnival stores over time. Our investment in new stores and remodels reflects this emphasis. From our ongoing customer research we have improved the quality and product mix in all our banners resulting in improved sales and profits across the board.
5. Has this been the plan all along? When were these decisions made?
We have been engaged in a continuous evaluation process of our customer base, stores and offerings since the new management team came in. This, combined with the unqualified success of our new Carnival Super Market flagship store in Oak Cliff along with our four remodeled stores, have given us the clear indication that Carnival will be our company's growth vehicle. Decisions have been made progressively as our research and experience developed, and today's announcements are timely and appropriate at this juncture in our transformation.
6. Did something happen over the past year that lead to or accelerate these plans?
The fruits of our extensive research in Mexico and other parts of the United States, added to our success with the new Carnival flagship and four remodeled Carnival stores, has given us the confidence to move forward aggressively.
7. Mike Byars' comments refer to possible "acquisitions." Are you talking about buying another grocer or possibly picking up real estate from retrenching companies, such as Albertson's or Tom Thumb?
We are not currently interested in acquiring another company. We are looking at all options when it comes to further expansion, which would include looking at other companies' store locations that are on the market.
8. How many employees will be affected and what assistance will the company offer them?
The decision to join the AWG Co-op could affect up to 231 local employees many who will remain with the company through the transition. We are actively looking for new operators who will continue to run the warehouse and distribution center, and who will require the experience of our current associates to staff it.
Store closings or sale could affect several hundred more associates, but we believe most will remain with our company by filling positions at other store locations. Our objective is to provide most everyone an opportunity for continued employment with the company.
9. Why is the company laying people off now that the stores are profitable?
With the announcements today, we are not laying anyone off.
Our decision to change our go-to-market approach relative to the warehouse and distribution center as well as certain headquarters functions is part of our continuing strategy to compete in the marketplace by cutting costs, increasing efficiencies and reinvesting our resources into our stores. It is our intention to find an operator for our warehouse and distribution center who will likely need to hire our employees to continue using the facility.
Store closings are a normal part of any retail business as neighborhood patterns change. When we sell a property, we actively look for a retail buyer who will be in a position to hire our employees. In addition, we absorb as many associates as possible into our other stores.
About Outsourcing
10. Minyard has been in the warehouse and distribution business for a long time. How will outsourcing warehousing, distribution and back-office functions save the company money?
Outsourcing functions will free up financial and human resources, and enable us to continue to upgrade our portfolio of supermarkets. The AWG agreement, in particular, will bring us major economies of scale that we could not achieve independently.
11. By outsourcing a local function to a Kansas-based company, is Minyard giving up too much control to outside parties?
On the contrary, we will be expanding our reach by becoming one of the owners of the oldest and second-largest grocery wholesaler in America. AWG is owned by its retailer members.
12. How many employees will be needed for the transition?
We plan to ask all 231 warehouse and distribution associates to remain through the transition.
13. How long will the transition to AWG take?
We anticipate a 6- to 8-month transition to AWG, to be completed in late summer of 2007.
14. Will the switch to Associated Wholesale Grocers change your product mix?
Our customers should expect to see the same products on the store shelves that they have come to rely upon.
15. You have private-label merchandise in each of your stores; will you continue with those or will you be switching to AWG's private-label offerings?
We plan a change to the AWG private label offerings plus adding several items under our Carnival label.
16. Do you anticipate shrinking the number of vendors you deal with as a result of the announced changes?
There should be no appreciable decline in the number of vendors, however, the way we deal with them will change when we become part of the AWG co-op. As a member, we'll tap into the huge buying power of nearly 2,000 stores that comprise AWG.
17. Will the change in your procurement and marketing strategy entail any changes in your retail systems, such as POS?
In addition to the store investments we announced, we will be upgrading our IT systems (particularly software), which includes our point-of-sale technologies.
About Personnel Issues
18. How soon will these changes take effect?
Some of the steps will begin immediately while other changes will transition over a period of up to about eight months. Your warehouse management team is planning a series of meetings over the next two weeks to allow questions to be addressed and ask for your suggestions. Please check with your supervisor or the Human Resources Department with any specific concerns.
19. How many employees will be affected?
Changes at the warehouse and in distribution operations will effect 231 associates, most of whom will be asked to remain through transition. We are also working to find a new owner for these facilities that would retain as many of these experienced staff as possible.
At the store level and in other offices, the number of employees will vary widely. Our experience with other closings is that we are able to absorb the vast majority of displaced associates in other positions within the company.
