Matamata butcher's survival strategy
He's mad. At least, that's what his accountant says, but Owen Henderson is a desperate man and that means even madness looks like a good option.
Henderson owns The Meat Company in Matamata, a retail butchery struggling to compete with supermarkets "smashing specials to destroy each other weekly." The internet adds another layer of competition. So the Matamata butcher has come up with a survival strategy: he plans to keep the retail side of his business afloat by selling at wholesale prices.
Henderson didn't make the decision lightly. He has been in the industry 41 years, and has tried his hand at several retail models.
After getting his first job at a butchers in Waharoa at 15, he worked his way up the ladder to ownership over 28 years.
The shop was called Waikato Meat Supplies, and when the meat factory in Waharoa closed up Henderson moved his business to Matamata.
That was when he decided to give franchising a go, selling under the Export Meat Warehouse brand until the bills for belonging to the franchise piled up higher than the money coming in.
"The returns that we were getting weren't anywhere near the fees we were paying. They went up annually, so we got out," Henderson says.
"To give you an idea, back then which is six year ago, it was $300 a week, plus all advertising payment on top of that including television. So it was more than another payment of rent on top [of your fees]."
That is why the The Meat Company co-operative formed three years ago. A group of ex-franchisee owners got together to see if they could get the same group discount deals the franchise offered, while continuing to operate as individual stores.
"In doing that we found that most individuals, stand-alone guys, get the same deals anyway," Henderson says.
"It's just a world of competition."
Now, that world of competition is driving him to try one last strategy to keep the retail side of the business afloat.
While people could save themselves up to 40 per cent by buying half a lamb to last them six months, few are willing or able to pay the steep price tag upfront at a retail butcher's.
As he says, "The only thing that counts now is the buck. Loyalty is non existent. People are specials shoppers."
That got Henderson thinking. Why not keep the wholesale price, but break it down into smaller packages for people?
He estimates it will save his customers 33 per cent on their meat bill. At the moment you could walk into The Meat Company and buy a mixed 12.5 kg pack of prime beef, pork and lamb for $150. All meat and all cuts sell for $11.95 a kg as of the start of the month.
"One of the reactions was ‘what's wrong with the meat? Why is it so cheap?' says Henderson. "That really bugged me." That's because the strategy will cost Henderson in margins. Hence his accountant's reaction. "He said to me, ‘mate, you gotta watch your margins,' and I said ‘well, at the moment there's not a lot of margins to watch.'
"If the volume of sales are there the margin is still reasonable," he says, before rephrasing; "survivable, survivable I'd say."
With rent in the retail shop to pay, plus wages and power among other things, Henderson has had to make some changes to give the new strategy the best shot at working.
He had one staff member leave to go farming recently, and won't replace him unless sales pick up.
He's also buying differently. Lamb and pork have to be bought wholesale, but buying a bigger carcass saves a bit. Beef, on the other hand, is still available from local suppliers, and by leaving his wholesaler Henderson has saved a "margin of about 10 to 12 per cent." He is also breaking bone in the meat himself. As he says; "it's a bit labour intensive, but I'm also saving."
If it doesn't work Henderson will just focus on wholesale side of his business. He has several contracts with smaller cafes, and says Hobbiton, Totara Springs Christian Camp and Two Tones Catering have been his "lifeblood."
But Henderson says retail butcher stores don't need to be confined to the history books yet.
"I don't think it needs to be [dying], I don't need to be yet," he says.