business news in context, analysis with attitude

Plenty of email about the Ahold decision to unload its Bi-Lo and Bruno's divisions.

MNB user David J. Livingston wrote:

Obviously the move to unload Bruno's and Bi Lo does not surprise anyone. This is going to be a blow the various consultants who have milked Ahold for years doing work Ahold should have been able to do for themselves. Ahold has developed a reputation of over analyzing everything and by the time they are ready to make a decision, too much time has passed and they have to analyze the project all over again.

Another member of the MNB community wrote:

What is Ahold selling? There is no more value left at Bi Lo or Bruno’s any more than there was when Penn Traffic finally decided to exit the scene with Big Bear in Columbus. It will also be interesting to see if Ahold gets real about valuation in order to get some of the debt paid down. There are some major reductions to the book value of Ahold coming if they are serious about a divestiture. Ahold paid 5 times EBITDA for Bruno’s in 2001, or almost $370 million.

MNB user Michael A. Casciano suggested:

I can say, with a reasonable sense of surety, that when the boys at Stop and Shop strike, there will be further sales plans, including Tops and Giant. Moberg doesn’t care about the brands, just results.

MNB user Marty Gillen wrote:

I'm surprised you did not bring up Wal-Mart in your comments on the sale of these once great chains. It is clear to me that Ahold is throwing in the towel and giving up on competing against the Wal-Mart Supercenter juggernaut in Bi-lo/Bruno's primary trading areas. The accounting scandal certainly is a contributing factor.

Another member of the MNB community chimed in:

We were a vendor for one of the Ahold operating companies for several years, generating about $10,000,000 yearly sales. We had an excellent relationship, produced an outstanding product and offered superb quality and service. At the insistence of Ahold corporate to centralize all operations, the purchasing for the product produced by us was awarded to a larger vendor, under the guise of an effort to reduce costs, supposedly benefiting Ahold by creating "economies of scale". What actually transpired was a change to an inferior product at a significantly higher cost by millions of dollars more per year. It does not seem to bother Ahold that they are paying more and getting less. Ahold has turned a deaf ear to our offers to help them save the millions of dollars that would help them in their current financial crunch. We don't understand the strategy.

Is it known if this has this occurred with any other vendor?

Not by us. But if there's anyone else out there who knows anything…

MNB user Joe Hutchinson wrote:

As someone who knows and respects Bill Grize and, newly promoted Marc Smith, I know their focus will be upon the rebuilding what was once a great start to Ahold's plan to be a major player in the U.S. market. In my opinion the US Food Service purchase was the root of all their current troubles--it made no sense then and even less now, and the divestiture of Bi-Lo and Bruno's is a good move for all involved

The Ahold objective is achievable and I wish them well.

We asked yesterday if there is anyone who makes Burger King a first choice when thinking about fast food…and one person came forth to say:

Burger King is my first choice, but due to its limited kingdom, rarely the first encountered. After all, isn't that what fast food is about--eating now?

MNB user Bob McMath had some thoughts on the subject:

Far be it for me to claim I am a fast food restaurant expert, but I wonder if all the turmoil in recent years has not been the major culprit in the gradual downturn in Burger King? McDonald's had a founder (or one who took over early) and had a dream he built on. So did Wendy's! I can only recall Burger King as the product of a big corporation (more recently several different ones) and cannot recall who started it or any dream anyone had except to get in on the fast food "Trend Wagon."

I know from personal experience in visiting many Burger King restaurants all over my travels (including London and Hawaii) that my recollection is near chaos if there were more than a handful of people waiting to order or obtain their orders. I can recall any number of times when I considered the individual restaurants so badly managed that I just would not consider going back to that particular one, even if it was the most convenient to where I was at the time. I remember waiting about 12 minutes in one restaurant that I stopped at before I could get my order, and there were four or five people on the other side of the counter and only three other people on my side trying to order or get their orders! I also recall thinking that one of the best ways to "smarten up" the chain would be to give better training to the management.

Incidentally, while we always liked the local Pizza Hut in Ithaca on the hill, we have stopped going to them in our travels as a result of seeing a store manager (clearly identified) in another city chasing one of the pretty female staff around the restaurant with a carving knife which went on for more than one spin around the restaurant! It was reasonably late in the evening, and my oldest son and I were the only patrons, at the time.

We know getting good staff for retail serving/sales is a problem in most retail stores, but one hopes the management has enough sense and training and knows how to run a decent restaurant following guidelines of common sense as well as rules laid down by the originator of the operation who had the original vision!

