Silver Lining – Hurricane Katrina leads Rouses Markets to business aviation, transformational growth

When Hurricane Katrina made landfall in August 2005, it shut down communication and transportation in much of southern Louisiana. The owners of Rouses Markets had no way of knowing what was happening at their 17 supermarkets or with their employees and their communities. There was no cellphone service and flooding caused many road closures.

“We didn’t know if we had stores that were under water, we didn’t know if we had stores that had no power, or stores that were closed because the manager couldn’t get there to open and service customers,” said Donny Rouse, CEO and grandson of the company’s founder; at the time he was handling the family’s real estate developments. “And with so many road closures, we couldn’t just drive to our stores to check on them. So I went by the airport to see if I could get a helicopter to fly around to the stores.”

It was the best solution for a crisis that turned out to be one of the deadliest and costliest storms in U.S. history. With the widespread destruction in the Gulf South re-gion, Donny said the company felt fortunate with what they found. Two stores were flooded with 4 to 5 feet of water inside, and 11 others were down, but not completely out. Within one week all but those two flooded stores reopened. “Selling food and other essentials was important, not just from a business standpoint, but as a neighbor and resource in each of the communities they serve,” Donny said.

That first helicopter ride was the start of Rouses Markets foray into business aviation. Soon after, Donny got his helicopter license and the company purchased a Robinson R44 helicopter, followed shortly by his fixed-wing license and the purchase of a Cessna 182 single-engine piston. Today, as the CEO for Rouses Markets, he says he can’t imagine doing business without aircraft as business tools or a time when the company won’t use a Beechcraft King Air, which they’ve operated for eight years.

The timeframe during which they’ve owned a helicopter or fixed-wing aircraft has also been the era of the largest growth period in the family’s nearly six decades in the grocery business. What started in 1960 with one small store in Houma, Louisiana, now is one of the largest independent grocers in the United States with 63 supermarkets across southern Louisiana, along the Mississippi Gulf Coast and in lower Alabama.

Deep family roots in food supply, community

Rouses Markets is considered one of the Top 50 grocers in the United States by supermarket industry experts and is one of the fastest growing family-owned companies in the country. The company earned 2018 Southeast Retailer of the Year accolades from The Shelby Report, a leading food and retail publication that gives out its highest honor based on industry and community contribution and leadership in the industry.

Donny said Rouses Markets is built on a foundation of service to community that started four genera-tions ago and has been nurtured by family and team members since.

Joseph P. Rouse, known as J.P., immigrated to Louisiana from Sardinia in 1900. He worked at a family truck farm raising garden vegetables. In 1923, he moved to Thibodaux to start his own farm, growing shallots and potatoes. He started City Produce Company that same year, which helped local, independent farmers get their fruits and vegetables to the rest of the state and, eventually, stores as far away as Alaska. J.P.’s son Anthony J. Rouse, Sr., and his cousin, Ciro Di Marco, worked side by side in the City Produce Company’s packing shed washing and sorting green onions, which were then packed in trucks and rail cars filled with ice. When J.P. died in 1954, the cousins continued to run the farm and the produce distribution company.

But the big farms that drew J.P. to Terrebonne and Lafourche parishes were already starting to shut down. Trading on the tradition of quality at City Produce Company, Anthony and Ciro changed course in 1960 and invested all they had to open the family’s first grocery store. Called Ciro’s, it was a simple 7,000-square-foot store in the nearby town of Houma.

They focused on finding the best quality and then getting the best prices so they could sell groceries cheaper. There were not large wholesale suppliers like the industry has today, so their efforts were pioneering: making their own Cajun specialties, drying their own spices, cutting meat to order, asking neighboring farmers to deliver produce directly to the store, for example.

As they got old enough, Anthony’s children joined in the business, stocking shelves, bagging and carrying groceries for customers after school and on weekends. Often, they were sent to the local dairy to get milk to sell in the store.

By 1975, it was time to open a larger store and Ciro, who had no children, was ready to retire. Anthony’s son Donald bought his uncle’s share in the business, and the family opened Rouses #1, a supermarket in their hometown of Thibodaux. While a typical supermarket at the time was 20,000 square feet, this one felt massive at 28,000 square feet and offering the area’s first floral shop, bakery and deli.

It was a true family business. The cooks used produce, meat and seafood off the store’s shelves to make the deli specials, which were based on what Anthony’s wife Joyce was making for dinner. Eventually all of the couples’ six children would work in the business, with sons Donald and Tommy becoming managing partners.

Through the 1980s and 1990s, the family added new stores in surrounding south Louisiana communities either through purchasing existing stores or building new. The third generation started tagging along at the stores and working during the summers and after school.

“We lived across the street from our offices so basically every day after school I was in the office sitting with my dad and grandpa, so I grew up listening to them talk and learning the business,” said Donny, who has worked in nearly every department for Rouses Markets from bagging to produce to his current CEO role.

Donny said he always planned to be in the family business. After college he was handling the company’s real estate developments as his father Donald was leading exciting growth. That’s when Hurricane Katrina hit. At that time, Rouses 17 locations were primarily in two parishes within about a 30-minute drive of home offices in Thibodaux. Two were in Metairie, and one was in St. Tammany Parish. But none were in New Orleans itself.

A&P decided to sell its Southern Division following the double-punch of Hurricane Katrina followed closely by Hurricane Rita, and in 2007 Rouses acquired 17 of their stores. It was a pivotal moment in the family’s history: two stores were in Mississippi, Rouses first outside its home state, and it was their access to the largest market in the state, New Orleans.

