H-E-B, a Texas-based supermarket chain, began in 1905 when Florence Thornton Butt moved her family to Kerrville, Texas. With a sixty-dollar loan, she established Mrs. C. C. Butt's Staple and Fancy Grocery, a one-room grocery store on the ground floor of the family home. In 1919 she turned management of the business over to her youngest son, Howard Edward Butt. Howard Butt, who delivered groceries from the store by wagon as a boy, went on to introduce major low-cost distribution innovations that eliminated middlemen and maximized profits when he took over the store's management. In 1922 he replaced the credit-and-delivery system with a policy of self-service cash-and-carry, thus increasing the turnover of goods and heralding a new era of shopping. He also renamed the business the C.C. Butt Cash Grocery and diversified his store by adding a meat market. Despite a lack of success at early attempts to expand into Central Texas, Butt was able to establish a successful enterprise at Del Rio in 1926, followed in 1927 by the purchase of three grocery stores in the lower Rio Grande valley. By specializing in low-priced goods the company survived the Great Depression so successfully that Butt was able to introduce employee picnics and a group life-insurance policy, move company headquarters to the Rio Grande valley, and expand to nearly twenty stores in Southwest Texas, with a gross business of $2 million in 1931. The company also organized a buying department and construction division. It began advertising with free gifts-dispensed in one case by throwing tagged live chickens, good for free groceries, and handfuls of nickels off a store roof-and later gave away cars, mink stoles, trading stamps, and cash prizes. In the mid-1930s, Butt again changed the name of his enterprise-this time to H.E. Butt Grocery Company. Under this name, he moved into manufacturing by acquiring the Harlingen Canning Company and opening a bakery in Corpus Christi in 1936. In 1940 company headquarters moved from the Valley to Corpus Christi to centralize distribution to its growing territory. In 1942, the year Butt installed air-conditioning in stores and introduced frozen foods, he also opened the first store under the name H-E-B, in San Antonio.
During World War II the company's Harlingen Canning Company produced food for the armed forces, and won a War Food Administration "A" award for its food processing. Women served as store managers, and H-E-B became known for its interest in personnel development. A store that opened in Austin in 1944 became the fiftieth H-E-B. Grocery stores grew into supermarkets in the 1950s, and during that decade H-E-B introduced in-store fish markets, butcher shops, drugstores, and bakeries, though Butt's stores carried no beer or wine-Butt was a traditional Baptist deacon-until his son took over in the 1970s. The Texas Gold Stamp Company, a subsidiary, was organized in 1955 to produce consumer trading stamps, and the first retail support center, a manufacturing and distribution center, was opened in San Antonio in 1964. In 1971 Charles C. Butt, a graduate of the Wharton School of Finance and Commerce of the University of Pennsylvania, took over his father's position as president and chief executive officer of the company. Under his administration, the firm restructured its management and introduced generic goods. A milk plant opened in San Antonio in 1976, and the company introduced Futuremarkets, a further diversification that added in-store pharmacies, photo processing, and video rentals. During the 1980s, H-E-B stores began offering bulk foods and fresh flowers. The Company headquarters moved to the renovated army arsenal on the San Antonio River in 1985. In 1988 Forbes named H-E-B the thirty-sixth largest private company in the United States, with annual sales of $2 billion. At Howard Butt's death in 1991, the company, centered around its San Antonio Retail Support Center, had grown to 175 stores and twenty-one video stores, a milk plant, a pastry bakery, a meat processor, an ice cream plant, a packaging and canning operation, a fleet maintenance and construction division, and 30,000 employees. The company was fully automated and computerized. The introduction of H-E-B Pantry Foods in 1988 took H-E-B to East and North Texas, as the company expanded across the state. In 1995 the company comprised 224 stores, all in Texas. Throughout H-E-B's history, about 5 percent of all pre-tax earnings have been donated to civic and charitable organizations as part of the firm's commitment to the community.