Texas Power Broker Labatt’s distribution saga spun one client at a time
San Antonio Express-News
Blair Labatt, CEO of Labatt Food Service, a fourth-generation food service distribution company with $1.3 billion in annual revenue and five hubs that daily move hundreds of thousands of items to restaurant chains, military bases and some 75 percent of Texas school districts, has never taken a business course.
In fact, Labatt once envisioned himself living a halcyon existence in the world of liberal arts academia. He holds a Ph.D. in English from the University of Virginia, won the F. Scott Fitzgerald Short Story Prize at Princeton University, where he earned a bachelor’s degree in English, and took home first class honors from Oxford University, where he got his master’s.
In an email exchange after an interview at the company’s San Antonio headquarters, he shared that while he did not win the Rhodes Scholarship, “Oxymoron,” his story about the competition, did net him another writing prize. “The nominee from Harvard did not win either,” he added of the scholarship. “His name was Tommy Lee Jones. I thought it was such a good Texas name, I put him in the story without changing the name.”
Labatt’s career in academia was derailed when he came home and caught the family business bug, returning for good to the frenetic food service scene after teaching stints at the University of Texas and Trinity University. He took the helm of a small “food away from home” offshoot, which over the next 40 years grew to become the company’s bread and butter. Labatt Food Service consistently ranks among the top 10 food service distributors in the U.S., employing 1,700 people in Texas and New Mexico.
He proudly shares how each warehouse grew along with the customer base, expanding storage and dock space, raising ceilings and extending automated shelving systems underground; computer-tracking everything and designing a robotic selection system to all but eliminate errors.
When the company felt that it couldn’t adequately supply Dairy Queens in El Paso from Dallas, San Antonio or Houston, it bought a warehouse in Lubbock. After acquiring a warehouse in New Mexico, the company got involved in a project that teaches Native Americans to raise top-grade beef to feature at casino restaurants. When a fast-growing Texas client needed someone to supply barbacoa, a South Texas favorite made by slow-cooking beef cheeks, the company added a cook plant.
The company distinguished itself by eschewing a private label line, instead focusing on linking brand-name manufacturers with clients. It built a good team. Al Silva, Labatt’s chief operating officer, has been with the company since 1981, when he was a manufacturer’s rep calling on the company. Senior Operations Manager Richard Benitez has been with the company 33 years. One of Labatt’s most recent projects is adding a free medical clinic for his employees and their spouses.
There have been failures — attempts to expand into Mexico in the 1990s were abandoned because of the differing business culture and the collapse of the peso — but in the end, Labatt has found orchestrating it all — the warehousing and trucking logistics, the innovation to reduce errors, the forging and maintaining of customer relationships — to be “kind of fun.”
“I’m not a power broker,” he said. “I’m just a grocery peddler, former English teacher, whatever. I mean, I don’t want to sail under terms that are too grandiose for me.”
Quick facts on Blair Labatt
What book are you reading?: I just finished “Shirley” by Charlotte Bronte. It’s a book she wrote after “Jane Eyre,” and it’s a spectacular unread book.
How do you typically start your day?: I like to have breakfast with (chief operating officer) Al Silva or some of the other people. It’s a really good way for us to kind of visit away from the office and think about things. So we have a couple of favorite places that we like to go and have some huevos rancheros.
What was your first job with a paycheck?: I worked in the mailroom at Frost Bank the summer of 1966.
Favorite restaurant?: La Fonda. I’ve been going there since I was a baby ... literally, with my grandfather would go to La Fonda. We’re very much regulars.
What’s your passion/hobby outside of work?: I would say reading is still my passion/hobby. Although late in life, I’ve become kind of a pretty enthusiastic golfer at a very low level of competence. The third, I should probably mention because it’d be wrong not to, is that I’ve really developed a keen desire to support the opera in San Antonio. So I’ve been very active in the work to create Opera San Antonio, the new resident company in the Tobin (Center for the Performing Arts), very active in that. I’m the vice chair and I really do believe in arts organizations but I particularly like opera because it really plays to my past. I mean it’s narrative, it’s drama, it’s also, obviously, great, great music.
Here is an edited transcript of the interview:
Q: Let’s start with the beginning, originating with the small grocery supply company and your grandfather here in San Antonio.
A: Well, my grandfather (T. Weir Labatt) came to San Antonio in 1910. He’d been born here, but he came here to start a company for a man named Collins who lived, I think, in Fort Worth. And the week he got here, Mr. Collins died. So my grandfather, who was a minor shareholder, operated that company for 30 years. And then the heirs sold the company, and my grandfather then went into business with his two sons as Labatt Wholesale Grocery Co. Of course, his two sons promptly left for the war and he — who was in his 60s at the time — managed to get the company off the ground.
And so then, after the war obviously, the three of them continued. In ’68, they literally created a separate company to support food at the HemisFair. And then by the mid ’80s, when it was clear that the future of the independent retail grocery store was not good, we kind of made this major shift into exclusively food away from home, or what we now call food service.
I joined the company in 1976, and in 1980, I was made responsible for this, at that time, smaller portion of our enterprises. And we had 28 employees at the time, and we had a lot of fun.
Q: So was the HemisFair a “big break” for the company?
A: I was not even out of school at the time, but from what I’ve heard, the business community rallied to put the fair on. And each of the people who made a contribution put in a certain amount of money. And in the process, there were all these restaurants, so my dad had the idea of starting a company. There was a bid to grant the rights to sell to all the restaurants. They got that bid.
And then, after ’68, as San Antonio had its sort of rebirth, our little company kind of poked along. But when I came (back) here in 1980, it was a very solid little company, and great people. And we just needed to get it some more items and get some more customers and just started to, one step at a time. That’s really the whole story. That’s what’s happened for the last 40 years. And sometimes as you get a little bigger, you can take bigger steps. But it’s still one customer at a time.
Q: Was it common (industry) knowledge that the independent groceries were going away?
A: I think part of it was foresight and part of it was just knowing our customer base and seeing how many of them were struggling.
Q: So adapting to the “food away from home.” Do you think that’s still a growth area?
A: Well, it’s certainly reached a point at which it was more than 50 percent of America’s food dollar. Clearly, not as many people cook at home. You have two-paycheck families, there are people that are eating out or getting takeout or something like that much more frequently, so it’s definitely a growth area. And then of course the grocery stores themselves are saying, well, we don’t want to concede that portion of America’s food, we’ll aggressively pursue takeout.
Q: Can you talk about that cook plant?
A: Yeah. So over 10 years ago, we had the opportunity to buy a meat processing plant that existed but that was going to close, and it was owned by Conagra, a big food manufacturer. We took that plant over, and in that plant we do further processing of raw materials. So, for example, we’ll trim fajitas and we marinate, but we don’t cook.
One thing led to another, and for a customer, we actually ended up building a plant. We built a very big plant.
Q: Is this Laredo Taco Co.?
A: Uh ... yeah. … It’s not confidential, I don’t think it is. I just told you, so it’s not. But that’s a wonderful story, because we were there when they served their first taco, the very first one. They serve 80 million tacos a year.
Q: You have to have had incidences of adversity, and maybe you’ve had to abandon a plan. Like your foray into Mexico turned out to be something that didn’t work.
A: That’s right, and fortunately we were very conservative in how much we exposed ourselves. But you know it was a wonderful experience, I learned a lot.