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A grocery scion reflects on survival and success

In 1991, Stew Leonard Jr. took over from his father (founder Stew Leonard Sr.) as president and chief executive officer of Stew Leonard's, a chain of grocery stores in Connecticut and New York featuring petting zoos and animatronic farm animals that entertain kids while their parents shop for farm-fresh produce and meats.

Stew Leonard Jr.
Since that time, Stew Leonard's has grown to 2,000 employees producing close to $400 million in annual sales and has frequently made it onto Fortune's "100 Best Companies to Work For" list. The grocer has also weathered legal battles, including a tax-evasion conviction for Stew Sr. that saw him spend over four years in prison.

In a recent interview, Stew Jr. talked about some of the secrets to the company's success -- and its ability to bounce back:

CBS MoneyWatch: You promote 82 percent of your managers from within. Why focus on this?

Stew Leonard Jr.: When you have people working for you for a long time, they learn so much about the business, culture and philosophy. These seasoned people don't have to go read the manual about how to act at Stew Leonard's -- they've watched it for 20, 25 years. We put a lot of value on that as a family.

MW: How did that notion help Stew Leonard's through the legal issues the family faced in the '90s?

SL: We had great people working for us that had been there a long time -- a solid core of good people. And a lot of the customers knew my father and were friends with him. He had done a lot in the community. Everyone just sort of supported my dad and the family through that time.

MW: How do you stand out in a new world of Whole Foods and Fresh Markets?

SL: I've been in the food business for 30 years, and we've always had competition from Costco, Trader Joe's, supermarket chains ... even Wal-Mart has gone into the food business. Since the day my grandfather started bottling his fresh milk from the farm, we've also focused on fresh and local food from farms around us. On the other hand, I love Whole Foods, Trader Joe's and Costco. I get ideas from them.

MW: What other ways do you compete?

SL: We keep up with the trends. Take the Cronut craze. We heard about that, and went down to the Dominique Ansel bakery in Manhattan. Soon after, we put our version in the store, Stew Leonard's Croissant Donut, and we sold $300,000 worth of them. That had to happen quick -- innovate and get something out fast. And it paid off.

MW: What's the best advice your father ever gave you about business?

SL: Listen to the customer. He said if you want to learn about the business, go out and stand in the traffic (in the store), and ask questions.

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