Off the Shelf : Food 4 Less Is Bringing Supermarkets Back to Downtown

When Casino France shut down Bunker Hill’s Thriftimart grocery store in the early 1980s, downtown Los Angeles was left without a full-service grocer.

Sure, there are specialty grocers catering to Little Tokyo and independent vendors in the Grand Central Market on Broadway, but the heart of the city has long been without the services that are the hallmarks of suburbia.

“The nearest supermarket now is at 3rd and Vermont,” where a Vons and Ralphs are located, said Leon K. Benizio, who for 13 years has lived and worked at the Bunker Hill Tower condominiums on 800 W. 1st St. “If you don’t own a car . . . it’s a long, long way to walk.”

But the holding company that owns The Boys supermarket chain has set its sights on downtown Los Angeles and plans to open three supermarkets there in the next two years, company officials say.

In a departure from its traditional focus on low-income neighborhoods, Alhambra-based Food 4 Less says it will open an Alpha Beta store on the corner of Sunset Boulevard and Grand Avenue this spring. The company now operates 209 Southern California stores including Boys Markets, Viva, ABC, Market Basket and Alpha Beta.

It is also negotiating to lease space for two other supermarkets--one underneath the Grand Central Market at 3rd Street and Broadway and another in the Southpark section of downtown at a site near Pico Boulevard and Flower Street.

Patrick Barber, vice president for real estate at Food 4 Less, said the moves are designed to position his company as a dominant player in a downtown market that has been avoided by major food chains because of its relatively small population and high land costs.

Spokesmen for two other supermarket chains say they have looked into building supermarkets downtown but have been deterred by high costs and the difficulty of finding a suitable site.

“We need at least five acres for one of our facilities and we just haven’t been able to find anything that large; but we think the population downtown is large enough to support” a grocery store, Lucky’s spokeswoman Judy Decker said.

Downtown Los Angeles, home to about 21,000 people--who reside roughly between the Harbor Freeway, Hollywood Freeway, Santa Monica Freeway and Alameda Street--has lost 16.7% of its residents because of a decade-long boom in office development.

The construction boom displaced thousands of homes, but it also created several condominiums and apartment projects that have drawn lawyers, accountants, judges and other well-heeled workers who wanted to be close to their downtown jobs.

While 27.3% of households downtown earn less than $5,000, the Census Bureau estimates that overall average household income downtown has risen 136% since 1979. What’s more, the bureau forecasts that by 1996, more than one-third of all households downtown will have annual incomes of $50,000 or more.

Food 4 Less officials declined to say whether the diverse downtown population fits the ideal grocery customer profile. In the past, the company has been able to operate profitably in many markets under-served by other major food chains--such as South-Central Los Angeles and East Los Angeles--by charging much higher prices, consumer surveys have found.

But Food 4 Less officials say they are also counting on more downtown population growth and the absence of big competitors to make their planned stores profitable. City planning officials are trying to attract more residents to the downtown area.

“A supermarket would complete the picture for downtown,” said Dennis R. Luna, a Los Angeles Community Redevelopment Agency commissioner who has been pressuring developers to recruit a supermarket that can help transform downtown Los Angeles from a 9-to-5 job hub to an around-the-clock community.

“I look at this as a positive step in breaking this chicken-and-egg cycle that has prevented a store” from being built downtown, Luna said. House-hunters decry downtown’s lack of amenities, Luna noted, and developers say there are not enough people to support a store given the high price of retail space.

Ironically, a glut of downtown commercial office space hasn’t helped lower rental costs for retailers, even though banks, law firms and other commercial tenants have seen their costs slashed by 20% or more as a result of the excess space. Retail leasing costs have fallen less than 5%, said Steve Soboroff, a retail expert who assists Circuit City and other stores in site acquisition.

“It’s very difficult finding sites for supermarkets,” agreed Irving Bonios, a downtown real estate broker who has been negotiating for space for Food 4 Less downtown. “The city wants to make sure there is adequate parking for supermarket customers and that such parking and deliveries don’t interfere with other activities downtown. (But) without supermarkets, we will never have a (viable) downtown,” Bonios said.

Barber of Food 4 Less said the 31,000-square-foot store the company is building on Sunset Boulevard near Chinatown is somewhat smaller than the typical supermarket the chain operates, and it will compensate for its size and location by charging slightly higher prices and limiting product selection to best-selling items.

However, he said the store will be designed to serve both residents within walking distance as well as commuters interested in picking up last-minute grocery items on their way home.

“We run stores that are tailored to the neighborhood that they are located in,” Barber said. “We think the population (density) is there downtown and the operating costs are not substantially different than in other neighborhoods.”

Although Soboroff believes that Food 4 Less can make money downtown, other experts have their doubts.

“The cost of downtown real estate for supermarkets is astronomical,” said James Stevenson, director of the food industry management program at USC. “In some cities like Chicago and New York you might find small gourmet markets. But the typical (full-service) supermarket would never cut it. Downtown is not a great opportunity.”

That assessment, however, was once made of some inner city areas such as Watts, South-Central Los Angeles and East Los Angeles, where the company now operates profitably. But while Food 4 Less has been praised by some for serving inner city areas that other chains avoided, its stores have been criticized by consumer groups for charging high food prices.

Shopping for Groceries Downtown

Alhambra-based Food 4 Less, which operates 209 Southern California grocery stores, says it will bring downtown Los Angeles its first complete supermarket since 1981. The chain will open an Alpha Beta store on the corner of Sunset Boulevard and Grand Avenue in the spring. Two other stores, as yet unnamed, are proposed: one underneath Grand Central Market on Broadway near 4th Street and one for the corner of Pico Boulevard and Flower Street.