Grocery Mogul’s Comeuppance Only Pushed Him Higher : Profile: Ron Burkle’s firing early in his career led him to build the Food 4 Less empire that stands ready to acquire Ralphs.
The turning point came in 1981 when Ron Burkle--then a vice president at the Stater Bros. supermarket chain at the tender age of 29--decided to put together a buyout team and raise money to acquire his employer.
Although Petrolane Properties, owner of Stater Bros. at the time, was entertaining offers to buy its supermarket chain, the parent company was not entertained by Burkle’s offer. Burkle offered about 20% less than Petrolane’s investment banker sought and--in a resulting dispute over the value of the company--Burkle was fired.
Since that incident, Burkle has made enough successful buyout bids to build a grocery chain empire that comprises Food 4 Less Supermarkets--the La Habra-based operator of the Alpha Beta, Boys and Viva chains and the Food 4 Less warehouse stores.
“I think most people would like to be entrepreneurial, but most don’t want to give up the security,” said Burkle, recalling the Stater Bros. firing. “That incident was the push I needed to do something on my own.”
Now Burkle is on the verge of completing what could be his biggest deal--a highly anticipated buyout that would lead to the merger of Food 4 Less Supermarkets and Ralphs Grocery Co. The parent of Food 4 Less Supermarkets, Los Angeles-based Yucaipa Cos., is expected to announce a $2.5-billion merger with Ralphs today.
Under the deal, Yucaipa--an investment company that Burkle heads--is to acquire Ralphs from DeBartolo Corp., an Ohio-based real estate development firm that has controlling interest in the supermarket chain. The boards of Ralphs and Food 4 Less Supermarkets have already approved the merger. The deal is to be finalized today if Ralphs shareholders also agree.
As the Ralphs merger loomed Monday, Burkle, now 41, recalled the Stater Bros. dismissal. To Burkle, the incident was not just a source of motivation; it was also a seminal experience that put his financial success in perspective and protected him from the dangers of hubris.
“It’s healthy to get a comeuppance,” Burkle said during an interview at his Yucaipa headquarters. “A humiliation every five to 10 years helps you maintain priorities--the importance of friends, family and community.”
In that vein, Burkle has built a record of social and community responsibility that he carries out through his Food 4 Less Foundation, a nonprofit organization regarded locally as one of the most active philanthropic groups in Southern California.
The foundation, which sponsors a number of programs for local schools, recently helped preserve high school sports programs by providing $2 million to the financially strapped Los Angeles Unified School District.
Working with the Parents of Watts, a self-help community group, the Food 4 Less Foundation recently provided a $100,000 grant for the completion of the group’s new Altadena Recreation Center. The center will provide retreats for inner-city youth.
Many activists in the minority community also credit Burkle for maintaining a large supermarket presence in South Los Angeles and other communities with large minority populations. Some Food 4 Less competitors have only recently started to expand into these underserved areas.
“We have to give back to the communities in which we make money,” Burkle said, offering a motivation for his philanthropic activities. “We have a special obligation in South-Central Los Angeles.”
Such activity, not to mention his growing prominence in the corporate world, could raise Burkle’s profile. But he rarely gives interviews, and community leaders say he avoids the social limelight--as well as the media spotlight.
John Mack, director of the Los Angeles Urban League, said Burkle declined an invitation to sit at the dais at the recent Whitney Young Dinner, a major annual event for the organization. Food 4 Less Supermarkets is a major financial supporter of the Urban League, and Burkle decided to sit instead with some of his company employees attending the dinner.
“Ron is not flashy, but considering his success in business, he’s no wilting flower,” Mack said. “He has very pragmatic business motives. When a company increases its involvement in the community, it reaps the rewards in the form of loyal customers. He also recognizes that the public sector and private enterprise have to work as partners if we are going to address major problems.”
Burkle has cultivated relationships with officeholders in both major political parties, but he has more recently given time and money to moderate Democrats such as Sen. Dianne Feinstein. President Clinton has visited Burkle’s Beverly Hills home for a political fund-raiser, and Burkle recently traveled with Commerce Secretary Ronald H. Brown on a trade mission to South Africa.
“I like Democrats or Republicans who are fiscally conservative--but aware and enlightened on social issues,” Burkle said.
When Burkle wants to make a political donation, he draws on personal wealth derived from successful investments in the commodities and currency markets. However, investment artists such as Leonard Green, who heads an investment partnership that controls the Thrifty and PayLess drugstore chains, said Burkle is quickly building a reputation in a field in which he initially failed.
“Ron does an excellent job of buying--and building--supermarkets,” Green said.
