Closures on Agenda in O.C. Talks

Food 4 Less and Ralphs Grocery Co. executives will meet this morning to start determining which parts of their grocery chain empire will be sold or closed in the wake of their companies’ $1.5-billion merger.

The deal, made final on Wednesday, gave the new company control over 27% of Southern California’s grocery market. The company, to retain the Ralphs Grocery Co. name, surpasses longtime market leader Vons in total stores and sales. Federal and state antitrust regulators now are scrutinizing the deal.

The new Ralphs owns 167 Ralphs, 131 Alpha Beta, 24 Boys and 15 Viva grocery stores, in addition to 30 Food 4 Less warehouse stores. In Orange County the company has 31 Ralphs, 31 Alpha Beta and two Food 4 Less warehouse stores.

Plans call for the Alpha Beta, Viva and Boys chains to be consolidated under the Ralphs name. Executives haven’t determined how many stores will be closed or sold off. Also up in the air is the fate of five distribution facilities, two creameries, a bakery, manufacturing plants and related functions.

As is the case with most mergers, the combining of the two longtime Southern California grocery companies will mean lost jobs, including an undetermined number at Food 4 Less’ La Habra headquarters, where 1,700 people now work. The combined chains employ almost 30,000.

“Short-term, there will be layoffs in redundant (headquarters and distribution) positions,” Ralphs Chairman and Chief Executive Officer Byron Allumbaugh said during a Friday afternoon press conference at Ralphs’ massive Compton headquarters, where the new company will be located.

“And, depending on which stores are closed, there may be some store-level layoffs,” Allumbaugh said. “But I’d be willing to bet that there will be more overall employees after a year because of the growth planned for our business.”

“It’s all a huge logistics problem that has to be solved, and it will take some time,” said George Golleher, president and chief operating officer of Food 4 Less Supermarkets Inc., which operates the Alpha Beta, Viva, Boys and Food 4 Less warehouse stores.

During a separate press conference Friday morning in La Habra, Golleher said that an undetermined number of Food 4 Less corporate staff jobs will move to Compton.

Ron Burkle, chairman of Yucaipa Cos., the Los Angeles-based company that holds a controlling stake in Food 4 Less, was named chairman of the merged firm. Allumbaugh is chief executive and Ralphs President Al Marasca is president. Golleher is vice chairman of the new chain. While Ralphs is to be operated from Compton and will oversee the traditional supermarkets, the new company plans to keep the Food 4 Less warehouse chain as a separate subsidiary. Its headquarters will shift to La Habra from the present location in San Bernardino.

Food 4 Less, with 30 warehouse-style stores in Southern California, is expected to swell to 90 locations within a year and account for about $1.5 billion of the chain’s overall $5.5 billion in annual sales. Golleher and Allumbaugh on Friday described the warehouse-style operation as an essential weapon in the increasingly important war with low-cost leaders, including Wal-Mart.

Executives on Friday maintained that it’s too early to determine what grocery store support facilities will be closed.

But during a daylong tour of the combined companies’ warehouse and distribution facilities, executives repeatedly stressed the up-to-date state of Ralphs’ facilities in Compton and Pasadena. In contrast, Food 4 Less’ leased buildings in La Habra date back to the 1950s and all the lack state-of-the-art equipment found at the two Los Angeles County facilities.