Sprouts Farmers Market 2014 Annual Report Download - page 15

Our Communities
We are actively involved in the communities in which we operate, and support many local non-profit
and educational institutions that share our goal of improved health, nutrition and fitness. Stores are also
encouraged to support charities important to their local communities. This involvement takes many forms,
including:
•Alignment with Certain Causes. Sprouts has undertaken a number of innovative corporate
fundraising initiatives, including a multi-faceted program with Autism Speaks and the Southwest
Autism Research and Resource Center. Since 2010, we have raised more than $4.9 million
through our donations, as well as the donations by our customers (who made donations at the
cash register) and business partners. We have also adopted the Grab & Give campaign, which
encourages customers to buy bags of groceries at a discount and then allow us to donate them to
food banks in the markets in which we operate.
•Donations. Our donation goal is to contribute to the health of families and children and to healthy
environments through in-kind support. Many donations are made at store level, in the form of food
donations or gift cards, to qualifying organizations that are aligned with our goals. Examples
include bananas or water for fundraising road races, reusable bags for health fairs and green
festivals and gift cards to be used as raffle items or to provide catering for a fundraising event.
During 2014, we donated over eight million pounds of produce and other food to local food banks
in the markets in which we operate through our Food Rescue Program, which we launched in
August 2013.
•Volunteerism. Our team members are encouraged to help people and organizations in need. We
have provided major volunteer support to events like the Arizona Walk Now for Autism Speaks,
the Phoenix Rescue Mission, and various food banks. With an engaged base of more than 17,000
team members, we have the ability to use our leverage to support causes.
Store Selection and Economics
We have an extensive and selective process for new store site selection, which includes in-depth
analysis of area demographics, competition, growth potential, traffic patterns, grocery spend and other key
criteria. We have a dedicated real estate team as well as a real estate committee comprised of our Chief
Development Officer and other members of senior management, including our Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer. Multiple members of our committee will also conduct
an on-site inspection prior to approving any new location.
Our typical store requires an average new store cash investment of approximately $2.8 million,
consisting of store buildout (net of contributions from landlords) of approximately $2.4 million, and inventory
(net of payables) and cash pre-opening expenses of approximately $400,000. On average, our stores
reach a mature sales growth rate in three or four years after opening, with net sales increasing 20-30%
during this time period. Based on our historical performance, we target net sales of $10-$12 million during
the first year after opening and pre-tax cash-on-cash returns of 35-40% within three to four years after
opening. We believe the consistent performance of our store portfolio across geographies and vintages
supports the portability of the Sprouts brand and store model into a wide range of markets.
Based upon research conducted for us by Buxton Company in 2013, we believe that the U.S. market
can support approximately 1,200 Sprouts Farmers Market stores operating under our current format. We
believe we have significant growth opportunity in existing markets, as approximately 400 of these 1,200
potential stores are located in our current markets (nine states). We intend to achieve 14% annual new
store growth over at least the next five years, with a balanced focus on existing, adjacent and new market
growth.
See “Properties” for additional information with respect to our store locations.
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