With the passion of an entrepreneur running through his blood, Oregon-raised Matt Stermer has always ventured toward new people, places, and opportunities. Matt spent 3 years working as a CPA at Deloitte & Touche and 15 years in various operations and sales management roles at Nike in the USA and Europe.

While based out of Nike’s European headquarters in the Netherlands, Matt discovered a hidden treasure, Oil & Vinegar — a culinary gift shop with an eye-popping design, Mediterranean flare, and a service culture centered around customer experience. In Stermer’s mind, the Oil & Vinegar concept and formula would be a huge success in the U.S. market.

Matt returned home to the Pacific Northwest and opened his own Oil & Vinegar franchise in the Seattle market. With a vision to build the Oil & Vinegar brand through franchising across American soil, Matt was appointed CEO of Oil & Vinegar USA by the Dutch parent company headquartered in the Netherlands.

Franchise Chatter (FC):  For the benefit of those unfamiliar, what is the concept behind Oil & Vinegar?

Matt Stermer (MS): Oil & Vinegar brings together a wide range of international food and cooking products in alluring, Mediterranean-style surroundings. Our mission is to be the consumer’s first choice when looking for a unique and “tasteful” gift for any occasion. The focus is not only on the attractiveness of the gift, but ultimately its flavor and ability to accent both the palate and table.

Our product lines and everything we do at Oil & Vinegar reflect our focus – being “passionate about taste”. We pride ourselves in offering the best local specialties from Italy, Spain, Greece, France, South Africa, Australia, and other international food destinations.

One will find an assortment of imported delights with a distinct Mediterranean flair, like bottled and “on-tap” oils and vinegars, mustards, sauces, salad dressings, olives, grilled vegetables, sun-dried tomatoes, honeys, fig spreads, fondue chocolates, dried herb mixes, spices, and a variety of flavored pastas.

To accent our gourmet tastes, a fine selection of ceramic table wares, cruets, kitchen accessories, salt and pepper mills, international cookbooks, and other culinary accessories fill the shelves.

FC:  What is the origin of the brand?  What are some of the key milestones in the company’s history to date?

MS:  Oil & Vinegar was founded in the Netherlands in 1999. By 2002, the company had expanded the concept internationally to the United Kingdom, Germany, and Belgium. We entered the U.S. market in 2004 and today you can find over 90 Oil & Vinegar stores in 9 countries spanning three continents.

After receiving awards in the Netherlands for Best Food Specialty Chain and Gift Shop, Oil & Vinegar received recognition upon the launch of its first store in the U.S. in 2004, including Grand Prize in the Food Retailer category of the National Association of Store Fixture Manufacturers’ (NASFM) 2005 Retail Design Awards. In addition, the retail executive magazine Chain Store Age awarded Oil & Vinegar the 2004 Retail Store of the Year Award in the Specialty Food category.

FC:  How has the concept been received by American consumers so far?

MS:  We have had tremendous success in the U.S. market, appealing to all age groups by delivering an unmatched shopping experience.  In recent years, the American consumer has become more educated and discerning about the oils and vinegars they consume and there is a real positive trend with gourmet food gifting.

FC:  Who is the target customer for Oil & Vinegar stores?

MS:  We appeal to consumers looking for premium products to use in their cooking or entertaining, as well as gift shoppers.  We find that our core consumer is not a chef, but a discerning foodie who demands quality in their gourmet ingredients and values the ability to sample and receive recommendations for using the products prior to purchasing.

FC:  Can you describe some unique elements of the store experience?

MS:  At Oil & Vinegar, customers are referred to as guests, and the guests are invited to smell, taste, and touch products before purchasing.  The retail philosophy revolves around three key aspects of a consumer visit:  Experience, Service, and Taste.

Guests are encouraged to sample products at their leisure and receive advice on product use, recipe ideas, and recommendations for that one-of-a-kind gift that is tastefully gift wrapped at no extra charge.

The focal point of the store is the “amphora wall,” where an international selection of over 40 estate-produced oils and vinegars are suspended in glass containers (amphoras) on a dramatic rock wall or stored in stainless Italian Fusti drums. Customers can sample the varieties, select from over 15 different shaped and sized bottles to have filled, or bring bottles in from a previous purchase to have refilled with an “on-tap” product of choice.