20. Can we apply for open positions within the stores slated to remain open?
Yes. We value your contribution to the company and hope you will remain with us to the extent that we can find a suitable position for you. In similar situations in the past, we have been able to accommodate most of our affected colleagues.
Carnival Super Market Flagship Launch - August 30, 2006
1. How is the new Carnival Flagship different from other grocery stores?
a. Prices – We meet or beat our major competitors' prices. We know that we have to have competitive pricing to compete in this marketplace. We offer a fun and exciting shopping experience at family friendly prices.
b. Meat – We offer a full butcher store experience at our carneceria. Through our 60-foot-long, full-service fresh meat department, shoppers may choose from up to 60 items like rib-eye steak, link chorizo, and ham hocks custom cut to order.
c. Produce – more than 600 items—including 15 varieties of chili peppers— all priced to meet or beat competitors' offerings
d. Fruit bar – fruteria, where cut fresh fruit and vegetables are offered in spears rather than chunks as is preferred by Latinos, plus
freshly squeezed juices
e. Prepared food from scratch – Carnival's Le Cordon Bleu chef oversees the cocina or kitchen with fresh Mexican – not Tex-Mex – specialties for breakfast, lunch and dinner.
f. Village -- a "village square" with 15 oak picnic tables under festive lighting where customers can sit and eat
g. Pharmacy – besides prescription drugs and all the usual over-the-counter health and grooming items, we offer the homeopathics
and other home remedies, like herbal teas, at our Farmacia that Hispanic customers are traditionally accustomed to using.
h. Fish -- full-service seafood department offers 49 items such as head-on and shell-on fish, squid, and six flavors of freshly made ceviche. After customers pick out their fish, the pescaderia will fry it for them at no cost.
i. Tortillas -- The tortilleria offers piping hot corn and flour tortillas made fresh daily from 4:00 a.m. – 10:00 p.m.
j. Bakery -- The pandaderia has signature items like in-store, made-from-scratch tres leches cakes and Mexican sweet breads and bolillios next to donuts and French bread.
k. Deli – the salchicheria offers fresh offerings to a variety of tastes such as two varieties of potato salad.
l. Vendors – sell jewelry, dresses and other items for special occasions like the Quincineria.
m. Ethnic focus on the neighborhood – Mexican, Latin American and African-American food items mingle with traditional southern and American offerings.
n. The store itself – unique "storefronts" are delineated by contrasting bold colors and lively graphics. A leaping fish, for example, signifies pescaderia (fresh fish), while a longhorn steer shows where the carneceria (fresh meat) is located. Signage is in both English and Spanish.
b. Meat – We offer a full butcher store experience at our carneceria. Through our 60-foot-long, full-service fresh meat department, shoppers may choose from up to 60 items like rib-eye steak, link chorizo, and ham hocks custom cut to order.
c. Produce – more than 600 items—including 15 varieties of chili peppers— all priced to meet or beat competitors' offerings
d. Fruit bar – fruteria, where cut fresh fruit and vegetables are offered in spears rather than chunks as is preferred by Latinos, plus
freshly squeezed juices
e. Prepared food from scratch – Carnival's Le Cordon Bleu chef oversees the cocina or kitchen with fresh Mexican – not Tex-Mex – specialties for breakfast, lunch and dinner.
f. Village -- a "village square" with 15 oak picnic tables under festive lighting where customers can sit and eat
g. Pharmacy – besides prescription drugs and all the usual over-the-counter health and grooming items, we offer the homeopathics
and other home remedies, like herbal teas, at our Farmacia that Hispanic customers are traditionally accustomed to using.
h. Fish -- full-service seafood department offers 49 items such as head-on and shell-on fish, squid, and six flavors of freshly made ceviche. After customers pick out their fish, the pescaderia will fry it for them at no cost.
i. Tortillas -- The tortilleria offers piping hot corn and flour tortillas made fresh daily from 4:00 a.m. – 10:00 p.m.
j. Bakery -- The pandaderia has signature items like in-store, made-from-scratch tres leches cakes and Mexican sweet breads and bolillios next to donuts and French bread.
k. Deli – the salchicheria offers fresh offerings to a variety of tastes such as two varieties of potato salad.
l. Vendors – sell jewelry, dresses and other items for special occasions like the Quincineria.
m. Ethnic focus on the neighborhood – Mexican, Latin American and African-American food items mingle with traditional southern and American offerings.
n. The store itself – unique "storefronts" are delineated by contrasting bold colors and lively graphics. A leaping fish, for example, signifies pescaderia (fresh fish), while a longhorn steer shows where the carneceria (fresh meat) is located. Signage is in both English and Spanish.
