From bust to boom – Harris Farm Markets and its expansion

Almost 50 years ago, a young David Harris and his wife Cath opened up Harris Farm Markets’ first store in Villawood, Sydney. It was a good business that provided for Harris and his growing brood that would end up producing five sons. It was an idyllic life, and a job that David was good at doing.

It’s usually at this part of the fairy-tale where it’s stated that 50 years later, the small business thrived through a lot of hard work, foresight and business acumen, to be the successful business it is today. And while the latter is definitely true – Harris Farm Markets is thriving and a very popular brand in its New South Wales environment – there is an interesting story behind its success.

Tristan Harris is one of the three co-CEOs of the enterprise along with his brothers Luke and Angus. They are the three middle brothers of the Harris siblings. Both the eldest brother, Dan, and youngest Lachlan are entrepreneurs in their own right. Dan has dabbled in the business on and off over the years, while Lachlan at one point was former prime minister Kevin Rudd’s press secretary before diverging into other pursuits.

Tristan Harris is affable and forthright when it comes to discussing, what in the end, has been a successful business. However, in order to understand the business’s current accomplishments, it’s important to go back a couple of decades to see where it got its start.

Like a lot of young entrepreneurs, David Harris was keen to expand the business when he started it up in 1971. Harris Farm Markets was in the fruit and vegetable business and by all accounts, Harris senior was good at it. However, like a lot of businessmen with dreams, by the 1980s, in a push to expand the venture, he overstretched his capital and before long he went bust.

“During the 1980s the business was expanding very quickly and dad expanded into Queensland and took a guy (Carlo Lorenti) from Sydney up to Queensland’s to run the operations,” said Harris. “Dad got into trouble because we expanded too quickly, he sold the store to [Carlo], who then ran it for the next 29 years.”

And now the business has gone full circle, with Harris Farm Markets recently buying the Queensland store back off Lorenti, and opening another one in the state, too – it’s first interstate foray, and one of many to come, according to Tristan. But how did the company get back on track? It turns out that father, David, learned his lesson, and came back stronger than before.

“My grandmother bought one of the stores off the bank and then dad ran that on her behalf and made some money out of that,” said Harris. “There was profit sharing going on. He had a number of friends who did the same thing – they bought some of the stores, and these were guys that were not fruit shop guys at all. They bought the stores off the bank out of receivership and dad ran them on their behalf and they paid a fee to run the centralised buying and marketing functions.”

When the investors got their money back they gifted the equity back to David Harris – it was the same process for the other nine stores. After profit sharing and creating more cash flow, Harris started opening other stores. Tristan had started in the business, and by the time of the expansion, Luke was on board. As they started to build the operation it became apparent that the cash dividends to the partners no longer made sense. The Harris’s went back to the banks and recapitalised – took on a lot of debt – and bought those partners out back in 2011.

“It was a 20 year process of building it back into a family-owned business,” said Harris. “Shortly after that the three of us became co-CEOs. We’ve changed Harris Farms quite a lot from what was at the time – just a fruit and veg business – into one that is more into the fresh food market that you see today. We moved them into a more specific demographic.

“Fruit and veg is far more variable in its production. For a start you have weather events all the time – whether that is going to produce too much or not enough you don’t know. At times you are going to have way too much fruit and at other times not nearly enough.”

Having 20-plus stores in New South Wales, and now reaching into Queensland, is not the end of ambition for the Harris family. They do have designs on making it in the other states, with Victoria next in line. That may be some time away, and Harris knows that while Australia is a single country, you do have to take local culture into account when doing so.

“We recognise that Queensland is Queensland and that they are different from us and we need to be respectful of the differences and the local culture there,” he said. “They seem to be very dedicated to local supply for example. Our research shows they are more interested in protecting the local supply than our customers in New South Wales.

“As for Victoria, we know that they have more independent operators. There is probably more competition in Victoria than there is in Queensland. There are some good operators in Queensland but fewer than there are in Victoria.”

Because Harris Farm Markets is an independent fresh food provider, it has to make sure its produce is top of the range. Supply chain is important, and Harris believes the relationships the company has built with suppliers over the past three decades means they have a diverse range of growers that they can rely on to make sure the quality stays strong. He also realises, that due to the nature of the fruit and vegetable business, there has to be give and take on both sides.

“That is an area where the strength of the relationship comes into the play,” he said. “The strength of the relationship always gets determined in that first season because every grower, no matter how good they are, has some product that is not as good as they want it to be. And every good grower knows when their product is not as good as they want it to be.”

He said retailers have a habit of saying that when there is a lot of fruit around, they will reject it on a quality basis. What they really mean is they have too much fruit and they can’t take any more. Whereas, Harris Farms like to think that it has a reputation with its direct growers, whereby if it has committed to take the fruit, it’ll take it, and if it means that the price is bad then both companies will wear the cost.

“On the other side of the coin, when it is really tight they’ll still give us the fruit we need and we won’t be paying that super premium price for it,” said Harris. “What is absolutely critical is that when the fruit is not good, we have the conversation with them about how it is no good, ‘what are we going to do?’ All good growers will acknowledge that they’ve got a problem. You build up trust. They will either divert it back onto something like Paddy’s Market, or they will ask us to clear it for them. Sometimes that’ll be okay and we’ll put it through our Imperfect Picks bins.”

“It’s tricky at first, because you are both learning to trust each other, just like in any relationship. There are moments where you have to test the trust and if you get through those things well, your relationship is a whole lot stronger after it because you look at them and realise that they handled a tough situation well. I can rely on them and that they are not going to stick me with 10 pallets of fruit that is not good. And they know I’m not going to throw 10 pallets back at them and they’ll get killed in the market.”

As for the future of the business, will the Harris’s keep it all in the family like a lot of dynasties do? Harris is non-committal. He would like to keep it in the family for a long time to come, but is also realistic that his and his brothers’ dreams are not necessarily those of the rest of the family.

“All three of us have kids,” he said. “My eldest is 15 and getting towards that age where they choose what they want to do. We don’t intend to make it one of those generational type of businesses just for the sake of it. Every family business struggles with this. We need to create options for family members to come in or out of the business when its suits them. We constantly look at this – how do we create these options? You want the business to be an opportunity not a prison.”

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