F.W. Woolworth - popularizer of in-store restaurants in variety, department and discount stores

It is hard to find a major department store, discount store or specialty outlet that doesn't have some type of in-store restaurant. That innovation was popularized by the variety store first known as the "five-and-ten" -- the F. W. Woolworth Co.

From humble beginnings as a lunch counter in a New York City store in 1910, the concept grew and was expanded to include Harvest House coffee shops and Red Grille cafeterias. In 1966, according to Tom Mahoney and Leonard Sloane, authors of "The Great Merchants," Woolworth was the largest commercial purveyor of food prepared and served on site. In 1976 Woolworth's 2,200 foodservice units and $162 million in sales made the company No. 42 in Nation's Restaurant News' Top 100 chains. That year Woolworth operated 2,200 restaurant units -- 1,850 sandwich counters, 50 Harvest House coffee shops and 300 Red Grille units.

Over the past two decades, as Woolworth has branched out to more specialty operations, such as Foot Locker, and closed many of its traditional stores, in-store restaurants have been less prominent. By 1984 there were only about 1,000 restaurants being operated, and total foodservice revenue was about $160 million -- $2 million less than in 1976.

In 1995 Woolworth's was still a force in the restaurant industry. The company was No. 100 in NRN's Top 100, with $154 million in annual foodservice revenue. However, the company has been surpassed by other in-store feeders, such as Kmart and Dayton-Hudson.

"Woolworth got the ball rolling," said Al Hodges, director of food operations for Target Stores, a division of Dayton-Hudson. "People look at in-store restaurants as a new concept, and it's not. We're just swinging back to the trend Woolworth and W. T. Grant made successful."

The man who started it all, Frank Winfield Woolworth, began like most innovators. He took someone's idea, tailored it to his own vision and made it work on a grand scale. In this case it was the soda fountain, which began in a Philadelphia pharmacy in 1903.

Woolworth began his retailing career most humbly, in 1873, as an unpaid clerk in the Augsbury & Moore dry-goods store in Watertown, N.Y. In 1877 he was hired by the store's owners at $10 a week.

One of the concepts W. H. Moore offered in his store was a table of nothing but five-cent items. Woolworth thought that this was a wonderful idea and could succeed as a stand-alone concept. In 1879 he approached Moore with his idea. He got $300 credit and Moore's blessing to go to Utica and open "The Great Five-Cent Store."

The store failed, primarily because it was in a bad location. Woolworth closed the store in June 1879 and 10 days later opened another, in Lancaster, Pa. It was a hit, with 31 percent of the store's stock sold the first day.

Woolworth seized on that quick success and added a counter full of 10-cent items. The addition drew even more business, and he expanded and remodeled the store several times to meet customer demand.

Charles Sumner Woolworth, Frank's younger brother, succeeded as manager of a Woolworth's in Scranton, Pa., and the chain was born.

Other five-and-tens were started, including some by Woolworth's old employer. In 1912 Woolworth bought five such chains and merged them into one conglomerate of more than 600 stores. By the time he died in 1919, his company had grown to 1,081 units.

Woolworth believed in making his stores as customer-friendly as possible, of which the lunch counter was just one example. He was the first retailer credited with putting stock out on tables within reach of customers and putting sales clerks in the aisles, the better to help customers.

In 1984 Woolworth's emulated its founder's innovative spirit when it contracted with Burger King to install franchises in several of its stores. That push toward branded concepts has been emulated by Kmart, Target and other retail stores.

Currently, there are 20 traditional Burger King outlets being operated in Woolworth stores. In addition, according to Burger King spokeswoman Kim Miller, three Woolworth restaurants have been converted to Burger King units since October 1995, and another three conversions are under construction.

Woolworth once referred to himself as "a boob from the country," according to Fortune magazine, but his business acumen -- reflected in his net worth of $65 million at his death -- has had an enduring influence on the foodservice and department store industries.

COPYRIGHT 1996 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2004 Gale Group