2. Why are the Carnival Super Markets focused on the Hispanic marketplace? How will the flagship affect future stores?
Carnival conducted extensive demographic, focus-group and hands-on research into each neighborhood where our stores resided. We learned that the Hispanic population in North Texas was expected to grow 40% over the next few years. Many of our stores are located in neighborhoods that are already 60% to 70%+ Hispanic. Based on what we learned, we invested time and money into all the stores. We brought in an improved, higher quality and more diversified mix of foods better targeted to the surrounding neighborhoods, upgraded our fresh produce and made needed repairs and upgrades to some of the older stores. In addition, we remodeled four Carnival stores and began testing some of the concepts that will be fully realized in our flagship store that opens August 30th.
We've seen immediate results across all our stores banners in response to these changes. Our flagship is our pride and joy. Concepts such as the Cocina, Fruteria, Pandaderia, Pescaderia, Carniceria, Salchicheria and others were pre-tested in our remodeled stores to much success.
We created a unique store design for the flagship that replicates the experience many Latinos remember from Mexico – that of a village with many goods and services including a butcher shop, a fish market, a produce market, a picnic area for eating meals, a bakery and more. Our focus is on fresh which can be seen by the over 600 items in produce alone. Unlike other stores that segregate "ethnic" from "domestic" foods, we integrate our Hispanic specialties with American favorites. In our bakery you'll find our house specialty "tres leches" cake next to the French bread.
The flagship will be the testing ground for new grocery concepts, foods, customer service and new community services. From here you can expect to see us continue to incorporate what we learn from our customers into our stores present and future.
3. How are Carnival Super Markets different from Fiesta and other Hispanic-oriented grocery stores in the area?
Our stores are more fun, festive and exciting. We offer a broader selection in all of our departments and we are the price leader. Our products are of a better quality and our stores are brighter and cleaner. Our product offerings tend to better mirror the neighborhoods in which we operate rather than offer a standard line of product. We have bi-lingual service people. We better understand the neighborhoods we serve than our competitors, and lead the marketplace in terms of innovation and freshness.
4. How is the new flagship different from other "fresh-oriented" stores like Central Market and Whole Foods?
Those stores are much more expensive than Carnival and serve a different consumer. Our stores have a different, more festive atmosphere. Our customers have large families, shop nearly every day for their meals and tend to cook more. They are interested in fresh produce, meat, fish and bakery offerings at a price that will stretch. In addition, they want specialty spices and foods from Mexico and Latin America to prepare traditional dishes. We offer a lot of international items at much better prices.
5. Wal-mart has announced its plans to appeal to the Hispanic grocer marketplace – how does that news impact Carnival?
We are prepared to compete. Our unique shopping environment, wide range of ethnic items, expansive fresh produce offerings and fresh cooked items offer our customers high value for their family's dollar.
In addition, we have well-trained, friendly, knowledgeable employees always available to help all our customers.
We know our customers better than most. We have more experience meeting our customer's specific needs.
6. Is Carnival part of Minyard Group?
Yes. Minyard Group owns Carnival Supermarkets, Minyard Food Stores and Sack 'n Save. We see strong growth potential for Carnival Supermarkets and have put our time, resources and focus there for the future, as is evidenced by the new store and the remodels.
7. What are the company's plans for future Carnival Super Market stores?
We've purchased undeveloped land at two locations in Fort Worth to build new stores. We also intend to remodel most of our existing stores over the next couple of years to incorporate the learnings and innovations from our flagship store. We will keep you abreast of future developments.
8. How will the company introduce innovations from its flagship into other stores?
Just as in the remodels, some of the innovations seen in the flagship have already been introduced to some Carnival stores such as the fresh cut fruit and fruit juice stand, the extended produce, the onsite fresh-made tortillas and the extensive bakery items. It is our commitment to provide food items that are tailored for the customers in each neighborhood. As new food items and fresh approaches are successfully tested at the flagship store, we will introduce them on a neighborhood by neighborhood basis – as space conditions allow.
9. Will non-Hispanic customers enjoy shopping at the store?
While the stores have a Hispanic theme, it really goes back to serving the neighborhoods we're in. We've learned from our focus groups with our remodeled stores that all different ethnicities shop with us. Signs in both English and Spanish make the store accessible to everyone. The cheerful, colorful store interior is attractive across all groups. Plus the emphasis on fresh produce and fresh-cooked items at competitive prices are appealing to many customers. Since many Latinos also enjoy traditional American food offerings, customers of all ethnicities will find their favorite foods at Carnival Super Market – like other grocery stores.
To read this page in Spanish (Click here: En Español)