The Oil & Vinegar shop ambiance reflects this philosophy. Products are attractively presented, the music is carefully selected to reflect the cultures of product origin, and lighting brings the stores to life.

FC:  Can you give us an idea of the sales mix (by product category) of a typical Oil & Vinegar store?

MS:

• Dried Herb Blends and Sea Salts:  16.0%
• Household Ceramics and Accessories: 10.0%
• Appetizers, Tapenades, and Pestos:  5.0%
• Oil and Vinegar Pre-packed:  13.0%
• “On Tap” Oil and Vinegars:  44.0%
• Pasta and Risotto:  2.0%
• Sauces and Dressings: 5.0%
• Sweets (Honey, Jams, and Chocolate): 3.0%
• Cook Books: 2.0%

FC:  What do you look for in a prospective Oil & Vinegar franchisee?

MS:  We are seeking food-crazy entrepreneurs who share our passion and commitment to operating a retail shop in a professional and profitable manner. The individual’s personal or soft skills are just as important to us as direct business skills.  We look for such things as prior retail experience, customer service skills, people management, solid business acumen, upstanding community involvement, ability to meet financial qualifications, a desire to succeed by following a proven operating system, and last but not least, a clear passion for our products.

FC:  What is the ideal location and geographic territory for an Oil & Vinegar store?

MS:  Given the gift appeal of our store, we target locations with a significant amount of shopping footfall. So upscale shopping centers (enclosed or outdoor/lifestyle) tend to be where we look first in a market we are entering.  Our ideal geographic market is one which is influenced by an educated consumer palate and holds a population base (local and tourism driven) which will draw over 50,000 unique visitors to the store a year.

FC:  What kind of training and support do you offer your franchisees?

MS:  We are in the process of expanding our training program to include a 2-week initial training focused on developing the business competencies, product knowledge, and systems and operational capabilities of the franchisee. This will take place 3-4 weeks prior to store opening. Then, a hands-on training and support program is delivered once the store buildout is complete, which spans approximately one week prior to opening for business and a week following the first cash register ring.  Ongoing support and training follow-up is provided on a case by case basis.  Merchandising guidance, new product education, and marketing support are provided monthly.

FC:  What can you tell us about the estimated initial investment, royalty fees, and profit potential for an Oil & Vinegar store?

MS:  What we disclose in our FDD are the following details:

• Startup investment range:  $202k to $356k (includes all initial costs and working capital provision)
• Initial franchise fee for a single unit/territory: $25k
• Ongoing royalty fee:  5% (based on gross sales)
• Profitability is impacted by numerous factors and we suggest prospects contact similar profile/market store locations to determine potential outcomes.

FC:  Can you name a few franchises (inside or outside your category) that you admire, and why?

MS:

• UPS Store – They have a system that is extremely well aligned with corporate identity and runs like clockwork.  I believe they have done an amazing job connecting the retail brand to the corporate brand to leverage that universal identity.  I suspect that most people are not aware that UPS store locations are franchisee owned/operated.

• TCBY – This brand was the pioneer in their market and have had to continually re-invent their model over time to maintain or recapture market share from new/innovative brands.  When I go into a new TCBY store, I really get the brand experience via a fresh new look that conveys the work this franchise has put in to stay relevant with their consumer.

FC:  What are your growth plans for Oil & Vinegar in 2012 and beyond?  How do you plan to achieve these targets?

MS:  We are on target to open 5 more stores in 2012 and our plan is to open an additional 8 in 2013 in various markets, including an expansion to Western Canada.

We are seeing a significant number of new prospects surfacing after visiting one of our stores and becoming enamored with the uniqueness of our concept.   Our newest (3rd generation) store design is extremely compelling and a key to our continued success in this market.

There is a trend in the retail market going on now for “on-tap” oil and vinegar tasting bars.  We believe our concept stands out amongst our competition given our product selection and the vertical integration of our brand for the vast majority of our products.  Our goal is to have 95%+ of our line carrying our own Oil & Vinegar brand, which identifies the product as premium quality and connects back to the service we provide when shopping in our stores.

To learn more about Oil & Vinegar, check out their website.