“It was a really big gamble for our company,” Donny said. “If we wouldn’t have done that acquisition, it would have been very difficult to get into the New Orleans metro area and our company would probably look very different today. We felt like if we wanted to have a brand that is really strong and known throughout the grocery industry, we had to be the dominant player in New Orleans.”

Donald Sr. led the acquisition, which not only doubled Rouses store count but also increased their sales by 110 percent. They were No. 1 in market share in New Orleans soon after converting the stores to Rouses Markets.

“The success of that acquisition gave us more buying power and gave us the confidence boost to continue to grow,” Donny said.

Rouses has added more stores in New Orleans, including opening the first new grocery store in the city’s downtown core in 50 years in 2011. They also are the Official Grocer of the New Orleans Saints and LSU Athletics.

Other sizable acquisitions came in 2014, with their first five stores in Alabama, and in 2016, with nine stores in Baton Rouge. Now with 6,700 team members, Rouses is preparing to celebrate its 60^th year in the grocery business next year and could reach store No. 70 by then. It opened its 60^th in fall 2018, and by the end of 2019 there will be 65 locations with plans to add four or five stores in 2020.

In 2016, Donald Sr. stepped down as CEO and remains chair of the board, as well as managing partner. The other two managing partners are Donny and Tommy’s daughter, Ali Rouse Royster. This third generation is joined by at least eight more cousins working for Rouses Markets, and the fourth generation – the oldest is currently 10 years old – looks to be even bigger.

Competing with corporate chains and discount stores

Competition has changed dramatically since the first generation of Rouses opened that first market. Today, Rouses Markets are fighting to remain competitive as independent grocers against pressure from corporate chains like Albertsons and Walmart Supercenters, discount stores like dollar stores and online giant Amazon.

Donny said they compete by offering services like online ordering, same day delivery, curbside pickup and digital coupons, and set themselves apart by operating each store as a local community partner better than anyone else.

“The roots of the company come from farmers, and we’ve always taken care of farmers, supported local and that’s still true today,” he said.

Supporting local, he said, is different for each location and ranges from décor to what’s on the shelves. A Rouses store fits into its neighborhood rather than forcing a cookie-cutter supermarket model into a community.

You’ll find a New Orleans Saints theme at the Baronne store in the Warehouse District in New Orleans, which is near the Saints’ home field at Mercedes-Benz Superdome, and shelves stocked for urban shopper habits versus what you’ll find at suburban locations.

No matter the location, there will be food from area farmers, fishermen, chefs and food manufacturers that highlight that area’s tastes. Donny said Rouses sells more Louisiana seafood than any other company in the state of Louisiana, and it makes more than 500,000 king cakes every year.

In addition to national brands, there is a focus on fresh ingredients and prepared food. Produce sections are front and center, and items are sourced from local farmers. Meat and seafood cases are seasonal and feature many Cajun favorites. Most stores have extensive ready-to-eat options prepared in-store, from jambalaya to a hot bar, soup and salad bar, Mongolian Grill, poke and sushi station, and chef’s case featuring sandwiches and entrees.

King Air allows hands-on approach as geographic footprint grows

Donny didn’t grow up interested in aviation and it wasn’t until the helicopter experience during Hurricane Katrina that he saw the value in learning to fly.

“I didn’t want to be put in the position again where we couldn’t check on our stores,” he said. “I wanted the flexibility to do that, plus I enjoyed flying a lot.”

Now, having business aircraft means that as the company’s geographic boundaries expand, the family can still be hands-on. They like to visit the stores, get to know employees, customers and the communities. They like to take their teams, whether that’s meat, produce or organics, to see the stores the way their customers are seeing the stores.

He was 24 when he got his helicopter license and 25 when he started flying the Cessna 182, which the company no longer owns. The current fleet – hangared at Houma-Terrebonne Airport – includes a five-seat 2013 Robinson R66 turbine engine helicopter, a 2006 King Air 350 purchased in 2011 and a 2008 Hawker 900XP jet acquired in 2016. Rouses employs two full-time pilots who handle scheduling and fly the King Air as well as the Hawker 900XP. One pilot also flies the R66, as does Donny. Donny is not type-rated in the King Air 350 but the company always flies the King Air with two pilots, so when on board he often co-pilots.

In addition to visiting existing stores, Rouses uses the aircraft to visit new stores during construction, meet with suppliers and to research potential new sites and partnerships. Donny said the King Air came along at a time when the company needed its range, load and short field capabilities.

“It was 2011 and it was the right time for the business and the right deal,” he said. “As we began expanding and opening up our footprint more, the King Air 350 would allow us to take more people when we went to different markets, attend trade shows or visit other stores around the country.”

The farthest market from Rouses headquarters is Orange Beach, Alabama, where they have eight stores. Driving there and visiting all the stores would take several days while the King Air makes it a one-day trip with stops at two airports.

Besides adding swept propellers, Donny said they haven’t made any modifications though will likely contract interior refurbishment and an exterior paint job in the next few years. They fly the King Air about 150-200 hours a year. Having a fleet allows mission flexibility, which grows more important as the footprint continues to grow. The Hawker 900XP is used for trips to trade shows in California and New York, or for travel related to the family’s business investments. The helicopter remains valuable for its ease of operation.

“If it’s just going to be me, I’ll take the helicopter and go,” he said. “Or if we have a full load on the King Air and a couple more people need to go somewhere, we’ll take the helicopter. The helicopter helps out a lot because I can fly it alone and we can land right in the store parking lot, no need for a rental car.”

He says he doesn’t see a future without the King Air.

“It just meets our requirements so well. For our one-hour flights, it has great speed and it has range when we need it,” he said. “It makes me more comfortable being able to grow our geographic footprint farther from our home base because it gives us the opportunity to get to those stores more often than we could if we didn’t have the King Air.”