H-E-B’s Stephen Butt shares the grocer’s new plans, discusses mask and Texas freeze challenges

The building is being enlarged for a bigger produce section and a dedicated area for curbside pickup orders. The rest of the corner shopping center, operated by Regency Centers, is also under construction and stores are expected to begin returning later this year.

“We’re just glad we could save the building,” Butt said. “If that tornado had hit just 25 yards over, it would have taken it down.”

He also provided updates on stores in the works in Uptown and Oak Cliff.

Butt said the company is still recovering from the February freeze that shut down the state for a week. H-E-B hasn’t tallied the cost of the storm yet. About 40 stores were closed for multiple days in Central Texas, including Austin, and in West Texas. Three of the nine Central Market stores in the state lost power, including one in Southlake.

The biggest Texas-based supermarket chain had a strong year during the pandemic, but the power grid failure was costly, Butt said. Days of lost sales, spoiled food and the expense of cleaning out stores was significant.

Butt and other grocers in the state are getting ready for Wednesday, the day Gov. Greg Abbott’s repeal of COVID-19-related restrictions takes effect. The grocery said it is continuing its requirement that customers wear masks, and Butt shared an official H-E-B statement written Friday that said: “The end of mask ordinances puts real pressure on retailers to enforce an emotional topic for many.”

This interview has been edited for brevity and clarity.

Q: What went into the company’s mask decision?

This is obviously a very important topic. We’re staying with all the protocols we had in place. We want customers to wear masks. And we think that’s best for the community. We think it’s best for our people. We want to see our customers and partners vaccinated as rapidly as possible. That’s really the solution.

Q: How hard has the mask mandate been to enforce?

It’s difficult. We tell our partners, if a customer refuses to wear a mask, we will not escalate the situation. We’ve had several thousand instances across the state. We will not put our people in harm’s way over this topic. Our partners’ safety is a top priority for our company. We’re not really changing what we’re doing. We’re just redoubling our commitment in light of the new development from the governor’s office.

Q: Have mask incidents tapered off in more recent months?

I’m speaking for Central Market, the stores that I’m in the most. I think we have seen an acceptance by our customers and our partners of the new environment. We were seeing a high percentage of customers with masks. We were seeing great follow-through voluntarily by the community. And we hope that will continue. We’ll have someone at the door reminding people to please put their mask on or offer a free one.

Q: Most grocery operators had better-than-average results in 2020. While H-E-B is a private company, what can you say about your company’s performance?

There were industries that benefited like groceries and home improvement. And there were industries that were really hurt — airlines, hotels, restaurants. And we respect the challenges other industries have been facing. But now, whatever benefit we had, I assure you the winter event [changed] that. We closed more stores for more days at H-E-B than our company has ever seen and supply lines were stopped. The lost sales and increased costs of managing through that event will probably take the bloom off the rose from the COVID lift. But we believe our business will come back strong.

Q: What are you seeing for the second half of this year?

We have a strong team of medical advisers. I think we’re beginning to hear a more optimistic view. Certainly with the third vaccine, and as vaccine production ramps up and more access points [become available] in communities, we’re beginning to hear more optimistic conversations.

Q: How has the grocery customer changed?

We believe digital shopping will level out somewhere between 10% and 15% of sales. We were well below that at Central Market when the pandemic started. We saw our percentage of weekly online business jump. But we think it will settle back into that range, depending on the store and depending on the community. The prepared food business has been a challenge, much like our restaurants and catering, and we’re hoping that business will rebound.

Q: What about the prospects for H-E-B stores opening in the Dallas market?

For a number of years, Central Market has been our growth format in Dallas-Fort Worth and continues today. We always look for growth opportunities at the right time. And I’m confident that day will come.

Q: What’s happening with the Central Market store in Uptown Dallas?

It’s a fabulous location and we’re having to be patient. KDC is a strong partner. The city has been very supportive. We were approaching groundbreaking right before the pandemic began. Obviously, it’s a big, expensive project. And there was quite a bit of new office space included. There’s obviously a reluctance now with the uncertainty about how people will be working for any investor, financial institution, developer or owner to commit a large amount of money into new office space. So KDC is redesigning the project. And we look forward to seeing those new plans. So we will have an unfortunate delay, but there is no lessening of our enthusiasm that this will be a great project. It will be for the city of Dallas a terrific addition to a really exciting part of the city. Everyone involved is very committed. We’re just being patient. When the project is complete, we’ll be glad we waited and did it right.

Q: What about a future Central Market in Oak Cliff?

We’re excited about our property in Bishop Arts and it’s very much on the drawing board. We’re not standing still in any way. We’re looking for the right developer that can help us with that project. We expect to be putting more time into working on that in the coming year.