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El Rancho opens first Houston supermarket to big crowds

Grocers are increasingly courting Hispanic shoppers not only because of their sheer size and buying power, but because they tend to spend more money on groceries than the average Houstonian, said Laura Murillo, president and CEO of the Houston Hispanic Chamber of Commerce.

“We enjoy cooking, often for more than two people, and part of our culture is to have people over to celebrate and congregate,” Murillo said. “We’re an important demographic to grocers. We’re a market that should not be ignored.”

El Rancho faces stiff competition in Houston from the likes of Fiesta Mart, H-E-B’s Mi Tienda and La Michoacana Meat Market, as well as discount grocers such as Food Town and Foodarama. Mainstream grocers, such as H-E-B, Kroger and Walmart, are also adding tortillerias and Latin American foods to their product mix to attract Hispanic patrons.

El Rancho’s biggest competition comes from Fiesta Mart, which operates 32 stores in the Houston area. The longtime Houston grocer was acquired earlier this year by California-based Bodega Latina Corp, which operates 59 El Super stores in the southwestern U.S. Its Mexican parent company, Chedraui, one of the largest Hispanic food retailers in the country, reportedly paid an estimated $300 million to acquire Fiesta Mart.

El Rancho, which is owned by the Nafal family with Boise, Idaho-based Albertson’s as a major stakeholder, operates 20 locations in Dallas-Fort Worth, Austin and Odessa. The grocery chan, a division of Garland, Texas-based Mexico Foods, plans to open four more stores this year in the Houston area, including north and northwest Houston, Garden Oaks and Stafford. Eventually, El Rancho hopes to have as many as 20 stores across the Bayou City.

“This is a very competitive market, but there’s plenty of room for everyone,” El Rancho spokesman Rodrigo De Luna said. “This city is growing by leaps and bounds.”

Fiesta Mart and H-E-B, which operates two Mi Tienda stores in Houston, declined to comment about El Rancho’s entrance in the Houston market.

El Rancho’s north Houston store employs 185 workers, and is expected to infuse $5 million in economic development to the area. The grocery store is a boon for residents in the area, who often travel more than five miles to purchase quality food, said Bilal Khan, director of community affairs for Houston City Councilman Jerry Davis’s office. The vice mayor pro-tem represents District B, which includes the new El Rancho.

“We’ve sat down with major grocers to bring stores to food deserts in our district, but they’re focused on other regions,” Khan said. “Stores like El Rancho are filling that gap.”

El Rancho’s first Houston supermarket features a butcher shop, a fresh seafood department, a produce section, a full-service bakery, an authentic tortilleria, a Latin American homestyle cocina food court. The grocery store does not sell alcohol or cigarette, a policy set by its Muslim ownership.

Alcohol sales represent a big chunk of the grocery business, so much so that H-E-B proceeded with plans for a store in one Heights neighborhood only after voters struck down a century-old ban on off-premise alcohol sales. Eschewing alcohol sales could hobble El Rancho, said Ed Wulfe, founder and chairman of Wulfe & Co., a Houston-based commercial real estate firm.

“The supermarket business is so competitive, you really can’t afford to give up any dollars to anybody,” Wulfe said. “I’m not advocating smoking and drinking, and I understand it’s their decision, but you’re taking away one aspect of the business and making it more difficult to compete.”

De Luna, the El Rancho spokesman, said executives there are confident they can compete in Houston by offering lower prices, better customer service and a wide array of Hispanic food products.

“We have a lot to offer,” De Luna said. “We’re confident that the Hispanic consumer will look for our service, quality and price when they buy their groceries.”

Priscilla Mejia, 36, drove 20 minutes from her Spring Branch home to be one of the first shoppers at the new El Rancho on Wednesday morning. The Jerry’s Cleaners employee, who used to shop at an El Rancho when she lived in Dallas, said she was happy to see the grocer come to Houston.

“I love this store; it’s amazing,” Mejia said, as she waited in a crowded line to check out. “There are so many great deals. I think it’s going to take Fiesta Mart away from here.”

As published by the Houston Chronicle