Ralphs’ Chairman Given a Good Chance to Win Bidding War for Chain

Back in 1943, when the men were at war, Byron Allumbaugh became a meat cutter at age 12. Today, at 56, he heads Ralphs Grocery, a supermarket chain caught up in a different sort of battle: the takeover kind.

As part of a plan to thwart a takeover by Campeau Corp., Federated Department Stores has put its 129-store Ralphs operation up for sale. As many as seven food retailers and investment banking firms--notably Lucky Stores, which met with Ralphs management Sunday--are racing to put their best bids forward, and Federated’s directors plan to decide on a deal Thursday.

Bets in the supermarket industry are that Allumbaugh and his management team will have a good shot at buying the company in partnership with an investment firm. Today, bidders--Allumbaugh among them--are to deliver their bids to Federated. The final price could be close to $1 billion.

Given the intense competitive environment, the challenge of running Ralphs without a parent company’s support and with a heavy debt load would clearly be the biggest ever for Allumbaugh, a go-getter who sells groceries, perpetrates pranks and plays golf with equal verve.

“He loves to compete and loves to win,” said Allen I. Bildner, a New Jersey supermarket executive and close friend of Allumbaugh who calls him by his nickname, By.

Allumbaugh gets high marks from his colleagues in the grocery business, but is considered distant and cool by some employees. His success story is tempered by occasional blunders such as Ralphs’ misbegotten and costly effort to build a separate identity for its Giant warehouse stores.

Should current managers succeed in beating out a bid by Lucky, both rivals and friends say they would be up to the task of taking on Ralphs without Federated’s backing.

Allumbaugh, who on Federated’s orders met through the weekend with potential bidders even as he attempted to nail down his own deal, declined to be interviewed about the likely outcome for Ralphs or the effects of a change in ownership on the ongoing supermarket wars.

Observers say, however, that he has been working almost around the clock to figure out how to preserve the company. In the last few days, both Federated’s Cincinnati headquarters and Ralphs’ offices in Compton have been besieged by waves of accountants, lawyers and company officials interested in hearing more about Ralphs’ real estate and store operations.

Meanwhile, Allumbaugh has maintained an optimistic public persona. At an annual Ralphs awards dinner Saturday at the Century Plaza, he took time out from bidding negotiations to speak to 1,500 store workers and managers in attendance. He spoke of a good year just completed and opportunities in the year ahead, mentioning only in passing that the future was uncertain because of the Federated situation.

In 12 years as head of Ralphs, Allumbaugh has gained the respect of peers by leading the company to a prominent position in one of the country’s most lively markets. “He has always been regarded as a leader in our industry and a very forward-thinking and innovative manager,” said William S. Davila, president of Vons Cos., Ralphs’ prime competitor in Southern California.

Allumbaugh was the first grocer west of the Mississippi to push the use of lasers to “read” coded price tags on groceries. Ralphs also has invested heavily in food distribution technology and recently opened a state of the art high-rise warehouse.

Allumbaugh recently finished a three-year term as chairman of the food industry’s largest trade group, the Food Marketing Institute, and has held leadership posts in other organizations, including the Western Assn. of Food Chains.

“He paid the price of being an apprentice and learned the business from the ground up,” said Jack H. Brown, chairman of Stater Bros., a chain based in Colton. “Byron is a rather distinguished guy, but he’s a butcher at heart. He’s very straightforward.”

Allumbaugh has spent his entire career in the food industry, working part time through high school and two years at Long Beach State, where he majored in speech and English. Although he had hopes of becoming a radio announcer, he says he gave that up “after learning that most butchers made more than most radio announcers.”

After quitting college to get married, he joined a small local chain called Iowa Pork Shops. In 1955, at 23, he became vice president and general manager of Bob’s Supermarkets, an eight-store operation in Orange County. Three years later, he left to run Ralphs’ meat division, even though he had never worked in a Ralphs store.

In 30 years at Ralphs, “I’ve had just about every job there is,” he said recently.

Since becoming chairman in 1976, he has concentrated on developing the company’s long-term strategy, finding real estate and buying stores. Allumbaugh visits three to five stores a week. But he leaves the chain’s day-to-day operation to 59-year-old President Patrick W. Collins--who recently recovered from cancer surgery--and a team of managers who have been in place for 12 years. (Allumbaugh’s daughter, Clancy, is an assistant buyer at Ralphs.)

Problems With Labor

Ralphs is run from functional headquarters in a Compton industrial park, in front of a Ralphs frozen food warehouse and ice cream plant. One former executive said Allumbaugh’s “only trapping” is a driver who takes him back and forth from his oceanfront home in South Laguna each day. Allumbaugh spends the three to four hours of commuting time reading or making calls in the back of his brown Cadillac, which he calls “my roving office.”

Not all of Allumbaugh’s strategies succeed. A multimillion-dollar effort to create a separate identity for the Giant warehouse stores failed, and Allumbaugh was forced recently to combine the two chains under a single marketing plan.

Associates say he does not view the Giant setback as a defeat. “Byron looks for opportunities and realizes that there are risks involved in being first, in doing things that others haven’t done,” said James L. Moody Jr., chairman of a supermarket chain in Maine and a longtime friend.

Interestingly, despite Allumbaugh’s meat cutter background, some store workers view him as more foe than friend. “He’s insensitive to labor, always trying to push the contract to see what he can get away with,” one Ralphs employee said. He recalled a time four years ago during contract negotiations when workers pelted Allumbaugh and several store managers with tomatoes as they returned to San Pedro from a Mexico cruise.

Late last year, a group supporting an increase in the minimum wage named Allumbaugh, president of the California Retailers Assn., its “No. 1 enemy.” Allumbaugh, who was visiting Federated’s Cincinnati headquarters on the day the announcement was made, persuaded his superiors to let him return to California and endorse a wage increase.

“He didn’t do it out of the goodness of his heart,” said Father John Seymour, pastor of Ascension Church in South-Central Los Angeles and a leader of the minimum wage campaign for the South Central Organizing Committee. “But you have to give him his due. It was a gutsy move. He was the first to break ranks with other corporate executives.”

Turkey Humor

Rick Icaza, president of Local 770 of the United Food and Commercial Workers, has built a grudging respect for Allumbaugh, though. In negotiations, Allumbaugh is “always looking for a win-win situation,” Icaza said. During a contract dispute two years ago, Allumbaugh personally entered into the debate. “He was very much involved,” Icaza said. “Without him we would have ended up in litigation.”

Despite a hectic schedule, Allumbaugh does find time for recreation. He and his second wife, Ronnie, an interior decorator, frequently attend morning sessions at food industry conventions then spend afternoons on the golf course. Davila also regards Allumbaugh as “a wicked gin rummy player.”

Most friends and associates say Allumbaugh is usually proper and controlled, but occasionally he has been known to unleash a practical joke.

Last November, after a particularly brutal price war on turkeys at area supermarkets, he was credited with playing a prank on Fred McLaren, chairman of Hughes Markets. As McLaren stood on the podium in front of 1,500 at the Harvest Ball for City of Hope, a medical research center in Duarte, a woman popped up in the crowd and “sang” him a telegram that called him “the biggest turkey of all.” She then handed him a rubber turkey.

By most appearances, competition among Southern California grocers would be so fierce as to rule out friendships. But that’s not the case, McLaren said. “Most of us work together with our common problems and we do socialize,” he said, “but then on Thursday mornings we tend to go out and cut each other’s throats in the ads.”

For now, Allumbaugh clearly has other things on his mind. “He can handle himself in tough situations,” said Davila of Vons. “He’s a very capable guy.”