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Fresh, ready-to-go food fuels Farm Boy’s growth

Jeff York took the reins of Farm Boy in 2009 after a long career leading the discount store Giant Tiger.

Justin Tang/The Globe and Mail

Businesses can sometimes plug along for decades in relative obscurity until that perfect moment when consumer taste aligns with the business model and, with some clever leadership, the company shoots to prominence.

Ottawa-based grocery chain Farm Boy Inc. is having one of those moments. Although it's been around for more than three decades, the fresh-focused chain, which pitches itself as a "food experience" as much as a grocery store, finally appears to be hitting its stride.

Over the past three years, Farm Boy has opened stores in half a dozen communities across Ontario. And while the company has largely avoided the ultra-competitive Toronto market, it has been moving pieces into place in preparation for an aggressive push into the Greater Toronto Area over the next several years.

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"We have 10 to 12 leases either ready to be signed, negotiated or development plans in place in the GTA," said chief executive officer Jeff York, who took the reins of the company in 2009 after a long career leading the discount store Giant Tiger. "In Ottawa we have 13 stores, so we can do 50 stores into Toronto pretty easily, in the GTA."

The company, sometimes described as Canada's answer to Whole Foods or Trader Joe's, is riding the wave of organic, health-conscious eating. It has also seen success by focusing on the growing demand for ready-made food to go, as more people buy lunches or eat dinner on the run.

"In a sense, the timing of the model has finally met up with consumer habits," said Sylvain Charlebois, professor of food distribution policy at Dalhousie University, who has watched Farm Boy's slow but methodical growth over the years in Ottawa. "The line between food service and retailing is blurring, and Farm Boy has always been able to strike the right balance for consumers."

Started in 1981 in Cornwall, Ont., by Jean-Louis and Colette Bellemare, Farm Boy focused from the start on smaller stores, fresh produce and a more involved "foodie" experience. Today their branded products make up a large percentage of their non-fresh offerings, and the centre of their stores lack the rows of toilet paper, cereal and dish-washing detergent that define traditional grocery stores.

Instead, Farm Boy stores prioritize the edges: the delis, bakeries, fresh produce, and increasingly, the salad bars and hot food stands. At the Farm Boy store in Pickering, one of only two stores so far in the GTA, there are eight soups for lunch, about two dozen salad and hot-food options, even 13 types of olives.

"We're into daily shopping. We're kind of into the European model, the opposite of Costco, where they have enough stuff for a month," said Mr. York.

The upscale, shop-more-buy-less model has struck a chord with Ontario shoppers, with the company being named best grocery chain in Canada in a 2015 survey by Field Agent Canada. It's also a model that Mr. York hopes will see Farm Boy through major changes in the grocery industry expected over the coming decade, with rising pressure from online shopping typified by Amazon's acquisition of Whole Foods.

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"We don't have toilet paper, we don't have Tide, we don't have the stuff that nobody should be buying at a store anyway, they should have it delivered to their house," said Mr. York. "You're going to have deep discount, cheap stores and you're going to have our type of stores, where they're experiential stores. Everyone in the middle is going to disappear over time."

He's also not overly concerned about competition from traditional grocery giants such as Metro, Sobeys, Loblaw or Wal-Mart. A Farm Boy store can nestle happily into a strip mall next to a Wal-Mart, he said. In fact, Farm Boy stores often do better when surrounded by competitors.

"We want to be across the street from a Wal-Mart, because what happens is a customer comes into our store first, buys all the fresh stuff, goes to Wal-Mart and buys their dog food and their toilet paper," said Mr. York.

As late entrants into the GTA, however, it won't be easy. So far, the only Farm Boy GTA locations are in Pickering and Whitby; the planned autumn opening of a location in Toronto's Etobicoke borough was pushed back to the new year. Along with competition from the big-name grocers, Farm Boy will also go up against fresh-focused grocers such as Longo's, Fortinos and Pusateri's.

Nonetheless, Mr. York said the company has been carefully planning its entrance into the market since 2012, when it secured financial banking from the Boston-based private equity firm Berkshire Partners.

"For Ontario, we kind of stretched the elastic to go to our furthest point first, so we'd get the distribution in place to go to London," he said. "Each store we open is successively cheaper because our highest freight bill goes to the furthest point. Now we've figured out the logistics, we're working backward into the right markets."

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The plan is to focus first on the suburbs and around the Golden Horseshoe, said Mr. York. "We're going to be covering from Hamilton to Oshawa, kind of following Highway 407 and then dipping our toe into Toronto proper."

For the urban locations, the company is testing a smaller store model with a new 8,000-square-foot outlet opening in Ottawa's Rideau Centre. Mr. York envisages similar-sized stores popping up in condo or office developments in downtown Toronto to compete with the likes of Rabba Fine Foods.

That seems like a strategically sound move, said Dr. Charlebois. "The trend right now is toward smaller stores. Convenience has more currency than, say, five years ago. Price is very important, but convenience is becoming very important," he said.

Long term, Mr. York sees taking Farm Boy across the country, particularly to Calgary and Edmonton – although the focus is firmly on the GTA for the coming years.

"We could put 20 stores out there [in Alberta] easily. But you've got to go with conviction, you've got to have a five-year plan, you've got to build the market share," he said. "Potentially, if you found a partner out there, it might be easier."

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