Regarding Meijer's layoff plans, one MNB user wrote:

One would think that Meijer would be teaming up with vendors now, more than ever, as they need their support to compete and keep growing profitably. Instead, they have become devoid of any relationships and ignore any past track records (the ones that assisted in building their company), refusing to entertain any needed vendor-business climate changes. Simply put, if they continue their ruthless, unprofessional, and self-serving style with the vendor community, I am sure the vendors will go with the #1 competitor that actually moves the cases and treats them as business professionals. Meijer is losing what set them apart to begin with. Their plans are to become a "me too"! If they become a "me too", they will be a poor one!

It has been our impression, from a number of sources, that cooperation and partnering with vendors is very much a high priority for Meijer. Rome wasn't built in a day…but we've seen evidence that Meijer is working hard in this area.

Response to yesterday's story about Wal-Mart filing two lawsuits, with the California State Superior Court and the Federal Court, challenging the Turlock City Council's adoption of an ordinance that will prohibit retailers with total sales floor area in excess of 100,000 square feet from devoting more than 5 percent of the sales floor area to the sale of non taxable merchandise, such as groceries and prescription drugs.

One member of the MNB community wrote:

My guess is that if you examined the council members of Turlock you will find business owners who have much to lose with the opening of a Wal-Mart supercenter. 20 years ago, when Wal-Mart was not into food, you would generally find a Wal-Mart store in close proximity (if not right across the street) to K-Mart. K-Mart didn't get it...and look where they are now. Today many grocery accounts don't get it either. A few years back, Henderson, NV tried to dictate terms to a new Wal-Mart supercenter. Wal-Mart went after the city and won. Today, it is difficult to find a parking place in the Wal-Mart lot, it is so busy.

The people vote the best way they know how...with their pocketbooks. If the grocery chains don't soon wake up to what is happening, then many of them (like Basha's) will end up becoming dinosaurs, like K-Mart. True, Wal-Mart is non-union and they may pay less than union stores. On the other hand, their benefits are better than most, their employees don't have to pay union dues, plus they don't seem to lack applicants for employment. Their prices are lower because they look at suppliers as partners (who have to jump through a lot of hoops just to get in front of the buyer)...take a look at Wal-Mart's new vendor application some can find in online. Traditional grocery accounts look at suppliers as profit sources with high slotting and a ton of ad money. Wal-Mart? They simply match all the ads for a particular questions asked.

It's time for the grocery industry to do some out-of-box thinking. Some will make it...many will not. Irregardless, the grocery picture is rapidly changing because of Wal-Mart.

We suggested in our commentary yesterday that instead of banning big box retailers, communities ought to "triple or quadruple the tax rate for all such stores so that the increased tax revenue can support the new stresses put on the local infrastructure, pay teachers better money, put more computers in the classrooms, hire more cops.

"There are too many communities out there that do exactly the opposite - offer tax breaks to the world's richest and most successful company as way of getting them to come to town. And sure, they may generate more sales taxes…but the time has come to really take advantage of Wal-Mart's (and other similar companies') desire for world domination."

This prompted some responses:

MNB user Denise Remark wrote:

Oh Kevin, you're brilliantly cunning! It's perfect and could be applied to every municipality in the US that has a Wal-Mart or any other type of supercenter! Have you ever thought about running for, say, Governor of California?

Actually, there may be an opening in the Connecticut governor's mansion a lot sooner…maybe we should go after that one.

MNB user David Malsom wrote:

I totally agree! If Wal-Mart wants to come into an area----MAKE 'EM PAY!!

And MNB user John Welsh had a one-word response:


And finally, MNB user Rosemary (Balistrieri) Fifield made a contribution that built on a headline that we used yesterday. The story was about the pro-carb summit taking place in Rome; the headline was When low carb hits your eye like a big pizza pie, that's annoying… And she wrote (and you can sing):

    When low carb hits your eye like a big pizza pie, that's annoying

    Crustless pizza with cheese in a soup bowl puh-lease, that's annoying

    Bells will ring, ting-a-ling-a-ling, ting-a-ling-a-ling as we sing "Feed me pasta!"

    No more meat, just good cheese, on a heap of gnocchi, Meatballs? "Basta!"

    When your pasta fazool has no pasta, you fool, that's annoying

    Garlic bread with no bread plays a game with your head that's too much

    Let me tell you, paisan, all the sense now is gone from the diet

    Scuza me, but you see, for Italians like me, that's annoying, annoying, ANNOYING!


As her reward, Rosemary gets an MNB t-shirt.
KC's View: