At Shoes for Crews’ closet-sized lab in its penthouse office, Chief Executive Matt Smith oversees a demonstration of the skid-proof rubber soles invented by his company.
An executive slathers Crisco on a piece of tile, then shows how easily a competitor’s top-of-the-line sole slides across the treacherous surface. A fresh layer of Crisco is added, but the Shoes for Crews sole doesn’t budge.
Thanks to its super-sticky black bottoms, made with a top-secret type of rubber, Shoes for Crews might be the biggest footwear brand you’ve never heard of.
The West Palm Beach-based company has sold millions of pairs of shoes to workers at KFC, Taco Bell, P.F. Chang’s, Ruth’s Chris Steak House and other restaurant chains. Yet its niche-marketing strategy makes Shoes for Crews anything but a household name.
“We’ve been flying under the radar for a long time,” Smith says. “That’s the way we like it. We’re not trying to be a big consumer brand.”
Privately held Shoes for Crews doesn’t advertise or buy sponsorships. While the company runs its own online store at www.ShoesForCrews.com, it doesn’t sell through department stores, Zappos.com or other mass-market retail channels.
Instead, the shoe maker hones in on workers whose jobs put them at risk of falling on slippery surfaces. Restaurants provide its biggest customer base, but Shoes for Crews also sells to workers at nursing homes, factories and supermarkets.
Thanks to its lack of overhead and tightly focused business model, Shoes for Crews boasts decades of profitability and steady growth. Revenue hit $170 million last year on about 4 million pairs sold — a fraction of Nike’s $24 billion in sales, but enough to support a staff of 230 employees in West Palm Beach.
“Shoes for Crews has developed a really creative and effective strategy in a very competitive vertical market,” says Kathleen Kennedy, head of the Suarez Applied Marketing Research Laboratories at the University of Akron.
Smith’s father, Shoes for Crews Chairman Stan Smith, fell into the shoe business by chance. In the 1980s, when the Smiths lived in New York City, Matt’s parents tried to unload a batch of nurse’s shoes owned by their uniform company.
Cold calls went nowhere, but a Burger King executive mentioned he couldn’t find anti-slip shoes to keep employees from falling on greasy kitchen floors. The Smiths promised to solve his problem, but their first attempt was a flop. They manufactured samples with Vibram outsoles that were no grippier than any other shoes.
Undeterred, the Smiths hired a chemist to create a sticky type of rubber. That breakthrough turned into a booming business. Many employers, including Chick Fil-A, Wendy’s, Olive Garden and Cheesecake Factory, let workers pay for the shoes through a paycheck deduction.
After launching their company in New York, the Smiths wanted to move somewhere cheaper.
“We looked at a map of states that were business-friendly and had no state income tax,” Smith says. “Then we narrowed it down to areas that would be a nice place to live and had a bilingual work force.”
Shoes for Crews needs Spanish-speaking workers to field calls from customers, many of them recent immigrants working in low-wage jobs. The family settled on West Palm Beach, moving their company here in 1995.
The West Palm Beach operations include executive offices and a call center where workers process orders and field queries in English and Spanish.
Smith, a 42-year-old Palm Beach resident, won’t reveal financial information except to say his income statement boasts “a very strong profit margin.” A 2004 deal with Boston private equity firm Advent International valued Shoes for Crews at $120 million. In 2010, New York private equity firm AEA Investors replaced Advent International. Terms of that deal weren’t disclosed.
Average price: $47
In a fad-obsessed business, Shoes for Crews focuses on function over fashion. Smith doesn’t strive to match Nike or Puma for hipness, but he knows the shoes can’t look too drab. After all, workers fork over their own cash for shoes that cost an average of $47 a pair.
To prove the point, Smith sports shiny black Shoes for Crews lace-ups in the office, where executives follow a dress code that requires neckties.
Smith makes concessions to vanity, but his business model is all about the rubber. The Smiths are so cryptic about their secret formula that they haven’t filed for a patent, fearing the process would reveal valuable clues to rivals.
The company takes pains to not clearly label ingredients shipped into its sole factory in China. Despite the precautions, counterfeit Shoes for Crews have hit the market in Asia.
The good news, Smith says, is that the knockoffs are no match for the real thing. The bad news? Low-quality fakes are flooding what Smith hopes someday might be a growth market for Shoes for Crews.
Copycat complaints can cut both ways. In 2009, Shoes for Crews became embroiled in trademark battles with German giant adidas and California-based K-Swiss. Adidas said a Shoes for Crews model with four stripes looked too much like adidas’ famous three stripes, an allegation Shoes for Crews disputed.
Meanwhile, K-Swiss sued Shoes for Crews in federal court, saying two Shoes for Crews models mimicked K-Swiss’ patented five-stripe look. Shoes for Crews denied infringing on K-Swiss’ trademark, and the two shoe makers reached a confidential settlement. Shoes for Crews no longer sells the five-stripe models.
Shoes for Crews also has battled in court with Crocs and Skechers. But styles and stripes aren’t the selling point for Smith, who instead stresses his soles’ stickiness.
Convinced of the superior safety of his shoes, Smith offers a money-back guarantee on slip-and-fall accidents. He promises companies up to $5,000 if they’re hit with a workers compensation claim involving a slip by an employee wearing Shoes for Crews.
McDonald’s franchisee Ricky Wade is such a fan that he wears Shoes for Crews and urges employees to buy them. Wade, who owns 11 McDonald’s restaurants in Palm Beach and Martin counties, favors lace-ups.
“We’ve been using Shoes for Crews for years,” Wade says. “It’s a shoe that looks good, looks professional, and creates a safer haven for people to work in.”
Wade lauds the combination of fall protection and value. Many Shoes for Crews models sell for less than $40, although some heavy-duty work boots are priced as high as $140.
“They’re extremely affordable,” Wade says.
Shoes for Crews can hold the line on prices in part because Smith is serious about running a lean operation. The penthouse on Australian Avenue offers fancy views, but Smith says he scored a sweet deal when he subleased the space in the aftermath of the Great Recession.
Shoes for Crews owns its sole factory in China, but everything else is outsourced, including assembly in China and distribution centers in California and South Carolina. Smith said he plans to keep manufacturing in China even as costs rise there.
“The minimum wage in China goes up 20 percent a year,” he says.
Succeeding in a niche market means reining in his ambitions, Smith says. The company runs tiny retail stores in Orlando and Las Vegas, where large service sectors mean big demand for Shoes for Crews, but Smith has no desire to take on the cost of a store network.
And Smith says he has turned down opportunities to expand. He toyed with a forklift company’s suggestion that he make high-grip tires but decided he didn’t know that business well enough. When his golf buddies urge him to make golf shoes, Smith waves them off.
“I don’t need to compete with Nike and FootJoy and Ecco,” Smith says. “We have so much growth in our core markets.”