Royal Farms quietly grows from dairy business

  • The Royal Farms gas station and store located at Maryland Route 32 and Route 26.
The Royal Farms gas station and store located at Maryland Route… (Robert K. Hamilton, Baltimore…)
September 22, 2014|By Natalie Sherman | The Baltimore Sun

Royal Farms quietly grew over decades into one of Baltimore's most ubiquitous businesses, but last week the convenience store chain took a bigger stage.

On Wednesday, the city approved a $1.25 million, five-year agreement for Royal Farms to serve as title sponsor for the Baltimore Arena, to be known starting Nov. 1 as Royal Farms Arena.

The move, which comes in the midst of accelerated expansion and after years of careful branding, is a statement of bigger ambitions that simultaneously ties the retailer, headquartered in offices above one of its stores on The Avenue in Hampden, more closely to its local customers, industry watchers said

"By having an arena that carries your name, you're saying, 'Not only are we the corner store, but we're the corner store in your community,' " said Jeff Lenard, vice president of strategic industry initiatives for the National Association of Convenience Stores. "Royal Farms is also saying that 'Maryland is important to us and here's how.' "

Royal Farms, which previously advertised at the arena, was approached about the sponsorship last year, said Frank Schilling, director of marketing and merchandising.

"It is, I guess, a more visible step in our growth and evolution as a company," Schilling said of the arena deal. But, he added, "We try to stick to our knitting. … This opportunity was not something that we were really seeking as much as it just kind of was an offshoot of a much smaller existing relationship with the arena."

Royal Farms traces its roots to Baltimore's Cloverland Dairy, organized in 1918 by Maynard C. Kemp, a Frederick native and later resident of Homeland, and his two brothers, who delivered milk to Baltimore homes sourced from Guernsey stock. At the time, they marketed themselves as the company "with cows" to distinguish themselves from other distributors, an early foray into farm-to-table advertising.

In 1959, as new technology extended milk's shelf life and home deliveries waned, the family opened a "milk store," which would become the Royal Farms chain.

The retailer and the Cloverland Greenspring Dairy still share the same owner, operating under the Two Farms Inc. corporate umbrella. The privately held company passed into the hands of Maynard's son Ralph, a University of Maryland graduate and Marine Corps officer, in 1964.

Over the decades, Royal Farms expanded slowly and steadily, said Schilling, who started at the firm 25 years ago when it had about 40 stores.

The pace of growth accelerated in recent years. Royal Farms opened a dozen locations in 2012, nine in 2013 and expects to open 10 this year, Schilling said. Next year, the chain plans to roll out another 10 to 15.

The chain now employs about 4,000 people and has a total of 160 stores in Maryland, Pennsylvania, Delaware and Virginia. It ranked 53rd in Convenience Store News' 2014 list of the top 100 chains. (Cloverland, which acquired other dairies as it grew, including the original Royal Farms and Green Spring Dairy, was 90 of 100 in the 2014 Dairy Foods ranking of dairy processors in North America.)

Current Royal Farms President John Kemp represents the third generation of family ownership, said Schilling, who declined to discuss the family's history, citing their desire for privacy. Kemp, a graduate of McDonogh School and Washington & Lee University and a resident of Baltimore County, declined to comment for this article.

"They're a strong regional player," said Don Longo, editorial director of Convenience Store News, pointing to their performance against rivals such as Wawa and Sheetz. "They're in a region of the country that's noted for having a lot of cutting-edge convience stores … and they compete against those companies pretty well."

Within the convenience store industry, Royal Farms, which started selling its "world famous" fried chicken more than 30 years ago, is known for its fresh food, Longo said.

That's no accident, said Schilling, who said the company's business model changed in the last 10 years, as it looked to food to made up for declining sales in traditional mainstays such as tobacco, soft drinks and gasoline.

"As a business, we have to find ways to overcome those declines and in effect replace those sales revenues with other categories," he said. "We found that food service was a good way to do that and at the same time fulfill a need that our customers had for fast, quality food."

The switch to food coincided with a new branding effort, as the chain worked to craft a reputation based on quality, appealing to a more upscale customer, said Auburn Bell, director of marketing at Legg Mason and an affiliate professor of marketing at Loyola University Maryland Sellinger School of Business.

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